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Option gains aren’t taxed as capital gains, so that doesn’t make sense. There are some preferential tax treatments of some employee option plans, up to $200K a year worth—did that get changed too? (There are capital gains taxes on profits above the market value at exercise time but that’s just…buying a stock.)
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Apr 18, 2024 21:05
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It's funny because I always see posts on LinkedIn from founders talking about how you shouldn't build a business with an exit in mind. You need to build a company that you're passionate about that addresses a real world need and everything will flow from that. Now the same execs are posting essays about how innovation in Canada is dead because no one will want to start a business here knowing how much they;'ll be taxed after selling it.
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Apr 18, 2024 21:08
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Femtosecond posted:I can understand why doctor/lawyer/dentists would be mad in this moment as their retirement may be negatively impacted by this change, but hey, maybe there was some risk in pursuing an arguably exotic tax scheme instead of doing something boring that aligns with everyone else in the country. Maybe your tax professional should have discussed regulatory risk with you! Sorry! As a physician, I personally support this move. I'm a rare salaried doc and keep relatively little in my PC. These changes aren't likely to ever affect me. Despite my own challenges, my career affords me a lifestyle many Canadians cannot reach and I try to remain grateful for that. But I will defend some angry docs - the provinces sold us the idea of incorporation to save money rather than increase billing codes, which have not come close to increasing with inflation. The vast majority of physicians don't have pensions or benefits and self-fund both. And most don't get to start practicing (and start saving for retirement) until in their 30s or later. Plus many of us start >$200K or more in debt on day one. We cannot strike to seek better conditions. I can understand some physicians being fed up with perceived financial penalties after being continuously overworked and underappreciated in a crumbling system trying to keep other people alive. I hope more physicians don't choose to leave for other jurisdictions. Most won't but even losing a few may teeter the system.
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Apr 18, 2024 21:14
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Subjunctive posted:Option gains aren’t taxed as capital gains, so that doesn’t make sense. There are some preferential tax treatments of some employee option plans, up to $200K a year worth—did that get changed too? Yeah, I just looked and they're taxed as income with a specific 50% options deduction that is similar to how capital gains are treated but not technically the same thing. They should be changing this as well, because it was clearly designed to parallel capital gains, but who knows Edit: the options deduction got capped at 200k a few years back. So it's already more restrictive than the capital gains changes.
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Apr 18, 2024 21:18
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Mr. Apollo posted:It's funny because I always see posts on LinkedIn from founders talking about how you shouldn't build a business with an exit in mind. You need to build a company that you're passionate about that addresses a real world need and everything will flow from that. It’s good advice because honestly you’re going to work like hell and probably end up with nothing but some leftover branded water bottles, so it might as well be something you really care about doing.
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Apr 18, 2024 21:20
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T.C. posted:Yeah, I just looked and they're taxed as income with a specific 50% options deduction that is similar to how capital gains are treated but not technically the same thing. Yeah anyone who is complaining about their option-heavy comp being harmed is very confused at best.
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Apr 18, 2024 21:22
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Subjunctive posted:VC funds are built on capital gains. That’s how they return their profits to the LPs. Founders also generally have their equity profit, on acquisition, end up at least partially as capital gains. So I guess Canada could become less attractive as a place to put money into VC funds, or for VC funds to operate, and that would in turn reduce available funding for Canadian companies. (I don’t know how the taxes work if a US fund invests in a Canadian company because I’ve never been close to a case like that where the investors made money!) Yeah this is the part I was unclear on. I mean the notion we're being pitched in these articles is that somehow external investment will go down, but if they invest in some Canadian startup and see great success won't those capital gains to those investors be taxed in their own local jurisdiction? (So eg. if they were from the USA the capital gains tax rate would most likely be either 15% or 20%) And for Canadian investors, well ok what else are you gonna invest in then? All capital gains is handled the same whether it's ultra risky Canadian startup or Nike stock on the S&P500. I'm not really sure I understand how things change for investors either way unless it's something to do with the inner workings of a VC structure. Like if returns are not some sort of "flow through" type instrument whereby the Canadian based VC is taxed on the gain using Canadian cap gains and investors of any jurisdiction only after that point make money through a dividend or some other mechanism. But yea that seems weird because it seems better to just handle things (if possible) such that the gain is handled entirely by the end investor in whatever jurisdiction they reside. Subjunctive posted:I have never met a founder who gave a poo poo about capital gains on their future exit when they were starting a company. Having something more than $250K to get taxed on is a victory. You get to put “(acq)” after every mention of your company in your Twitter or conference bios, and will always get introduced as having had a “profitable exit”. It’s all good. This is my sense as well as someone who has not formed a startup (but thought about it) and is a very small time investor. Gains are good! I recall my old CEO was pretty delighted when he was able to do a bit of revenue sharing (something that netted me ~$7000) saying that a goal of his was to give people small tax complications (highlighting that if this happened it was a good thing because you made an extra surprising amount of money).
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Apr 18, 2024 21:23
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Subjunctive posted:It’s good advice because honestly you’re going to work like hell and probably end up with nothing but some leftover branded water bottles, so it might as well be something you really care about doing. I also reminded of a story one of my professors told me. he had a friend who had to write a cheque to the CRA for almost $1 million in taxes for his business. The professor asked his friend why he wasn't upset about paying that much in tax. His friend answered something like "Do you know how much money I made to have a $1 million tax bill?" Mr. Apollo fucked around with this message at 21:34 on Apr 18, 2024 |
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Apr 18, 2024 21:31
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Femtosecond posted:Yeah this is the part I was unclear on. I mean the notion we're being pitched in these articles is that somehow external investment will go down, but if they invest in some Canadian startup and see great success won't those capital gains to those investors be taxed in their own local jurisdiction? (So eg. if they were from the USA the capital gains tax rate would most likely be either 15% or 20%) No, the situation is that you have a VC fund in Canada that needs money for it to invest. Limited partners in other countries put capital into the fund. The VC invests in Femtoco. They then sell their shares after Femtoco goes public as TO.FEM. The profit from that sale is taxed as capital gains to the fund, and the fund later pays returns to the LPs out of post-tax dollars. There are fewer of those dollars if the capital gains tax is higher.
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Apr 18, 2024 21:33
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DandyWalker posted:As a physician, I personally support this move. I'm a rare salaried doc and keep relatively little in my PC. These changes aren't likely to ever affect me. Despite my own challenges, my career affords me a lifestyle many Canadians cannot reach and I try to remain grateful for that. Oof yea if the Provinces were suggesting that doctors do this sort of thing then that is a bit of a rug pull. That is unfortunate. Ultimately I think it is best if all Canadians are on the same page with regard to tax treatment. Treat doctors the same as everyone else and compensate them more if it's a problem. Subjunctive posted:No, the situation is that you have a VC fund in Canada that needs money for it to invest. Limited partners in other countries put capital into the fund. The VC invests in Femtoco. They then sell their shares after Femtoco goes public as TO.FEM. The profit from that sale is taxed as capital gains to the fund, and the fund later pays returns to the LPs out of post-tax dollars. There are fewer of those dollars if the capital gains tax is higher. Ok yeah that makes sense to me. Helpful thx.
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Apr 18, 2024 23:22
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GTA new home sales down to record low in Q1. Builders, especially of condos, are cutting back on construction due to sluggish pre-sales and rising construction costs (so they say). Also, this is the kind of poo poo some of them were building: https://twitter.com/StephenPunwasi/status/1766521859414147216 I understand people in physically-constrained* spaces like Vancouver being frustrated by NIMBYism stalling densification but this is absolutely not the problem in the GTA, which has had lots of construction in the last 20+ years. There is no free market supply-side solution. *constrained from sprawling more, I mean.
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Apr 24, 2024 18:11
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The condos built in the past ten years or so weren't built to be high-rise worker camps. They were built to be tiny boxes that are there for trading back and forth between
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Apr 24, 2024 18:35
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Precambrian Video Games posted:GTA new home sales down to record low in Q1. Builders, especially of condos, are cutting back on construction due to sluggish pre-sales and rising construction costs (so they say). Also, this is the kind of poo poo some of them were building: Lmao. This is literally just a normal 400sqft 1 bed with a piece of drywall to make it a 2 bed. What a joke, but I mean, you're an idiot if you buy this, it's not like you didn't have the floor plan right?
