Thursday, March 18, 2010

ETF Cheat Sheet

Courtesy of Andrew please find the attachment on ETF's.  It is 15 pages.

 Click Here to Download

Wednesday, March 17, 2010

Minutes - March 16, 2010

Thank you for attending Ellen's Investment club on March 16, 2010.

During this meeting we discussed the iShares Energy index fund (TSE: XEG) as part of our Energy sector analysis. We also talked about Encana (TSE:ECA), AltaGas Income Trust (TSE:ALA.UN) and Cenovus Engery Inc (TSE:CVE). Following the Fed's announcement of keeping the interest rate unchanged "for an extended period", the energy sector rose 0.27 per cent. Suncor Energy (TSX:SU) gained 30 cents to $31.66 but Encana Corp. (TSX:ECA) fell 37 cents to $33.22. Members' consenus of this sector is one of cautious optimism.

Now for new business: we would like to again stress the importance of staying on topic and within the time limit of the agenda items. We appreciate our members' enthusiasm during discussion but let's keep focus so everyone will have a chance pick up useful information. The last 30 minutes of the club is open to free form talks so save your questions for that time.

The next meeting agenda will centre around the Retail sector. We will review this sector with individual picks to be presented to the club. 

I encourage members to check out our Blog site as up-to-date information on monthly agendas, investing tidbits, stock research reports, and presentations can be found there:

I would like to welcome Lubka and Anne as our new members. The next session will be held on April 20, 2010 at 7:30pm in the Miles Nadal Jewish Community Centre (750 Spadina Ave). We will be sending out the room number in the coming weeks.

Please email me or Gord Kozak ( if you have any ideas and suggestions.

Luke Zhang

Friday, March 12, 2010

Agenda - March 16, 2010

March 16, 2010
7:30 - 9:30 p.m.
Miles Nadal Jewish Community Centre
750 Spadina Ave (southwest corner of Spadina & Bloor)

1 7:30 PM Sign in and payment ($10)
2 7:35 PM New member self introduction and members investment forum
Members are invited to talk about what they had invested in since our last meeting.
Please be brief, but explain why you chose a particular stock, if it has performed to-date, and/or what your expectations are from the investment.
3 7:55 PM Sector Review - Energy Sector, TSE:XEG, and the following stocks: TSE:ECA, TSE:CVE, and TSE:ALA.UN.
4 8:30 PM Luke - Investment Challenge update & Tutorial on Short Selling
5 8:50 PM New Business

Minutes of February 16th meeting

Hi everyone:

Thank you for attending Ellen's Investment club on February16, 2010. Here is the result of the survey we have taken in Janaury:

* Almost everyone has a self-managed brokerage account (94%).
* Most people think they are beginner to intermediate level investors (between 3-6 level, where 10 is expert)
* Most people understand equity (88%) and mutual fund (63%) and fixed (44%). Only two people understand option trading (13%)..
* A majority of people make about 1-9 trades in four months (50%). Second majority doesn't trade at all in that time frame (25%). Third majority trades 10-29 (19%). (There is 1 person who trades in the 30-89 range)
* Almost no one surveyed is enrolled in the Investpedia Challenge (81%)
* Most people think they like the guest speaker session.
* Half the people who would attend a separate guest speaker session (56%), the other half would attend depends on availability and content (44%)
* Most people think the club is useful to them (between 6-8 level where 10 is very informative)

Some suggestions were:

Interesting topics needed in club presentation: options and futures, assessing stocks for value + when to buy and sell, portfolio development/allocation, inviting a CFA, mortgage, mutual funds, call and put.
Review: should include MA charts + MACD charts, recent buys, trend analysis with charts, advanced screening tool.

So in conclusion based on the survey. We should push the content geared towards an intermediate level. We can definitely move the Guest Speaker session to a separate timeslot. (We can do a joint thing with Bill's club again) And we should continue with our fundmental analysis.

During this meeting we discussed the iShares REIT index as part of our Real Estate sector analysis. We also talked about Rompsen Investment Corp and Foremost Financial Corp - the two mortgage companies which issue high-interest commercial loans.

Now for new business: We are actively listening to members' feedback to better improve our club. As part of that initiative, we decided to encourage members to talk about what they had invested recently as part of our introduction. Furthermore, the meeting will end 30 mininutes earlier at 9:00pm with the remainder time being an optional free-forum discussion between our members.

The next meeting agenda will centre around the Energy Sector, TSE:XEG, and the following stocks: TSE:ECA, TSE:CVE, and TSE:ALA.UN.

