Tax Avoidance, Financial Stress & Well Being

Earlier this month, Statistics Canada published a report titled Stretching the Loonie: a time series analysis of financial difficulty and quality of life. The report is based on a nation-wide survey and the results are concerning. They reveal a serious trend and it is possible this is contributing to the late filing trend we are seeing this tax season.

Despite a hack at CRA, which shut down its site for applicants of various pandemic relief programs, Period 5 Canada Emergency Wage Subsidy (CEWS) applications can now be accessed.  This newly extended program also marks the beginning of new eligibility requirements. There is now a sliding revenue test, eliminating the requirement for a minimum 30% drop. In addition, a special top-up subsidy is available to some employers.  Following are details to consider:

Close to 2 million people still need to file their tax returns for 2019 before September 30 to avoid late filing penalties if they owe.  That means there is still an “end of tax season” rush coming for busy tax professionals. CRA released tax filing and processing statistics on August 10 which also show the numbers for average refunds and balances due for the 2019 tax year. That the average refund for 2019 was $1840 and the average balance due is $6,070. 

As Canadians face the prospect of higher spikes in COVID cases this fall, the financial fallout will be grim for millions who also face the loss of CERB and other safety nets that were available in the first wave of the pandemic. There are seven basic strategies advisors and clients can discuss now in anticipation of a 2020 tax year dominated by pandemic stress and a 2021 that may be characterized by more debt, and more tax audit potential:

Join some of Canada's leading Real Wealth Managers™ for a discussion about wealth preservation in these very uncertain times. It’s a  free virtual, national conversation that brings together advisors from the tax, bookkeeping, insurance, financial planning and legal communities to discuss true-to-life issues that require inter-advisory collaboration. Details below.

Michael Flux, Executive Vice President and Portfolio Manager at Connor, Clark & Lunn Private Capital Ltd. helps high net worth families and foundations reach their long-term financial goals by providing pension-calibre investment solutions. “My aspirational goal in life,” says Mike, “is to leave much good behind.”  He has recently enhanced his education to earn the MFA-P™ designation to help him in that quest.

Last month’s Knowledge Bureau Poll brought a surprising result from tax and financial professionals: 52% thought the extension of the Canada Emergency Response Benefit was a mistake. The 48% who agreed were more prolific in their comments, however. Here’s what you said: