Letters – February/March 2018

CPA Magazine readers respond to the October, November and December 2017 issues.

LEFT WANTING FOR MORE DEPTH

As a CPA, CA and a data-driven REALTOR® I was very interested in reading the November special issue on real estate. Unfortunately, I found the content was a little wanting. Instead of some strong market analysis, or in-depth investment information written to a CPA’s level of comprehension, the feature article (“The Real Estate Investor’s Toolkit”) was written by a freelance lifestyle writer. Also, the Editor’s Note touts a focus “on what people are doing to beat the heat of the market” and cites a “solution” one family had with shipping containers in cottage country (“Home Free”). Then, that section opens by describing how the family packs the kids up on the weekend to drive two hours from Toronto to the property. How is spending additional funds to buy a second property two hours away from Toronto allowing anyone to “beat the heat” of the Toronto market?

 

I don’t mind a fluffy article on alternative housing types, but please don’t try to make it sound like something it’s not.

 

Scott Ingram, Toronto

 

In theReal Estate Investor’s Toolkit” Rosalind Stefanac recommends the Smith Manoeuvre, but I believe this is the wrong terminology. She indicated that “if you’ve mortgaged your home to invest in an income-producing asset, you may benefit from a tax-saving strategy called the Smith Manoeuvre.”

 

If you own an income-producing property, borrowing to invest may be appropriate if you have the right income, net worth and risk personality. However, my understanding is that the Smith Manoeuvre is targeted at people who have a non-deductible mortgage on their principal residence, not on an income-producing property. In addition, they have equity in their home on which they can borrow an additional loan. The proceeds are invested in stock market funds to generate after-tax returns in excess of deductible interest, leading to long-term financial success.

 

The Mutual Fund Dealers Association, in Member Regulation Notice MR-0069, states that there should be no need to rely on the investment portfolio to meet loan payments. If you are still paying off your home purchase mortgage, it is not likely you have any free cash flow; if so, maybe you should seek guaranteed returns by paying off the loan more quickly. After that, look at leveraging and its suitability for you.

 

In my opinion, as a fee-for-service registered financial planner, the Smith Manoeuvre is inappropriate in the case I describe. People should use their free cash ow to rid themselves of debt, not borrow more money to invest it in the stock market with no guarantees. A bear market or significant interest rate increases could result in margin calls and foreclosure action. Leveraging is only for those who understand the stock market, can afford to lose some of their investment and still repay their debt.

 

As Stefanac suggests, leveraging may be appropriate. However, I do not believe her advice to use the Smith Manoeuvre is appropriate without a lot more disclosure in her article.

 

Unfortunately, I have seen more than one complaint led with the provincial securities commission in this type of scenario.

 

Blair Corkum, Charlottetown

 

CHALLENGE ASSUMPTIONS AND PROCESSES

I am glad to see Ready, Willing and Able” (Workplace, December). We who are disabled have to eat too. We need ways to bridge to employment that don’t come with unreasonable, unfair barriers.

 

It took much for me to be considered employable. I have a high IQ. I was on the dean’s list. If I put out a resumé, there was a 50% chance I would be called for an interview. But, once they saw me, there was a 0% chance to get the job. Sometimes it was a legitimate mismatch. But other times, it was clear that my appearance was the problem. Interviewers need to challenge their assumptions and their processes.

 

The article discusses changing how you interview the applicant. I have heard many questions that didn’t have a purpose or an answer. Asking a person who already feels challenged, “Why should we hire you and not someone else?” is a tough one. Such a question becomes, “How does your disability affect your self-esteem?”

 

In order to work I have accepted low pay. In order to have a job I have accepted being in a toxic smoking environment. I needed experience.

 

For every champion there is a discriminator. When you are a hard-working disabled person you can have one supervisor who expresses that the organization needs to clone you and another one who tells you you aren’t trying to improve and that you are using your disability as an excuse. Given enough time, discriminators can sour champions. In an interview it may be that they have a veto right; in a job, it might be that you have to stick up for yourself in a way that no one else would have to. Even champions sometimes cannot see the why, because they aren’t the target of it.

 

There is also accommodation jealousy — accommodations are requested so that a person with a disability can do his or her job. Such accommodations may be nice-to-haves for everyone else, but not having them would not prevent everyone else from doing their job. If you need something badly enough, you will go get it for yourself. And, honestly, the employer is not always the one you need the accommodation from.

 

Name withheld on request

 

ONLINE COMMENTS

Childcare program should be BC priority

(“A Daycare Caution,” Canadian Issues, October)

We recently visited Sweden, where there is a national childcare program that could be emulated in Canada.

 

Upon researching childcare in Canada, and BC specifically, we learned that Quebec provides childcare subsidies to families that are significantly greater than those in BC and other provinces; as well, we understand the Quebec program is administered in a way that provides uniform care with province-wide standards.

 

We are at a loss at how this can be funded in Quebec; Quebec is a net receiver of federal transfer payments from provinces such as BC. It can be argued that BC taxpayers (and those in other “have” provinces) are paying for Quebec’s childcare program. This is not equitable; all Canadians should be entitled to the same benefits regardless of where they live.

 

According to Global News, a Quebec family pays an average of $2,000 to $3,000 a year for childcare compared with more than $23,000 in BC. Budgeting for a province-wide standardized, licensed and subsidized childcare program in BC should be a priority.

 

Gary Brush