Originally Posted by
SBQ
As comparing to other countries, tax is everything. Especially in places like Canada where the SMALL investor can invest 100% tax free. For eg. RRSP, RESP, & RDSP offer the ability for the holdings to be sold 100% tax free. All these 'registered' accounts compound returns year after year tax free. RESP (education savings plan) the Cdn gov't matches contribution amounts and when the person is ready for uni education, they can sell the portfolio 100% tax free without having to repay the matching grants. Likewise with RDSP (disability savings plan). And then you have the TFSA (Tax Free Savings Account) where every Cdn resident over 18 can invest $6K (current contribution limit) per year (and the contribution amounts you miss in the pass can be added towards future years) ; ALL gains including dividends are 100% tax free. The USA has similar programs for investment that allow the small investor to be 100% tax free. But for the most compelling benefit for the investor in Canada (and likewise in the US), is they can structure their tax at retirement age to be at the low end of the income by selling the shares when they want to. As I explained before, in NZ you don't have any distinction on tax paid on shareholder income if the person is over $100K salary / wage income or $20K /year, because the income / gains from share investments can not be controlled ; much like dividends, when the board issues dividends it's beyond the control of the shareholder that may be stuck at the high end of the tax bracket. In NZ, the whole idea of deferring tax is alien like to the accountants I speak to but the reasons are clear. Who would not want to pay tax at a lower rate on their investments at a future date when their working income can be low or zero at retirement?