Comments on: Risks in Life (Part II) http://www.canajunfinances.com/2009/11/18/risks-in-life-part-ii/ Personal Finances and Consumer Concerns, essays, stories, examples and how to articles with a distinctly Canadian Point of View Fri, 19 Mar 2010 18:56:53 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: bigcajunman http://www.canajunfinances.com/2009/11/18/risks-in-life-part-ii/comment-page-1/#comment-6314 bigcajunman Wed, 18 Nov 2009 17:57:29 +0000 http://www.canajunfinances.com/?p=3114#comment-6314 @Neil Very true about the options, I know a few folks who have been burned by holding stocks bought in Options (and a large number of folks got burned not even knowing they were doing that). Getting taxed on money you never got really does suck! @Neil

Very true about the options, I know a few folks who have been burned by holding stocks bought in Options (and a large number of folks got burned not even knowing they were doing that). Getting taxed on money you never got really does suck!

]]> By: Neil http://www.canajunfinances.com/2009/11/18/risks-in-life-part-ii/comment-page-1/#comment-6313 Neil Wed, 18 Nov 2009 17:18:23 +0000 http://www.canajunfinances.com/?p=3114#comment-6313 If you can write off your lease payments, you can claim a CCA deduction on a purchased vehicle. If leasing is a worse deal than buying (which it almost always is) then yes, you will recover a portion of that "worse deal" through lower taxes, but you will still be out more money in total. I suppose if we're talking luxury cars, where there's a cap on the purchase price that can be claimed for CCA purposes, then leasing may make more sense, but even then it's necessary to actually run the numbers on a case-by-case basis, since the gap has to be sigificant before you'll actually save money just from the tax deduction. As for options - if there is not a minimum hold time requirement for exercising them, then the best approach is to exercise and sell immediately. It's a huge risk to exercise and then hold the options, because if the stock goes down you end up paying taxes - as employment income - on a lot of money that you never saw. If you can write off your lease payments, you can claim a CCA deduction on a purchased vehicle. If leasing is a worse deal than buying (which it almost always is) then yes, you will recover a portion of that “worse deal” through lower taxes, but you will still be out more money in total.

I suppose if we’re talking luxury cars, where there’s a cap on the purchase price that can be claimed for CCA purposes, then leasing may make more sense, but even then it’s necessary to actually run the numbers on a case-by-case basis, since the gap has to be sigificant before you’ll actually save money just from the tax deduction.

As for options – if there is not a minimum hold time requirement for exercising them, then the best approach is to exercise and sell immediately. It’s a huge risk to exercise and then hold the options, because if the stock goes down you end up paying taxes – as employment income – on a lot of money that you never saw.

]]> By: bigcajunman http://www.canajunfinances.com/2009/11/18/risks-in-life-part-ii/comment-page-1/#comment-6312 bigcajunman Wed, 18 Nov 2009 15:21:21 +0000 http://www.canajunfinances.com/?p=3114#comment-6312 @MJM So in this case substitute BAD for Risk ;-) @MJM
So in this case substitute BAD for Risk ;-)

]]> By: Michael James http://www.canajunfinances.com/2009/11/18/risks-in-life-part-ii/comment-page-1/#comment-6311 Michael James Wed, 18 Nov 2009 15:11:22 +0000 http://www.canajunfinances.com/?p=3114#comment-6311 I think you're right that leasing can only make sense if you can write off the payments on your taxes. In the every day sense of the word "risk", leasing is risky because of the higher costs over the long term. However, in the financial sense of the word "risk", leasing isn't particularly risky compared to buying a car because it is almost guaranteed to be a worse deal :-) I think you’re right that leasing can only make sense if you can write off the payments on your taxes. In the every day sense of the word “risk”, leasing is risky because of the higher costs over the long term. However, in the financial sense of the word “risk”, leasing isn’t particularly risky compared to buying a car because it is almost guaranteed to be a worse deal :-)

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