"Those who agree with us may not be right, but we admire their astuteness." Cullen Hightower
 

The Department of Finance has launched its budget consultations to protect the Canadian economy, and it is important for Canadians to participate, says best-selling author Evelyn Jacks, Founder and President of The Knowledge Bureau, who has submitted several recommendations to government. You can participate in two ways, by contacting the Department of Finance website or by answering our poll questions over the next few weeks.

“The time is ripe to reverse the “double trouble” Canadians faced in 2008,” says Mrs Jacks, a best-selling author who has just published her 42^nd book, Master Your Taxes. “Taxes now eat up almost 21% of average household budgets*, and even worse, Canadians are losing more and more control over the first dollars they earn as withholdings of deductions at source increase. If stimulation is required to keep a significant recession at bay, governments need to look seriously at tax erosion as a significant barrier for both consumers and savers.”

According to the Canada Revenue Agency, average refunds reached a record $1440 in 2007. “At approximately $120 a month, this represents a significant loss of control of personal funds to pay for consumer needs, let alone personal or retirement savings, which everyone knows have been seriously eroded by the financial meltdown of the past several months,” says Mrs. Jacks. “The problem with increasing tax burdens, however, is that they are harder to identify, because governments continue to over deduct taxes at source, thereby using your money first.”

And that trend is poised to continue into 2009, says Mrs. Jacks. “We know that premiums payable into the Canada Pension Plan (CPP) and Employment Insurance (EI) rise 3.4% and 2.9% respectively over 2008 levels. Even with an increase in the Basic Personal Amount to $10,100, Canadians who earn more than $42,000 will end up in a net loss position again in 2009.”

Canadians need to take a hard look at their largest eroder of wealth—the taxes they pay—by taking three actions in early 2009: “First, participate with your suggestions in the pre-budget consultations by visiting the Finance Canada website: http://www.fin.gc.ca/fin-eng.asp. Second, don't do it alone: learn how to take back control of the money you earn by asking better questions of your tax and financial advisors. Third, find out more specifically how to shave off tax dollars payable by digging for deductions and tax credits, filing returns as a family, participating in RRSP and TFSA savings opportunities and refusing to overpay governments with tax withholdings.

Taxes continue to be the largest expense item for Canadians, despite “tax-cuts” announced by various levels of governments. Statistics Canada confirmed in their report on family expenditures, released just before Christmas, that taxes, which increased of 6% over the year before to an average of $14,450 per household, consumed almost 21% of household budgets, costing average Canadian families more than housing and increased more significantly than the cost of living.

Evelyn Jacks is one of Canada's most prolific international authors, speakers, educational publisher and an award-winning entrepreneur, having written 42 books, including the new Master Your Taxes, and the annual Essential Tax Facts series (annual editions in 2005 to 2009), published by The Knowledge Bureau.

The Knowledge Bureau is a national post-secondary educational institute specializing in tax and personal finance courses and certificate training for professionals who practice real wealth management services for their clients.

For publicity or to arrange author interviews, please contact
Marion Trapp at 1-866-953-4769 or by email: marion@knowledgebureau.com

LATE YEAR ANNOUNCEMENTS IMPORTANT TO AMATEUR ATHLETES

Now available for investment purposes, the new Tax-Free Savings Account (TFSA) is a registered account in which investment earnings, including capital gains accumulate tax free. Taxpayers over the age of 17 may contribute up to $5,000 each year to such an account. If a taxpayer's contribution room is not used in one year it may be carried forward to the next year allowing for a larger contribution in that year.

Unlike the RRSP, contributions to a TSFA do not result in an income tax deduction and withdrawals from a TFSA are not reported as income nor will they be included in net income for any income-tested benefits, such as the Canada Child Tax Benefit or Goods and Services Tax Credit.

The CRA will establish contribution room for all taxpayers on the basis of income tax returns filed. Taxpayers who do not file for a number of years may establish their contribution room by filing those returns under the taxpayer relief provisions.

Manitoba is proposing legislation under their Retirement Plan Beneficiaries Act that will allow the designation of a TFSA beneficiary outside of a will so that probate fees that would normally apply can be avoided. Manitoba Finance has advised the designation of beneficiary can be made now, however, the designation will only have effect once the Federal legislation has received Royal Assent.  In the event the TFSA account holder passed away before the legislation was brought in and a designation of beneficiary had been made for TFSA assets which differed from the will, an executor may have difficulty determining who the asset should be distributed to.

For more tax tips, purchase a copy of Essential Tax Facts written by The Knowledge Bureau's President, Evelyn Jacks, to learn how to ace your 2008 tax return and save money all year long.

On December 16^th, 2008 Canada's Department of Finance and the U.S. Department of the Treasury each announced the entry into force of the fifth Protocol amending the Canada-U.S. Income Tax Convention (the "Treaty"). The 5^th Protocol was signed on September 21, 2007 and ratified by Canada in December 2007.

For a copy of the Protocol click here. 

For a copy of the Technical Explanation click here.

For a copy of the News Release issued by Canada's minister of Finance click here. 

NEW RRSP MAXIMUMS FOR 2009

MEAL AND VEHICLE RATES FOR 2008

An Opportunity For:

• Concerned Investors
• Better Informed Advisors
• Innovative Financial Services Companies