I encourage members to check out our Blog site as up-to-date information on monthly agendas, investing tidbits, stock research reports, and presentations can be found there:

I would like to welcome Tzahi and Andrei as our new members. The next session will be held on March 16, 2010 at 7:30pm in the Miles Nadal Jewish Community Centre (750 Spadina Ave). We will be sending out the room number in the coming weeks.

Please email me or Gord Kozak ( if you have any ideas and suggestions.

Luke Zhang

New Budget - Tax Update

On March 4, 2010, Finance Minister James Flaherty presented the 2010 Federal Budget which contains several measures of interest to Investors Group and its clients. This summary contains highlights of these proposals, which are not yet law. Clients should contact their Investors Group Consultant for information on how these proposals may affect their financial plans.

Parental Government Benefits – Shared Custody

Currently, when parents share custody of a child, only one individual can receive the Canada Child Tax Benefit (CCTB) and Universal Child Care Benefit (UCCB) amounts in a particular month and the child component of the GST/HST credit in respect of a particular quarter. The Budget proposes to allow two eligible individuals to receive CCTB and UCCB amounts and to receive GST/HST credit amounts when a child lives more or less equally with two individuals who live separately. These individuals will each receive 50% of the annual entitlements effective for benefits payable starting in July, 2011.

Universal Child Care Benefit for Single Parents

The Universal Child Care Benefit (UCCB) is $100 per month for every child under the age of 6 years. For parents in a married or common-law relationship, this payment is taxable to the spouse with the lower income. Single parents are required to include the amount in their income and effectively be taxed at their marginal tax rate. The Budget proposes to allow a single parent receiving the benefit the option to include all amounts received under the UCCB in either the parent’s income or in the income of the child for whom an Eligible Dependant Credit is claimed. If included in the income of the child, this will reduce the Eligible Dependant Credit the parent can claim. If the single parent is unable to claim an Eligible Dependant Credit, he or she will have the option of including the aggregate UCCB amount in the income of one of the children for whom the UCCB was paid.

Measures Affecting Stock Options

Repeal of Stock Option Tax Deferral for Publicly Traded Securities - If an employee acquires a share of his or her employer’s corporation under a stock option agreement, the difference between the fair market value of the share at the time the option is exercised and the amount paid by the employee to acquire the share is taxable as employment income in the year the option is exercised. If certain conditions are met, the employee is also entitled to a stock option deduction equal to one-half of the employment benefit, which results in the taxation of stock options at capital gain like tax rates. Since the year 2000, employees exercising stock options of publicly traded companies could elect, within limits, to defer the taxation of employee stock option benefits until the year in which the shares were sold. This election was available on up to $100,000 of options vesting in a particular year (based on the option strike price). The purpose of this measure was to reduce the incidence of employees being forced to sell shares of their employer in order to pay the income tax triggered by the exercise of the option. The Budget proposes that this tax deferral election be repealed with respect to options exercised after 4:00 PM Eastern Standard Time on March 4, 2010.

Relief for Tax Deferral Elections – Some taxpayers who took advantage of the tax deferral election on stock options (introduced in the 2000 Federal Budget) have experienced declines in the value of their optioned shares to the point that the value of their shares is less than the tax liability that would be owing should they decide to sell the optioned shares. To provide relief, the Budget proposes an elective tax treatment that would limit the tax liability on the employee stock option benefit to the proceeds realized from the disposition of the shares. Individuals who disposed of optioned shares prior to 2010 will have to make an election for this special tax treatment on or before the filing due date for 2010 (generally April 30, 2011). Individuals who have not disposed of their optioned shares must do so before 2015 in order to be eligible for this elective tax treatment.

Stock Option Cash Outs – As outlined above, the 50% stock option deduction results in the taxation of employee stock option benefits at capital gain like tax rates. Unlike other remuneration paid to employees, the corporate employer does not get a deduction for the stock option benefit if the employee exercises the option to acquire shares. However some stock option plans have been structured to provide the employee with the option of receiving cash instead of shares at the time of exercise. In situations where the employee elects to receive cash, under the existing law, it is possible for the employer to deduct the payment made to the employee and for the employee to also claim the 50% stock option benefit deduction. For options exercised after 4 p.m. EST Time on March 4, 2010, the Budget proposes measures to prevent both the 50% stock option deduction and a deduction by the employer from being claimed for the same stock option employment benefit.

