La Cible

Octobre 2020

La Cible, magazine officiel de l’IQPF, est destinée aux planificateurs financiers et leur permet d’obtenir des unités de formation continue (UFC). Chaque numéro aborde une étude de cas touchant les différents domaines de la planification financière.

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26 lacible | Octobre 2020 Step 3 – Projection based on the IQPF and FP Canada Projection Assumption Guidelines The next step is to project the account balances using the Projection Assumption Guidelines and the same assumptions used for the reference scenario (management fees, foreign income tax, dividend component and corporate tax accounts). Following our example, the net value of the portfolio after taxes is $309,301 after one year (see Table 6 below). Step 4 – Rebalancing the accounts after taxes At the beginning of the next year, you have to rebalance the net values of the portfolio to match the target allocation in the investor profile, since the assets did not all change in value at the same pace (see Table 7 below). Step 5 – Repeat Steps 1 to 4 Finally, you repeat all the steps for the target projection period. In our case, after 20 years, we will have a total after-tax portfolio value of $594,557. Results Remember that this example was just one of the 2,880 possible combinations, not necessarily the one that would provide the best outcome. To identify the optimal combination, you would have Table 6 Table 7 Table 8 Year 0 NET AMOUNT (END) Allocation after income taxes RRSP TFSA NR HOLDING Total Cash $2,367 $5,070 $5,033 $2,691 $15,161 4.90% Fixed-income securities $45,198 $61,322 - - $106,521 34.45% Preferred shares - $15,217 - - $15,217 4.92% Cdn. equities - $20,902 $25,856 - $46,758 15.12% US equities - - $72,751 $36,796 $109,547 35.43% Int. equities - - - $16,046 $16,026 5.18% Total $47,565 $102,511 $103,640 $55,584 $309,229 100.00% Year 1 NET AMOUNT (BEGIN) Allocation after income taxes RRSP TFSA NR HOLDING Total Cash $2,378 $5,126 $5,182 $2,776 $15,461 5% Fixed-income securities $45,187 $63,043 - - $108,230 35% Preferred shares - $15,461 - - $15,461 5% Cdn. equities - $18,881 $27,503 - $46,384 15% US equities - - $70,955 $37,279 $108,230 35% Int. equities - - - $15,461 $15,461 5% Total $47,565 $102,511 $103,640 $55,513 $309,229 100% to find the after-tax values for each of the 2,880 possible combinations (see Table 8). FEATURE ARTICLE To simplify the presentation of the results, we illustrated all the possible combinations after 20 years, based on frequency. We get the following data: - Maximum value after income taxes: $628,837 - Minimum value after income taxes: $572,624 - Average value after income taxes: $600,522 - Standard deviation after income taxes: $14,434 Getting the maximum after-tax value is the goal of tax optimization. It is possible to create additional

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