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Gold/Mining/Energy : TAXES, TAXATION, TAX and Canadian stocks

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To: scouser who wrote (77)	11/8/2000 9:26:19 AM
From: Jordan Levitt	Read Replies (2) of 548

<<The % foreign content rule. This one is not very well known, you can have 20% foreign content in your RRSP , that is common knowledge, but most people do not know you can have 100% foreign content by paying a 1% penalty per month on the amount over 20%, you do not need permission or anything special, your broker will add the penalty each month automatically. So if your RRSP was 100% foreign for the whole year you would pay 12% of 80% = 9.6% penalty on the total value as a penalty. The value of the stock will change each day so the $ penalty will also change, but your broker does that calc.>> First: You are allowed 25% Second: all calculations are based on book (or purchase values. So the penalty amount will not fluctuate ! You can also use this to your advantage. Say the portfolio has increased. You can sell the CDN. holdings, then buy them back the next day, effectively increasing the book value of the CDN holdings. If you hold the US holdings, they remain at the original book value. The net result is that you have reduced the relative weight of your foreign holdings, thus reducing the penalty. good luck

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