|  Canadians’ debt confidence hits new low A new report is highlighting just how little confidence Canadians have about being able to repay their debt. The latest MNP Consumer Debt Index, released Monday,  has fallen to 88 points — the lowest point since the quarterly survey was launched in 2017. The highest score reported was 106 in June 2018. The higher the score, the more positive Canadians feel about their personal finances. The insolvency firm credits the stress of holiday bills coming due and the resurgent COVID-19 pandemic as the culprits. "It is getting harder for Canadians to see the light at the end of the tunnel," said Grant Bazian, president of MNP. "Unexpected expenses are one of the biggest contributors to household financial turmoil, and many are starting the new year being dealt another round of unexpected business closures, reduced working hours or job loss, and COVID-related health concerns." Global News reporter Sean Boynton has more here.  Inflation and the Bank of Canada’s next move The latest reading on Canada’s inflation — the top economic issue for consumers, according to the most recent Bank of Canada survey — came out earlier this week. It showed Canada’s inflation rate hit its highest level in 30 years last month, climbing 4.8 per cent compared to a year ago. That news comes ahead of the Bank of Canada’s next interest rate decision Wednesday. More and more economists are predicting a rate hike next week — much sooner than the bank had been previously been signaling — in an effort to tame rising prices. "Despite a clear, but temporary, negative impact of Omicron on economic activity, it is clear that inflationary pressures are larger than earlier assessed and require a more robust monetary policy response," Scotiabank chief economist Jean-Francois Perrault wrote in a note earlier this week. If predictions are correct, it would mark the first rate increase since the fall of 2018, meaning Canadians would be facing higher borrowing costs for the first time in years. Global News’ Craig Lord has more here on what’s going into the Bank of Canada’s decision next week.  Staycations set to boom Like many Canadians in 2019, Toronto resident Daniela Renda was looking forward to a new year filled with fun travel, including a planned trip to Italy and France with her family. Then the COVID-19 pandemic struck and disrupted travel plans across the country. But more and more Canadians seem to be turning to staycations – as local trips have been dubbed – while uncertainty around the pandemic’s trajectory remains. A staycation boom would be welcomed by the tourism sector, but some in the industry are warning it may not be enough to sustain their businesses long term. Global News reporter Craig Lord has more on the staycation trend here. ________________________ – THE QUESTION – “I am 74. Recently married last year. I have redone my will. It has been brought to the forefront that my paltry investments need to be adjusted. I have funds in a non-registered investment account at a bank and funds in a TFSA and RRIF. I have chosen a successor for the registered funds but am in a quandary about the non-registered account. I have room in my TFSA and would like to draw funds from the non-registered investment account into the TFSA. If my husband predeceases me, then my sister becomes my estate trustee. She would then become a beneficiary on the TFSA. I would like to avoid the lengthy process of probate for her and am thinking that funds in a registered account could just flow directly to her. If I opt to transfer funds from the investment account “in kind” to the TFSA: 1. Am I correct that there is no need to sell and rebuy? 2. Am I correct that transferring funds “in kind” will allow these funds to be invested the same in the TFSA as in the non-registered account i.e. I am just changing the umbrella? 3. I am aware that there is the capital gains aspect to an “in kind” transfer. Does this capital gains amount just arrive as a tax form early in the next year? “ — A Money123 reader “Congratulations on your recent marriage and on getting your will and personal finances in order. Assets can be transferred "in kind" from a non-registered account into a tax-free savings account (TFSA), and if you have contribution room in your TFSA, then transferring assets from a non-registered investment account into a TFSA is a great idea. But there are a few things to watch out for… If the assets in the non-registered account have a capital gain (meaning they're worth more than when you originally purchased them) then the transfer to the TFSA will be considered a "deemed disposition" and it will be as if you sold the assets and triggered the capital gain. This is an important consideration if you're currently receiving income tested government benefits like the Guaranteed Income Supplement (GIS). If the assets in the non-registered account have a capital loss (meaning they're worth less than when you originally purchased them) the transfer to the TFSA will again be considered a "deemed disposition" and it will be as if you sold the assets and triggered the capital loss but – and this is an important part – that capital loss will be denied and cannot be used to offset current or future capital gains. If the assets in the non-registered account have experienced a capital loss, it's important to first "crystalize" the loss by selling the investment in the non-registered account and then shifting the cash into the TFSA. This loss can then be carried backward up to three years, and can be carried forward indefinitely and used against future capital gains. When you crystalize a loss, it's also important not to repurchase the same investment inside the TFSA for at least 30 days before and 30 days after to avoid the superficial loss rule, which would again result in the capital loss being denied. If you have some investments in the non-registered account that have losses, and some investments with gains, you should consider crystalizing enough losses on one investment to offset the gains on another investment, this could help avoid any impact to your Guaranteed Income Supplement (GIS) but still allow you to use your available TFSA contribution room. Although brokerage accounts may help track adjusted cost base, capital gains and capital losses, and this information will come in a tax form early in the year, it's important for individual investors to track their own adjusted cost base. Ultimately, it's the investor who is responsible for reporting the information to the CRA, so it's best to use a tool like adjustedcostbase.ca to track your investments independently and ensure the information being reported is correct.” -Owen Winkelmolen, advice-only financial planner, CFP, and founder of planasy.ca ___________________________ Want your money question answered by an expert? Get in touch! | 
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