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Apr 24, 2024 19:20
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You should probably not buy units in buildings where 100sqft of the 400sqft one bedrooms are hallway and entryway. It's a clear indication that developer was maximizing unit count at all cost, including any sort of useable layout, and is likely 'optimizing' everything else as will
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Apr 24, 2024 19:27
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Precambrian Video Games posted:GTA new home sales down to record low in Q1. Builders, especially of condos, are cutting back on construction due to sluggish pre-sales and rising construction costs (so they say). Also, this is the kind of poo poo some of them were building: It's called providing housing supply, and it will fix the affordability crisis.
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Apr 24, 2024 19:44
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Precambrian Video Games posted:GTA new home sales down to record low in Q1. Builders, especially of condos, are cutting back on construction due to sluggish pre-sales and rising construction costs (so they say). Also, this is the kind of poo poo some of them were building: Downtown Toronto has had zero problems with construction, but when you expand that to the GTA, there really is a supply problem. This is data from 2016 to 2021.  Sure, some parts of GTA have been building like crazy, but there are entire neighborhoods, even in Toronto proper, that have lost more housing than they have built, and those neighborhoods aren't hard to find.
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Apr 24, 2024 20:00
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About 10 years ago, I walked through demo unit for a new condo on Adelaide St W in Toronto. It didn’t have a place for a stove or a full size fridge. It just had an under the counter bar fridge. The sales rep said that their studies showed that the people living there would be young urban professionals and they ordered takeout for almost every meal so a microwave and mini fridge would suffice.
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Apr 24, 2024 23:28
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Mr. Apollo posted:About 10 years ago, I walked through demo unit for a new condo on Adelaide St W in Toronto. It didn’t have a place for a stove or a full size fridge. It just had an under the counter bar fridge. The sales rep said that their studies showed that the people living there would be young urban professionals and they ordered takeout for almost every meal so a microwave and mini fridge would suffice. Ah yes, the old "Millennials don't care about wealth generation. Look at how few of them chose to be wealthy!"
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Apr 25, 2024 00:00
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Part of the issue with bad unit layouts is related to the small floorplates (750 m²) that high rise buildings are restricted to by Toronto city policy. The city does not want anything like the larger (and more comfortable and better laid out) towers that were built in the 70s and 80s anymore largely because of wind and shadow impacts, I believe. https://www.toronto.ca/wp-content/uploads/2018/01/96ea-cityplanning-tall-buildings-may2013-final-AODA.pdf quote:Regardless of stylistic approach, the design and placement of all tall buildings should make a positive contribution to the public realm, fit harmoniously within the surrounding context and skyline, and be consistent with the following: quote:Limit the tower floor plate to 750 square metres or less per floor, including all built area within the building, but excluding balconies.
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Apr 25, 2024 00:50
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thats kind of a stretch to excuse developers that are trying to market condos to airbnb investors and fit as many units into as little square feet as possible because it's more profitable
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Apr 25, 2024 01:26
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It's not the sole reason but small floorplates encourage "creative" layouts while the marginal cost from building larger floorplates are small. So it's one of the ways bad municipal policies stop better housing from being built.
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Apr 25, 2024 03:05
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I remember, when I was a wee lad, coming up with an idea for a sci-fi pod living space that maximized every possible inch. And I've got to say: that idea is better than the skint fuckin condos they're building in Toronto. I at least had the idea of storage pods like overhead bins on airplanes. Honestly, these condos look worse than the worst, cheapest hotel room I've ever seen.
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Apr 25, 2024 03:18
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I am very skeptical that city design guidelines, which are several layers away from the provincial building codes that actually determine what can be built, are the reason why developers are churning out dystopian rats' nests with the cheapest possible fittings and materials. I still don't fully understand why build quality took a huge dip from 20-30 years ago. I mean yes I get that incentives changed, condos just need to sell to one desperate fool and not be liveable for decades like purpose-built rentals. But did the technology for putting massive structural columns in living rooms not exist? Were impractical glass boxes just not fashionable or are they actually somehow cheaper than any opaque exterior? I suppose BC was ahead of the curve with leaky condos before Ontario/the northeast US got around to it.
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Apr 25, 2024 03:45
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Maybe the builders realized that most of the people buying them will not be living there so they won’t care about the quality. The people who will be living there, won’t be living there long-term.
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Apr 25, 2024 03:59
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Then why do they need a second bedroom?
