Opinions
John Hood
HBP S&P/TSX 60 Index ETF
HXT-T
TOP PICK
Sep 01, 2017
Stock price when the opinion was issued
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HXT-T vs. XIU-T. They have basically identical holding but one pays a dividend so has different tax treatment. He is indifferent. In a TFSA, there is no reason to not to use the XIU-T.
Any sale triggers either a capital loss or gain. It depends on the election you made with CRA on your exact tax treatment. Capital gains are the most efficient tax treatment.
Benefit of CRA and dividends only comes from Canadian companies. So, even if you have an ETF that pays a distribution that comes from European or American companies, that dividend is treated as income even though it comes through a Canadian ETF.
He very much likes the Global X series of corporate class ETFs. They give you broad exposure to markets but don't have those distributions, so they're a bit more tax-efficient. Now, there are some additional costs in there to create those structures. As well, it really depends on your tax rate whether they're a really big benefit to an individual. More benefit to those in higher tax brackets than in lower ones.
This is extremely low cost. What is different about Horizons products is that they are a total return index. This is for someone who doesn’t want the income. There is no distribution, therefore there is no tax. It is all done with a SWAP. All you have to do is go onto Horizons website where there are a couple of really good concise explanations of what they are doing. 100% of it stays with their custodian and they do the SWAP thing, and their counter-parties are National Bank and CIBC.