Knowledge Bureau Poll: Tax Cut Doesn’t Cut It!

The Notice of Ways and Means Motion was released on May 27, but the 1% tax rate cut going into effect on July 1, didn’t cut it with Knowledge Bureau Report readers who responded to our May Poll.  A decisive 90% of respondents said “No” when asked: does the new government’s promise to cut the lowest personal income tax rate by 1% to 14%, (14.5% in 2025) go far enough to help Canadians impacted by high costs?  Here were their comments and suggested alternatives based on real life experiences with the after-tax income their struggling clients are left with:

Monday June 17 is the tax filing deadline for proprietors and many of them will owe money to the CRA. In fact, over  5.6 million returns filed as of May 27, 2019, had balances due averaging $5244. Three things must be managed if you owe: interest on late payments, potential offsets and adjustments, and your relationship with the collections office. 

The Department of Finance Canada and the CRA defines the principal function of the tax system as a means to “raise the revenues necessary to fund government expenditures.” Of course, it is not quite that simple, as the tax system is also used to achieve public policy objectives by administering preferential tax rates, exemptions, deductions, deferrals and tax credits. The question to be answered, post-tax filing season, is whether all taxpayers claimed their fair share.

The early bird registration deadline for the 2019 Distinguished Advisor Conference in Puerto Vallarta is coming up on June 15. Be sure to check out the outstanding guest speaker list who will address the theme: Powerful Competition: The Secret to Economic Resilience.

Statistics Canada estimates the deaths in 2017/2018 numbered 142,331, and every single one requires that a final return be prepared and filed. Estate and final returns can be accompanied by a costly tax bill, especially if the client has a significant estate, assets, or savings. That’s where a highly qualified tax specialist comes to the rescue of executors who are responsible for filing the final return of the deceased.

Seniors may be grappling with significant financial literacy challenges in retirement. According to a Statistics Canada study released on April 3, 2019, a greater number of seniors are in more debt than past generations, and one of the big reasons is mortgage debt. Together with higher taxes, “new” retirement income planning requires a close look at the net worth statement, followed closely with tax projections to maximize both income and savings.

The Canada Pension Plan (CPP) has earned an average return of 11.1% over the past ten years, and as of March 31, 2019, its value was $392 billion dollars. But, with longer life spans and the boomer generation retiring, will that be enough? Here’s a look ahead at how Canadians will fare as changes to the CPP program occur: