Once you receive your letter in the mail, go to the BC government website’s speculation tax page here.

On the right side of the webpage, click “Declare Now”.

The letter you received will include a Declaration Code and a Letter ID. You will require these to complete the declaration.

Note that joint owners must both file declarations.

It is always advisable to save a copy of your confirmation.

Weekly Update – By The Numbers

Sources: Yahoo! Finance, CNBC.com, Government of British Columbia

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The existing CRB Benefit of $500 per week remains and the maximum claim period will increase from the 26 weeks to 38 weeks.

In addition, the federal sickness benefit will expand from two weeks to four weeks, allowing employees to remain at home in the event of illness or if they have to isolate due to COVID-19.

Finally, Employment Insurance eligibility is being nearly doubled, from 26 weeks to 50 weeks for any claims filed since September 2020.

These proposals aim to stave off benefit panic for those who are nearing the end of their benefit periods and remain out of work.

Weekly Update – By The Numbers

Sources: Yahoo! Finance, CNBC.com

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The New York S&P TSX Composite index has had a strong run over the last 2 weeks. It has posted daily gains in nine of the last 10 trading sessions and has risen 6.5% over that time and is up 5.89% year-to-date. The TSX closed Friday at an all-time high of 18,460.21.

The Nasdaq closed above 14,000 for the first time on Tuesday and hit an intra-day all-time high of 14,102.04 on Friday before closing at 14,095.47. Year-to-date the Nasdaq is up 9.37%, continuing its torrid pace.

The S&P 500 is up 4.77% year-to-date and continues its march toward the 4,000 mark. Friday saw the S&P 500 hit an all-time intra-day high of 3,937.23 before closing at 3,934.83.

Most major European and Asian markets – even London’s FTSE 100 – posted weekly gains and are all positive for 2021 year-to-date.

Working from home: calculating your workspace deduction percentage

We have had several clients reach out with questions around tax deductions for employment expenses incurred while working from home throughout COVID, and specifically, how to calculate the appropriate workspace percentage.

As a reminder, there are two options for claiming home expenses: the temporary flat rate method ($2 per day worked at home, up to $400 maximum) or the usual detailed method. You can read a more thorough breakdown of these options here.

When calculating your workspace at home, you must prorate your workspace versus total home space, but you must also prorate your work time spent in your workspace within the context of a full week’s worth of hours.

For example: Jim worked from home from March until December 2020. His home is 1,300 square feet and his workspace is his living room/dining room, which is 300 square feet in size.

The first step in calculating the percentage of home expenses is to prorate the workspace by the total home space. In this case, 300 / 1300 = ~23%.

Next, Jim must consider that he is only using that workspace for 40 hours per week (his normal work week). There are 168 hours in a week (7 days, 24 hours per day). The second calculation is to divide Jim’s 40 hours by 168, giving him 24%.

So for work, Jim uses 23% of his home, 24% of the time. Multiplying these two amounts, Jim’s deductible percentage of home expenses is ~5.5%.

Using the detailed method of calculating home expenses is not worthwhile unless Jim ends up with a tax saving greater than the $400 flat rate method. In order to deduct more than $400 using the detailed method, Jim would need to have eligible home expenses of ($400 / 5.5%) ~$7,300.

A reminder to contact us if you have questions about your home use percentage or what constitutes and eligible expense. We can work with you to determine if the flat rate method or detailed method is the most applicable to your situation.

Weekly Update – By The Numbers

Sources: Yahoo! Finance, CNBC.com

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Markets south of the border saw increased volatility as a battle between Wall Street hedge funds and retail “do it yourself” investors raged. Several trouble stocks which had been shorted by hedge funds and others saw DIYers engage in a coordinated effort to drive these stock prices upward, leading to a “short squeeze”. The upward and downward sJesskate have been extreme.

These attempts were abated to some extent on Thursday as some online brokerages temporarily halted buys to these companies but Friday saw a return to the wild upward sJesskate for these stocks.

Silver, a precious metal which has been shorted recently, spiked upward on Friday as retail investors turned their attention to those short-sellers. Gold also took part to some extent, riding Silver’s rally to a modest Friday gain. However, both were down for the week.