US Social Security Benefits

The Budget proposes that Canadian residents who started receiving U.S. Social Security benefits prior to 1996, and who have continuously received those benefits since that time, must only include 50% of those benefits received on or after January 1, 2010 as taxable income. These rules may also apply to survivors.

Canadian residents who started to receive benefits on or after January 1, 1996 must continue to report 85% of the benefits received as taxable income as per the Canada-US Tax Convention.

Scholarship exemption

Currently, post-secondary scholarships, fellowships, and bursaries are fully exempt from tax. The Budget proposes to make post-doctoral fellowships taxable. The Budget also proposes that if the educational program is part-time and the student is not disabled, then the exemption will be limited to the amount of tuition paid for the program plus the costs of program-related materials. These measures will apply to the 2010 and subsequent taxation years.

Medical Expense Tax Credit

The medical expense tax credit provides a non-refundable tax credit for eligible medical expenses that exceed the lesser of the annual threshold ($2,024 for 2010) and 3% of net income. The credit is calculated by multiplying the lowest personal tax rate (currently 15%) by the amount that exceeds the lesser threshold.

The Budget proposes that expenses incurred for purely cosmetic procedures (including related services and other expenses such as travel) would not be considered eligible medical expenses for the purposes of this credit. Purely cosmetic procedures would generally include surgical and non-surgical procedures purely aimed at enhancing the individual’s appearance. A cosmetic procedure that is required for medical or reconstructive purposes will continue to qualify for the medical expense tax credit. This measure will apply to expenses incurred after March 4, 2010.

Registered Disability Savings Plan changes

A Registered Disability Savings Plan (RDSP) allows families and friends to save for the long-term financial security of a person with a severe disability. Where an RDSP has been established for an eligible beneficiary and their family meets certain income tests, the government may contribute Canada Disability Savings Bonds (CDSBs) of up to $1,000 annually ($20,000 lifetime). Where eligible contributions are made, the government may also contribute Canada Disability Saving Grants (CDSGs) of up to $3,500 annually ($70,000 lifetime) to the plan.

CDSG and CDSB room will now carry forward - Currently, if a contribution is not made or an RDSP is not established during a year of eligibility, the CDSG and CDSB “room” for that year is lost. The Budget proposes to allow CDSG room and CDSB room to carry forward for up to 10 years. The amount of the CDSG and CDSB that will be awarded in any given year will be based on the family income during each of the prior 10 years (but not before 2008, the year RDSPs became available). There is no limit on the CDSB amount that can carry forward, but CDSG will only be paid on unused entitlements up to an annual maximum of $10,500. The carry forward will be available starting in 2011.

Rollovers from RRSPs/RRIFs to RDSPs - Currently, upon an individual’s death, if their RRSP/RRIF proceeds are payable to the individual’s financially dependent infirm child or grandchild, they can be transferred to that child or grandchild’s own RRSP/RRIF on a tax-deferred basis. The Budget proposes to extend these rollover provisions to include transfers to the child or grandchild’s RDSP. The amount transferred to the RDSP would count against the RSDP beneficiary’s lifetime $200,000 contribution limit, but these “rollover contributions” would not be eligible to receive the CDSG and would be taxable when withdrawn. These measures will be effective for deaths occurring on or after March 4, 2010. Special transitional rules will apply for deaths that occurred after 2007 (when RDSPs became available) and before 2011, effectively allowing the proposed measure to apply as of January 1, 2008. To allow time for financial institutions and the government to adjust their RDSP systems, RDSP contributions benefiting from the proposed RRSP/RRIF rollover measures cannot be made before July, 2011.

Requirement to Report Aggressive Tax Planning Transactions

The Budget introduces proposals requiring taxpayers to report aggressive tax planning transactions. Under the proposals, a reportable transaction is defined as a tax avoidance transaction that bears at least two of the following three hallmarks:

  1. The promoter or tax advisor is entitled to fees that are contingent on the tax results achieved or the number of participants;
  2. The promoter or tax advisor requires “confidentiality protection” in respect of the transaction; and
  3. The taxpayer or the person who entered into the transaction for the benefit of the taxpayer obtains “contractual protection” in respect of the transaction.

Discovery of a reportable transaction that has not been reported could result in the denial of the tax benefit resulting from the transaction. If the taxpayer elects to claim the tax benefit, a penalty for not reporting the transaction would apply. Subject to modifications from public consultations, these proposals would apply to avoidance transactions entered into or completed after 2010.