Now that I am retired and can split my pension income with my wife, there is no more need for the spousal loans. Should we keep the spousal loans going? She pays me the prescribed rate interest annually, and I declare this on my income annually. What is the best strategy to have the spousal loans reimbursed to minimize taxes? The market value of the investments, including non-realized capital gain now exceeds the loan amount?
I have seen advice on setting up a spousal loan for investments, but I can’t find much on the need to reimburse one and how to do so.
How to set up a spousal loan in Canada—and what not to do
Thanks for your question, Ghislain…
Banking on stability and caution
Canadian investors love their banks. Year in and year out, banks provide dependable dividend growth and solid long-term share price increases as well. They also make up a massive part of any Canadian index fund, as well as the bulk of Canadian pension funds.
So, when the banks pull back the curtains to reveal how business is doing, we take notice.
With a set of mixed results, the main takeaway appears to be that the Big 6 (BMO, CIBC, National Bank, RBC, Scotiabank and TD) looked at the economic storm clouds on the horizon and decided to batten down the hatches.
By provisioning more of their profits for default loans, the news wasn’t as good as recent previous quarters. That said, these conglomerates continue to tick along cautiously, dependably spinning off free cash flow…