Thanks so much, Justin. It is a delight watching your videos where you simplify concepts to us non experts. Do you consider VEQT and XEQT a suitable pair for this process?
Very insightful! With the same logic, can I say that XDIV and VDY are different enogh as XDIV follows the MSCI Canada High Dividend Yield 10% Security Capped Index and VDY the FTSE Canada High Dividend Yield Index (not capped)? Also...this pair is different enough from XIC/VCN pair? I plan to have 2 margin accounts
@@JustinBenderCPM thank you! I read the book you suggest in this video and I strongly suggest to everyone to have a look at the document you linked in the description!
Would switching from your Vanguard model portfolios to your ishares, BMO and MacKenzie ETF's of the same category be appropriate, or would CRA likely view this as a superficial loss?
@Ryan Cormack - The various asset allocation ETFs do not follow the same index, so based on past comments made by CRA, they wouldn't view any losses realized on a switch as superficial. For example, selling VEQT at a loss and immediately purchasing XEQT would be allowed.
HXT and VCE track different indexes, so they would be suitable. HXS and ZSP track the same index, so I likely wouldn't test CRA on this one (even with the different structure).
@Harpreet Sandhu - CRA has made it clear that selling an ETF that tracks the S&P/TSX Capped Composite Index and repurchasing one that tracks the S&P/TSX 60 Index would be acceptable (even though all stocks included in the S&P/TSX 60 Index are also included in the S&P/TSX Capped Composite Index).
@@JustinBenderCPM thanks for replying Justin, but I was asking about XIT(Ishares technology) etf , it mainly contains CGI , Constellation software and Shopify. I want to know if I sell XIT etf and buy these 3 stocks.
Hi Justin great video! Do you think you could do a video explaining how to calculate ACB? I'm having trouble finding a simple step-by-step guide on how this can be done. I've debated just going with indexed mutual funds so can avoid this but in the end, I could save a lot of money once my taxable portfolio gets quite large.
@Daniel J - For sure! I'll release it early 2021. In the meantime, check out our step-by-step guide to calculating the ACB of your ETFs: www.pwlcapital.com/wp-content/uploads/2018/06/PWL_Bender_As-Easy-as-ACB_2015-January.pdf
Hi Justin thanks for the great videos! Please keep them coming. Had a question slightly off topic but also regarding taxes. I'm a Canadian and live in Canada. If I want to hold only equity etfs in my taxable cash account. Is it better for me to hold only Canadian listed etfs like VIU and XUU or would it be better to hold US listed etfs like VTI and IEMG in my US cash account? Or is it better to have a mix of Canadian listed etfs in my Canadian cash account but also hold US listed etfs on my US cash account? Thanks for help!
@Bobby J - It depends what you consider as "better": Holding all Canadian-based ETFs is certainly better from a portfolio management perspective. You won't need to convert back and forth between CAD and USD (using Norbert's gambit) when rebalancing the portfolio, you won't need to track your USD cost base in CAD, and you won't have additional T1135 reporting. And with Canadian-based international equity ETFs (like XEF and VIU), the foreign withholding taxes are generally recoverable, whereas U.S.-based international equity ETFs (like IEFA) have one layer of unrecoverable foreign withholding taxes (making IEFA an inferior choice to XEF, once all costs are considered). Having said that, holding U.S.-based U.S. equity and emerging markets equity ETFs (like VTI and IEMG) will technically be cheaper (from a product cost perspective) than holding their Canadian-based counterparts (VUN and XEC). But this assumes you convert your CAD to USD back and forth cheaply and efficiently, using the Norbert's gambit strategy.
Thanks for the video. My question is if one only holds an etf such as VEQT. How much benefit would there be in breaking up these funds in a taxable account to engage in tax loss harvesting for the constituents. I.e instead of VEQT, holding VCN, VIU, VUN, VEE. I assume it will be related to how correlated the individual markets are to each other, but wondering if you have any testing?
@supernumex - I would avoid selling VEQT and buying back its underlying ETFs (to realize a capital loss), as this may be considered a superficial loss by CRA. Likely best to switch VEQT to XEQT (as none of the underlying ETFs follow the same index as one another).
@@JustinBenderCPM Apologies, I wasn't very clear. Assuming I don't have a taxable account right now, and I am deciding between holding VEQT or holding the underlying funds in a taxable account: How much benefit would there be in constructing the portfolio with the underlying ETFs for the purpose of tax loss harvesting. I.e harvesting between (VEQT & XEQT) vs. (4 underlying funds of VEQT & 4 other funds)
@supernumex - It's difficult to say. You would increase the probability of capturing more losses by holding VCN/VUN/VIU/VEE (relative to VEQT), but that doesn't mean you'll necessarily have a tax-loss selling opportunity: www.pwlcapital.com/wp-content/uploads/2020/01/2020-01-09_PWL_WP_Bender-Bortolotti_Tax-Loss-Selling.pdf (pages 22-24) Having said that, I would prioritize the product that's the most appropriate for your situation and goals. If you value keeping things simple, go with VEQT or XEQT (and switch them between one another if any tax-loss selling opportunities present themselves).
@Tanah Merah - For ETFs, the liquidity risk depends on the underlying holdings. If the majority of the underlying stocks in VEQT or XEQT are liquid, then the ETFs will be liquid as well. www.vanguardcanada.ca/documents/understanding-etf-liquidity-and-trading-en.pdf
@shitskadoodle - This can also be done with all-in-one ETFs. XEQT could be swapped for ZEQT and XGRO could be swapped for ZGRO (or a Vanguard AA ETF that has the same split between stocks and bonds). After 30 days, you could choose to switch back to the original if you have a preference.