Weekly Update – By The Numbers

Sources: Yahoo! Finance, CNBC.com, Globe Investor

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We have turned the page on a difficult and turbulent 2020. However, there are signs that the current upward market trend can continue. Here are 20 of our favourite charts heading into 2021, organized into the following categories:

-2020 Index Returns
-Economy
-COVID and Sector Returns
-Market Analysis
-Central Banks and Inflation
-Asset allocation and Portfolio Construction

2020 Index Returns

Here are the major index returns for 2020. Most indexes were positive, though there was a large gap between the largest gainers (Nasdaq) and the more modest ones(TSX).

Economy

Report card: Here is an overview of recent positive and negative developments as we turn the page on 2020 and look to 2021. The “interesting” category (items of interest which may end up positive or negative) centers on the new U.S. government with President Biden and the potential of a soft U.S. dollar.

Business cycle “reset” due to COVID: Heading into 2020, this chart indicated the U.S. was most likely in a “late cycle” or “end of cycle” phase. COVID changed everything. The two most likely stages at this point are “early cycle” or “start of cycle”, with “recession” a distant 3rd.

Turning the corner toward recovery:

COVID and Sector Returns

Winners and losers: The two charts below give a quick view of the sector-based winners and losers from the COVID pullback.

The impact of technology on 2020 S&P 500 and TSX returns: The overnight creation of a “stay-at-home” economy was great news for tech stocks.

Strong year for green energy: Green energy continues to grow its market share and experienced strong returns last year.

Market Analysis

U.S. equity valuations to end 2020 increased year-over-year: As we see higher valuations, we should lower return expectations accordingly. Currently, U.S. forward P/E ratios are about 22.33 times earnings, compared to the 25-year average of about 16.3 times earnings. The forward P/E was 19.3 times earnings at the end of 2019.

The S&P 500 since 1900: Here we see the steady growth in the S&P 500 since 1900.

The S&P 500 and market volatility: Here, we see the major pullbacks the S&P 500 has experienced since 2010 and the subsequent recoveries.

U.S. bulls are longer and stronger than bears: Using data going back to The Great Depression, we see that the average S&P 500 bull market is 54 months, and the average total return is 166%, whereas the average bear market lasts 22 months but sees a 42% drop. Once again, the average bull market lasts longer and gains more than the preceding bear market lasts & drops. Note that the COVID-related recession lasted only 1 month and saw a 34% drop.

Intra-year declines happen every year, don’t panic! History has shown that a large majority of calendar years see at least one drawdown of 5% or more. Years like 2017, where markets truly head upward with no real speedbumps, are exceedingly rare. It is generally a good idea to ride out the volatility, as markets always rebound given time.

Weak outlook for fixed income: With central bank rates at emergency lows, bond yields have followed suit. Medium-term return projections for the fixed-income space are in the low single-digits:

Central Banks, Fiscal Stimulus, and Inflation

U.S. Fed made a series of emergency rate cuts: During the first wave, drastic action was taken by the U.S. Fed as they made a series of emergency rate cuts. Currently the Fed’s key rate is 0.25%, as is the Bank of Canada’s key overnight rate. The EU overnight is at 0%.

Inflation should be low in the near term but will rise in the long term: When so much money is injected into the overall money supply, rapid inflation becomes a long-term concern.

Inflation: Over the next 1-2 years, inflation should remain low but looking at a longer timeline, expect inflation to move upward.

Inflation’s impact on market returns: As we see below, the inflation environment has historically influenced where returns are best derived. We are currently in a low inflation environment, and as our previous charts show, we expect inflation to remain low in the near-term, followed by upward movement.

Asset Allocation & Portfolio Construction

Can you commit for 10 years? Why does the industry always talk about a “long-term mindset”? The historical worst-case for stocks over any 10-year period since 1950 is -1%.

Broad diversification is a great risk-mitigator: If there’s only one chart you want to look at, this is the one. Diversification is one of the best risk mitigation strategies one can undertake.

