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As shocking as this may sound, I don’t know the answer to every question readers send in. Sometimes, I have to reach out for help.

Thanks to Jamie Golombek, managing director of tax and estate planning with Canadian Imperial Bank of Commerce, for lending a hand this week. I’ve condensed and edited his answers for clarity.

How much income can a university student in Ontario make before paying tax? Also, are tuition and other education expenses a deduction?

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An Ontario university student can take advantage of the basic personal amount, which for 2018 federally is $11,809 and in Ontario is $10,354. So, an Ontario student with income below $10,354 would pay no tax either federally or provincially. Tuition fees provide for a non-refundable federal tax credit and, in many provinces, a separate provincial credit. In Ontario, however, the provincial credit for tuition was eliminated for fees paid after Sept. 4, 2017. As a result, if an Ontario student with $6,500 of tuition claimed the tuition credit and the basic personal amount, she could earn about $18,309 ($11,809 plus $6,500) of income before paying any federal tax but would pay about $400 in Ontario tax ($18,309 minus $10,354, multiplied by 5.05 per cent). (Note that, effective Jan. 1, 2017, the separate federal education and textbook tax credits were eliminated.)

If a surviving spouse inherits a deceased spouse’s tax-free savings account (TFSA), does this inherited TFSA continue to grow via dividends and capital gains so long as the inheritor survives?

If you designate your spouse as the “successor holder,” and assuming your spouse takes over your TFSA, the TFSA continues growing tax-free after your death. Your surviving spouse steps into your shoes and becomes the new TFSA holder.

If your spouse is designated as a “beneficiary” of your TFSA, instead of the successor holder, your spouse has until Dec. 31 of the year following the year of death to contribute any payments received out of your TFSA, up to the date of death value, into his or her own TFSA without affecting your spouse’s unused TFSA contribution room. The disadvantage here is that all income earned on the TFSA assets, as well as any increase in the fair market value of the TFSA's assets after death, from the date of death until the date the TFSA is paid out to the spouse beneficiary (or Dec. 31 of the year following death, if earlier) will be taxed as ordinary income to the beneficiary. That is why it is usually preferable to designate your spouse as a successor holder on your TFSA.

Assuming the surviving spouse also inherits a registered retirement income fund (RRIF) to add to a personal registered retirement savings plan (RRSP), spousal RRSP, non-registered investment account and TFSA, to minimize taxes, what would the optimal order of draw down be: RRIF, spousal RRSP, RRSP, TFSA, non-registered investment account?

It’s impossible to generalize here without knowing details such as the relative values of each account and the adjusted cost base of the non-registered securities, among other factors.

Generally, it may be prudent to draw just enough from the RRIF (above the required annual minimum) and RRSP to use all available non-refundable credits and perhaps to also bring the surviving spouse up to the top of the first tax bracket (in Ontario for 2018, that’s $43,000).

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Any excess cash needed for living expenses can then come from non-registered accounts so that the RRSP, RRIF and TFSA can continue to grow tax-deferred. Of course, this has to be balanced with the expected tax bill on death arising from the deemed disposition of the non-registered account and the income inclusion of the fair market value of the RRSP/RRIF, all of which must be reported on the terminal tax return for the year of death.

I have shares of a company that no longer trades. I would like to claim a capital loss on them. My discount broker advised me that I “hold some securities that may be subject to a Cease Trade Order (CTO). If you would like to remove them from your list of holdings, you may apply to gift each security to [the broker].” Should I do this?

If the shares are subject to a CTO, they can’t be easily sold. As a result, your broker is offering to let you transfer the shares by way of a gift to the broker, which would be considered a disposal at the fair market value (which could be zero). You could then claim a capital loss.

Note that for a company that has declared bankruptcy or a company that has ceased operations, is insolvent and it is reasonable to expect that the corporation will be dissolved or wound up, there is an election that can be made under the Income Tax Act where shares are treated as if they were disposed of for proceeds of zero.

The problem is that just because a CTO has been issued, it does not mean that the criteria for making the election have been satisfied. For instance, the shares may still have some value, or the company may still be carrying on operations. That’s why your broker’s solution seems to solve this problem. If you do not see the company rebounding, you may wish to take your broker up on its offer.

E-mail your questions to jheinzl@globeandmail.com.

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