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Apr 25, 2024 04:29
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Precambrian Video Games posted:I still don't fully understand why build quality took a huge dip from 20-30 years ago. I mean yes I get that incentives changed, condos just need to sell to one desperate fool and not be liveable for decades like purpose-built rentals. But did the technology for putting massive structural columns in living rooms not exist? Were impractical glass boxes just not fashionable or are they actually somehow cheaper than any opaque exterior? I suppose BC was ahead of the curve with leaky condos before Ontario/the northeast US got around to it. Well first off I'm not sure the build quality improved, since much of that product around where I live is wood framed three story apartments with all the woes that typically come with wood frame, and that seem no different or worse than new product. What has changed however is square footage these days is lower. It is likely that square footage is decreasing due to higher modern costs and due to less competition. In the 1970s there was a lot more options in terms of affordable alternatives to an apartment as it was the pinnacle of "drive until you qualify" and constant greenfield construction at the margins would have suppressed land values and provided strong competition to inner city home builders. Why live in a shoebox condo downtown when you can drive over some newly built bridge on a brand new wide highway into a brand new town and a brand new subdivision of detached homes? Nowadays however the era of easy growth is over and people don't have any options. Land values and construction costs are so high and regulations so hard to work with that developers are struggling to be able to create a development that checks all the boxes of both being allowed and being profitable. Their trick to pull this off seems to be shrinking ceiling heights which allows more units in a shorter building and cramming in more units by making them smaller. In the 1970s people would balk and go elsewhere but now no one can. What can be done? How about some carrot and stick? Cities could allow much taller and bigger buildings, but at the same time mandate bigger unit sizes and taller ceilings.
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Apr 25, 2024 05:05
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Subjunctive posted:No, the situation is that you have a VC fund in Canada that needs money for it to invest. Limited partners in other countries put capital into the fund. The VC invests in Femtoco. They then sell their shares after Femtoco goes public as TO.FEM. The profit from that sale is taxed as capital gains to the fund, and the fund later pays returns to the LPs out of post-tax dollars. There are fewer of those dollars if the capital gains tax is higher. Do you think there's anything that could be done to fix this and make Canada a better investment environment for VCs? Just thinking about how it seems like even the current system is broken, with existing Canadian tax rates being higher than the American ones. And already it's well known that America is a better place for a startup to be to raise money than Canada. I don't care about rich people or doctors at all, but this is the one area where I think folks could have a little bit of a point. The tech sector seems a lot more exit oriented than most businesses, and so those capital gains a more important part of the fund raising equation. In contrast with lots of other sorts of investing groups, a capital gains exit may not be the real point and constant dividends and dividend growth is more the goal.
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Apr 25, 2024 05:08
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McGavin posted:Then why do they need a second bedroom? So the tenant can have a roommate to help pay for the mortgage
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Apr 25, 2024 05:20
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Would mandating minimum sizes for X bedrooms work at all? I certainly accept that they're trying to maximize profits on each building but I tend to believe them when they say they can't build something profitable without stretching to these insane designs. There are developers that stay sitting on undeveloped land for years because they can't make it work. If it was just about less profit vs more profit would they not still build it? It's not like sitting on undeveloped land is a cost-free scenario. Maybe I'm giving them too much benefit of the doubt but I do see our massive gap in trades workers, high interest rates, expensive materials and I'm like...yeah, I could see how there's possibly thin margins here. If they build a new tower full of stupid floor plans but it still sells out, feels like that's on the buyers to me. This is what regulations are for eh.
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Apr 25, 2024 13:57
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Femtosecond posted:Do you think there's anything that could be done to fix this and make Canada a better investment environment for VCs? Just thinking about how it seems like even the current system is broken, with existing Canadian tax rates being higher than the American ones. And already it's well known that America is a better place for a startup to be to raise money than Canada. Canada is just a tiny market, taxes are not a major component of the VC differences between the countries, IMO.
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Apr 25, 2024 14:05
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Fidelitious posted:If they build a new tower full of stupid floor plans but it still sells out, feels like that's on the buyers to me. This is what regulations are for eh. Do you also think people are homeless because they want to be? I don't think tiny apartments are a revealed preference if that is all that is available and people need a place to live. I think it is always worth mentioning that the best we can say about any purchase is that people show preferences among what is available, not their preferences, when they have to buy something.
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Apr 25, 2024 14:43
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