Sources: Capital Group, JP Morgan, RBC GAM

The post 20 Charts for 2021 appeared first on Smof Investment Manager, LLC.

The e-newsletter will include a 2021 market outlook, our favourite 21 charts for 2021, and a couple of other topical articles.

Markets Down Friday on Lockdown Fears, Rising Coronavirus Cases

Markets were down for the day and most markets were down for the week, as “third wave” cases continue to rise. The possibility of additional lockdown measures added to the daily & weekly decline. For the year, the New York S&P/TSX Composite is up a modest 2.73%.

The Japanese Nikkei 225, the English FTSE 100 and Chinese Shanghai Composite indexes are up by modest amounts as well to start the year. The major U.S. indexes – the Dow Jones Industrial Average, S&P 500, Nasdaq, and Russell 2000 – are all relatively flat but slightly positive thus far.

Weekly Update: By The Numbers

Sources: Yahoo! Finance, CNBC.com, The Globe and Mail

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.

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Since the market bottom in March 2020, the TSX has now risen over 60%. In the process, the index erased the last remnants of the COVID-related market losses.

Canada’s tech and materials sectors have performed well through the recovery while financials and energy have struggled.

Looking forward, cheap money via low interest rates should help the index continue moving upward, though we should expect some bumps along the way.

2020: By The Numbers

Sources: TDAM, Yahoo! Finance, The Globe and Mail

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.

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BC Recovery Benefit

Yesterday, the BC Government issued a release to clarify details surrounding the BC Recovery Benefit. Beginning December 18, 2020, British Columbians will be able to apply for the BC Recovery Benefit. Eligibility criteria are as follows:

• Families with total incomes under $125,000 will qualify for a $1,000 tax-free, one-time benefit. Families earning up to $175,000 will qualify for a reduced benefit amount
  • Single-parent families also qualify under these income-tested amounts
• Single people with incomes under $62,500 will qualify for a $500 tax-free, one-time benefit. Single people earning up to $87,500 will qualify for a reduced benefit amount

Additionally, British Columbians receiving income assistance or disability assistance, and low-income seniors receiving the senior’s supplement will receive an additional recovery benefit of $150 per month from January 2021 through March 2021.

Eligibility Criteria

To be eligible to receive the one-time, tax-free BC Recovery Benefit, people must:

• be a resident of B.C. on Dec. 18, 2020;
• be at least 19 years old on Dec. 18, 2020;
• have filed a 2019 income tax return;
• have their 2019 income tax notice of assessment, and if applicable, their spouse’s 2019 income tax notice of assessment;
• have their social insurance number;
• have their direct deposit information; and
• have their B.C. driver’s licence.

How to Apply

Once you’ve determined you are eligible to receive the benefit, you can apply via the following routes:

• starting Dec. 18, visiting: gov.bc.ca/recoverybenefit
• starting Dec. 21, agents will be available by phone to assist people who need help applying, including those who do not have internet access.
• starting Dec. 21, phone-based support will be available at 1 833 882-0020 toll-free within North America, Monday to Friday, from 7:30 a.m. to 5 p.m. (Pacific time)

The government also plans to introduce a modified application process in early-2021. The modifications will be aimed to make it easier for persons on disability or income assistance who do not have banking services or tax filing issues to apply and receive benefits as soon as possible.

Here is the link to the BC Government link to the BC Recovery Benefit page.

Canada Emergency Business Account (CEBA) Expansion

As of December 4, 2020, eligible businesses facing financial difficulty due to COVID are now eligible to access an additional CEBA loan of up to $20,000. Half of this additional loan, up to $10,000, is forgivable if the loan is repaid by December 31, 2022.

The additional $20,000 loan is in addition to the original CEBA $40,000 loan.

In total, eligible businesses could receive up to $60,000 in CEBA loans with only $40,000 repayable (if repaid by December 31, 2022).

The CEBA application deadline was also extended to March 21, 2021. The original application deadline was December 31, 2020.

How to Apply

If you applied for the original CEBA $40,000 loan, you can apply through the same financial institution for the additional $20,000.

