With growing economic uncertainty during the COVID-19 pandemic, the financial landscape is shifting every day.
Whether it's dealing with sudden unemployment, ballooning debt, or expenses related to working from home, BNN Bloomberg wants to help Canadians navigate these uncharted waters.
That’s why we created Ask BNN Bloomberg, where you can have your personal finance questions answered by industry professionals.
Email or send your questions via video to firstname.lastname@example.org, and we will aim to answer them weekly.
Questions and answers have been edited for clarity. Last names will not be used.
Disconnect between economic data and market performance
David in Wetaskiwin, Alta.:
I don’t understand this market. I have been an investor for over 40 years and I’ve been through several bear markets. Right now, GDP is negative, unemployment is at an all-time high, government debt is out of control, bankruptcies are taking place; how is it that the markets are at or near record levels? What happened to the recession? (June 5, 2020)
Brian Belski, chief investment strategist at BMO Capital Markets:
We believe much of the confusion between economic data and stock market performance is because of the over-reliance investors have placed on macro data and strategies over the past 20 years without really understanding the connection – and more appropriately stated, disconnection - that macro data has from real time.
For example, stocks historically lead GDP readings by three to six months. In addition, one of the most widely analyzed data points is unemployment, yet unemployment data has one of the longest lags relative to stock market performance. In other words, once the macroeconomic data becomes an actuality, six months have gone by in some cases.
What is particularly troubling in our view during COVID-19 is some very negative economic forecasts were made early on, especially during February and March, and the stock market did its usual discounting (three to six months ahead). Fortunately or unfortunately, that "discounting" equated to a three-week cyclical bear market and an over 30 per cent pullback in prices.
In essence, the stock market has foreshadowed a one or two quarter recession at worst, with a recovery to follow. (June 23, 2020)
Transferring a losing stock to a TFSA or RRSP
Tom in Dundas, Ont.:
I have a Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) question.
If I have contribution room in either of these accounts and hold some stocks that are way down at this time, can I transfer them from a non-registered account at today’s value and claim a loss and hope they appreciate in the registered account? (June 12, 2020)
Jamie Golombek, managing director of tax and estate planning at CIBC Wealth Advisory Service:
It’s a common question. You’ve got a stock, a bond, a mutual fund that’s gone down in value; you’ve got unused RRSP room or unused TFSA room; it’s very tempting to contribute that losing stock as a contribution in-kind to your RRSP or TFSA.
Problem with that is that you lose the ability to claim the capital loss. There’s a specific stock loss rule in the income tax act that prevents you from claiming capital loss on a transfer to an RRSP or TFSA.
Simple solution of course is to simply sell the stock or losing mutual fund on the outside, and then take the cash and contribute that to your RRSP or TFSA. If you still want to buy that stock back because you think it’s going to go up in value, wait 30 days, because if you don’t wait 30 days the superficial loss rule will come in because your RRSP and TFSA will have bought it back and will deny you the capital loss.
It’s a good idea but don’t do it directly. Instead you want to sell outside, claim your capital loss, take the cash, contribute that to the RRSP or TFSA. If you still want to buy back the identical security, wait 30 days. (June 24, 2020)
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CEWS guidelines for full-time workers
Renate in Kitchener, Ont.:
Our daughter works in a dental office that is receiving the Canada Emergency Wage Subsidy (CEWS). Therefore, she is receiving 75 per cent of her normal wage. She is working 40 hours a week at this new wage.
Is the employer obliged to bump up her pay to pre-COVID-19 pay, or can he continue to have her work full-time at the 75 per cent pay?
I look forward to your response. (June 9, 2020)
Robyn Thompson, personal finance expert and president at Castlemark Wealth Management Inc.:
The Canadian Emergency Wage Subsidy provides qualified or eligible businesses a 75 per cent wage subsidy for their employees.
Now this is something that is paid for a period of 24 weeks, it is retroactive back to March 15, and is payable up until August 29; and the maximum amount that a person will be able to receive is $847 on a weekly basis.
In order to qualify, the business must have seen a 15 per cent reduction in qualifying revenue. The purpose of this program is to help business owners rehire their employees after COVID-19 or the lockdown from COVID-19 as normal business starts to resume.
One thing to take note of here is although your daughter is working and she’s only receiving 75 per cent of her salary up to that maximum of $847 a week, there is no legal requirement for her employer to top up the difference between the 75 per cent and what she normally makes before COVID-19 or the pandemic.
With that said, business owners are encouraged to top up that amount and those that do not will likely have a conversation or will be contacted by the Canada Revenue Agency to find out why they did not do this.
So unfortunately in this circumstance, your daughter will not likely receive the additional top-up unless her employer is willing to do so on their own accord. (June 24, 2020)
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