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It’s time once again to check the inbox and see what questions are on readers’ minds.


Q - I recently read an article with regards to a spinoff of Constellation Software (CSU-T). The company is called Topicus (TOI-X). It is currently trading close to its 52-week high, and from what I can decipher it’s very well-run and growing exponentially. I was hoping I could get your opinion on this company and what you see in the future for it. – Paul C.

A – Constellation Software is a very successful Canadian company so investors would naturally be interested in a related venture. Topicus was spun-off in early January 2021, with Constellation shareholders receiving 1.86 shares of the new company for each common share of Constellation they owned. Topicus immediately started trading on the Toronto Venture Exchange in the $60 range. The shares reached a high of about $136 in September of that year before pulling back. A year later, they were back around the $60 range. They are now at about $95. In short, the stock has been volatile.

The company is based in The Netherlands. It provides vertical market software and platforms to about 100,000 customers in 26 European countries.

The business is doing well. First quarter revenue was up 30 per cent year-over-year (organic growth was 8 per cent) to €264.4-million compared to €203.8-million in the same period of 2022. (One euro equals $1.47.) Net income increased to €21.1-million (€0.17 on a diluted per share basis) from €20.4-million (€0.14 per share) in the prior year.

Like its parent, Tropicus is growing by acquisition. The company spent €22.7-million in the quarter on new purchases.

Overall, this looks like a company with a bright future. It’s essentially trying to replicate Constellation’s success story in a European environment and, so far, is succeeding.

But – there’s always a but. At a trading price of $95, the p/e ratio is almost 96. That’s a high price to pay for future earnings that may or may not happen, especially considering that Europe is traditionally a slower growing economy than North America.

In sum, it’s an interesting company. But at this price it needs to be viewed as speculative. – G.P.

Royalty trusts

Q – Is it riskier to build a portfolio of royalty trusts, as opposed to dividend stocks? Why? – Filipe W.

A – It’s very difficult to build a diversified portfolio of royalty trusts, simply because there are very few of them. We have only a couple on my newsletter recommended lists: The Keg Royalties Income Fund (KEG.UN-T) and Richards Packaging Income Fund (RPI.UN-T).

Some mining companies use a royalties business model to generate income – Franco-Nevada (FNV-T) is an example) – but they are set up as corporations, not trusts.

Unless you want to include REITs (which really are not royalty trusts), there’s not much to choose from.

So, your question should really be: “Is it possible to build a diversified portfolio of royalty trusts”. The answer is no. – G.P.

GIS puzzle

Q – I’m a bit confused on what counts as income for guaranteed income supplement (GIS) calculations. Money Sense has an article that reads: “CPP, interest, and RRSP withdrawals are all counted dollar for dollar, so these items will cost you $0.50 per $1 received.”

How can this be? It’s impossible to be dollar for dollar and also $0.50 on the dollar. Which is correct?

Dividends will cost you $1.40 per dollar so should we avoid dividends? – Joe

A – Bureaucracy can be confusing at times, and this is an example. What it really means is that any income you receive from the sources you named (plus others like RRIFs, EI benefits, etc.) is included at the full amount in calculating your income for purposes of determining GIS eligibility. So, $1,000 worth of RRSP withdrawals adds $1,000 to your total income – dollar for dollar.

As for dividends, you have to use the grossed-up amount of any such payments in your calculations, which is where the $1.40 number comes from. That may not seem fair but it’s the law.

I should note that withdrawals from a Tax-Free Saving Account do not count as income for GIS purposes.

For every dollar you receive as income, your GIS eligibility is reduced by $0.50. That means if your total income from all qualified sources is $10,000, your GIS payments would be reduced by $5,000.

The maximum monthly GIS payment for a single person in 2023 is $1,026.96 but remember that will be reduced by $0.50 for every dollar of other income you receive. To qualify, a single person’s income cannot exceed $20,832. – G.P.

Return of capital

Q - I am able to calculate the ACB (adjusted cost base) when I add new stocks/ units. But how do I adjust the ACB for ROC (return of capital)? Does ROC decrease my book cost? Also, is a “distribution” different from ROC for taxation and ACB calculations? Thank you. – Stella

A - Distribution is the broad term that covers payments from an ETF, mutual fund, REIT, limited partnership, etc. For tax purposes, a distribution may be broken down into several components, including dividends, capital gains, interest, foreign income, and return of capital. These should be broken out on the reports you receive at tax time from your broker or the company that manages the security.

If a distribution includes return of capital, that amount should be deducted from your original cost to produce a new adjusted cost base. So, if you paid $10 for a security and you received $0.50 in ROC, your adjusted cost base will now be $9.50. This will increase your capital gain (or reduce a capital loss) when it comes time to sell the security.

If at any time the ACB drops below zero, the difference is taxed as a capital gain.

Finally, remember this only applies to non-registered accounts. You don’t need to worry about ACB in RRSPs, TFSAs, etc. – G.P.

RRIF withdrawals

Q - Is it always better to use the younger spouse’s age for a RRIF? My wife turns 71 this year, but I’m turning 67. I’ve been told varying things. – A.M.

A - Using the age of the younger spouse means the minimum withdrawals are less, which extends the life of the RRIF. The reduced income will also lower her tax bill and allow the RRIF savings more time for tax-sheltered compounding. I would certainly choose that option. It offers more flexibility, reduced tax liability, and she can always withdraw more than the minimum if needed. – G.P.

If you have a money question, send it to me at and write Globe Question on the subject line. I can’t promise a personal response, but I’ll answer as many questions as possible in this space.

Editor’s note: An earlier version incorrectly stated that any income you receive from Old Age Security is included as the full amount in calculating your income for purposes of determining GIS eligibility.

Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to

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