Even if you have not previously applied for the CEBA, as long as you are eligible, you can apply for up to the full $60,000 loan amount. To do so, apply at the financial institution where you have your business bank account.

Sources: Canada.ca, Government of British Columbia

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.

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The S&P 500 rose by 10.7% in November and closed this week at an all-time high of 3,699.20.

The Nasdaq rose by 11.8% in November and also closed this week at an all-time high of 12,464.23. For 2020 year-to-date, the Nasdaq has risen nearly 39%.

Not to be outdone, the S&P TSX Composite posted a double-digit November (10.3%) of its own and is now in the black for 2020 YTD, up 2.68%.

There are a number of reasons for optimism that drove markets upward in November. The conclusion of the U.S. election clarified who will occupy the White House for the next 4 years. Also, several pharmaceutical companies announced their respective COVID-19 vaccine candidates had completed Phase 3 trials with strong efficacy rates.

This week, the United Kingdom became the first country to approve a COVID-19 vaccine that had been tested in a large clinical trial. The road has now been paved for the U.K. to begin a mass inoculation campaign. U.K. Health Secretary Matt Hancock expects the U.K. will receive its first shipment of 800,000 vaccines “within days” and stated that people will begin receiving shots shortly after the National Health Service receives the vaccines.

Weekly Update – By The Numbers

Source: Yahoo! Finance, CNBC.com, Dynamic Funds, CBC.ca

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any

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Yesterday, Dynamic Funds’ Chief Investment Strategist, Myles Zyblock, offered his thoughts on the Q3 Earnings results.

Earnings Rocket Past Expectations

Third quarter reporting season is effectively complete with filings from nearly 95% of S&P 500 constituents now in the books. Expectations were surpassed across the entire capitalization spectrum with a record proportion of positive surprises. Breadth of beats was +80% while both top- and bottom-line growth projections were exceeded by a wide margin. S&P 500 earnings growth still contracted but only at a -7.1% rate instead of the initial -18% estimate. Sales came in at -1.8% compared to the -5.6% target.

The small-cap segment of the equity market was the most impressive with an earnings surprise of +57% for Q3. Analysts were far too pessimistic for these names as actual S&P 600 EPS performance came in at -7.6% compared to the -48% estimate. For the S&P 500 sectors, Health Care, Information Technology, and Consumer Staples stood out as the sectors with the highest breadth of beats and were positive year-over-year for both earnings and sales.

Bottom-up consensus estimates suggested that this quarter would be the trough in aggregate earnings and the strong results certainly helped support that prediction. S&P 500 trailing earnings has fallen 14.3% since peaking in February 2020 and currently stands at $140. If estimates are met over the coming year, the Index should see +16.7% growth and a full recovery by November 2021 (see the chart of the week below).

• The strong start to earnings season reported in our preview a month ago held up to the end with results remaining heavily skewed to the upside. The breadth of beats for earnings and sales are well above average for all capitalization segments. Economic uncertainty around COVID-19 and the lack of management guidance likely caused analysts to set very low targets.
• The magnitude of earnings surprises has also been very strong with double-digit beats for all three indices. The S&P 600 stands out with a stellar +57% surprise.

Earnings Growth Came in Far Above Expectations

• Q3 2020 earnings growth targets were slashed leading up to reporting season and the final results suggest that the analyst community were far too pessimistic. Only single-digit contractions were seen in earnings compared to the staggering double-digit projections.
• A similar story is seen for the top-line as actual sales growth also fell much less than anticipated in Q3.

All S&P 500 Sectors Beat Earnings Growth Projections

• Every major S&P 500 sector surpassed earnings growth expectations in Q3. Five of them, including Health Care, Consumer Staples, Communication Services, Information Technology, and Utilities, posted positive quarterly year-over-year earnings growth.
• Almost the same story was seen for top line (sales) growth, but Materials came in slightly lower than expected. The relative order of growth for sales mirrored that of earnings in Q3 with defensive sectors posting the highest growth rates.

(End of Myles Zyblock commentary)

Weekly Update – By The Numbers

Source: Yahoo! Finance, CNBC.com, Dynamic Funds

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.

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