Claiming Medical Expenses: Free Healthcare?

Free Health Care? Did you know that Canadians spend on average more than $1,000 on medical expenses each year? It’s estimated that government programs, via our taxes, cover about 72% of medical expenses, which means that we pay for the rest. Your clients may be over-paying on their taxes because they don’t know about medical expense deductions. 

Oct. 1 was National Seniors Day in Canada and the treatment of Canada's seniors is on the mind of Diana Juricevic, a member of the British Columbia Human Rights Tribunal and a speaker at this year's Distinguished Advisor Conference.

Knowledge Bureau Report readers do not dispute the value of education; it is the future - for our children and our country. And most agree that affordable post-secondary education is important if we are to have a world-class workforce and a vibrant economy. But not all agree Canada's overburdened taxpayer should bear the cost.

As part of its election platform, Quebec's Parti Quebecois promised to eliminate the $200-a-person health tax for 2012. Now, in an attempt to recoup lost revenue, the newly elected minority government has proposed a number of changes.

Are you using your operating line of credit to buy the kids a big-screen TV? Are you also using it to fund your investment activities? Come tax-filing time, this may be a problem. The cost of borrowing to invest is a legitimate income-tax deduction. The cost of financing the purchase of a TV, however, is not. So, if you want to deduct the interest paid on your line of credit as a carrying charge, you will need to keep your borrowings separate and traceable. The onus, then, is on you to establish that the borrowed funds are being used for the purposes of earning income ó from a business (this is claimed on a business statement) or from an investment in property, real or financial (claim on your Rental Property statement or on Schedule 4 ñ Statement of Investment Income).  The Canada Revenue Agency (CRA) will want to see a direct link between your borrowing and the resulting earnings, although there are some exceptions to this rule. Remember that interest is not deductible if the loan is used to acquire a life insurance policy or property that produces tax-exempt income, or if you borrow to contribute to a registered retirement savings plan (RRSP), a registered education savings plan (RESP), a registered disability savings plan (RDSP) or a Tax-Free Savings Account (TFSA). If you borrowed to buy securities ó such as common shares or mutual funds ó for your non-registered account, you face another hurdle. Because common shares or mutual funds generally do not carry a stated interest or dividend payment, the interest costs on the loan may not be deductible. The CRA will generally allow you to deduct interest costs on funds borrowed to buy common shares if there is a reasonable expectation that those shares will pay dividends, whether or not they are actually do. But each case will be assessed individually upon audit. You should also know that if the source of the income for which you borrowed no longer exists or has substantially diminished because the investment has lost significant value, you will be able to continue writing off the interest on the loan as if the underlying asset still existed. It's Your Money. Your Life. If you must be in debt, make sure the money you borrow is put to work to earn income and your interest payments are clearly traceable. That way those costs will be tax deductible. It makes those interest payments a bit easier to swallow. Evelyn Jacks is president of Knowledge Bureau, whose curriculum includes wealth-management and income tax-preparation courses. You can also offer Knowledge Bureau financial education books to your clients or family members. For more information, click here.   Additional Educational Resources: Introduction to Personal Tax Services Preparation and Advanced Tax Prepararation and Research.  

Knowledge Bureau Report readers do not dispute the value of education; it is the future ó for our children and our country. And most agree that affordable post-secondary education is important if we are to have a world-class workforce and a vibrant economy. But not all agree Canada's overburdened taxpayer should bear the cost. KBR's September poll noted that the pressure to increase university tuitions is growing if universities are to meet the cost of infrastructure and curriculum improvement. That would make university educations inaccessible for lower-income families. So, the poll asked, "Should university tuitions remain low in order to accommodate all students?î Of the 129 readers who responded, a resounding 71% agreed university tuitions should remain low and accessible for lower-income families. But even among the 29% who voted "No,î their aim was not to deny lower-income families access to education but to find creative solutions to the growing cost of education. Judging by the more than 70 comments left on the Knowledge Bureau website, readers link education and prosperity, both at an individual level and a national level. As Larry said: "Higher education leads to prosperity for our nation.î And whether they are in the "Yesî camp or the "Noî camp, readers believe no one should be denied an education because they don't have the money. As accounting professional Trenholme Lodge says: "Education is the country's future and should be available to all at a low cost. This country needs this approach.î Zafar agrees: "We need an educated Canada and post-secondary education must be accessible by the poor.î Adds another reader: "Of all the things that our governments waste money on, education is not one of them. We need all children to be able to receive a good education and not have the barriers of high tuition costs keep them from pursuing their dreams.î No one disagrees with that sentiment; the greater concern is how we, as a society, pay the growing cost of post-secondary education. "The taxpayers can only afford so much,î says a reader from the "Noî camp, "and we already do subsidize post-secondary education.î As Beatrice Grant put it: "We live in a world today that cannot continue to subsidize and put governments in the red. We have to pay as we go along ó and this goes for students in university.î Some readers suggested that one answer is to cut administrative costs, and some perceived professors are paid too much while some believe that if we want to attract top-notch professors, universities need to pay them more. Many believe there should be more merit-based scholarships and grants that will help students shoulder the cost of a university education. And some mentioned the value of programs that blend paid work and university attendance. Another solution, said other readers: make student loans more accessible by raising the family-income ceiling for loans and by lowering the amount of interest changed on the loans. Dave McGruer suggested something more radical: "Universities should be cut loose from government controls so they can flourish on merit and in economic reality. Competition will ensure quality and allow for different cost models to flourish.î Whether education is free or low-cost, readers agree it should be universally accessible. The quandary is just how to deliver high-quality education that is affordable. Knowledge Bureau Report would like to thank all the readers who responded to the September poll. We look forward to your comments to our October poll.   Additional Educational Resources: The Smart, Savvy Young Consumer and Financial Recovery in a Fragile World books.  

Oct. 1 was National Seniors Day in Canada and the treatment of Canada's seniors is on the mind of Diana Juricevic,  a member of the British Columbia Human Rights Tribunal and a speaker at this year's Distinguished Advisor Conference. Elder abuse ó be it physical or financial ó is a human rights issue for a number of reasons, says the Ontario native. "One, seniors are entitled to respect,î Juricevic explains. "Also, seniors have the right to live in safety and security and, thirdly, seniors have the right to be free from economic and financial abuse. Their money and property belong to them ó not to their families or administrators.î Juricevic has spent a career thinking about human rights and how those rights can best be safeguarded. A lawyer by profession, she was a member of the defense team for General Ante Gotovina, who was being tried in the International Criminal Tribunal for the former Yugoslavia. In 2010, she worked in the Extraordinary Courts of Cambodia as it dealt with the atrocities committed by the Khmer Rouge in the later part of the 1970s. Now in Vancouver as part of B.C.'s Human Rights Tribunal, she sees cases of elder abuse ó and it raises concerns. Certainly, there is a growing awareness of elder abuse ó and for good reason. According to Statistics Canada's report The Canadian Population in 2011: Age and Sex, the number of seniors in Canada is increasing. From 2006 to 2011, says the report, the number of seniors aged 65 and over increased 14.1% to close to 5million. In 2011, seniors accounted for 14.8% of the population, up from 13.7% five years earlier ó a record high. But growing even faster is the number of Canadians aged 60-65. In that time period, their numbers increased by 29.1%. Says the report: "This suggests that population aging will accelerate in Canada in the coming years, as the large baby boom generation, those born between 1946 and 1965, reaches 65 years old.î There are indications that incidence of elder abuse is growing in tandem with the aging population. Another StatsCan report, Family violence in Canada: A statistical profile, 2010, notes that, compared to other age groups, seniors are at the lowest risk of violence ó but that doesn't make them free of violence. "Overall,î says the report, "seniors were most at risk from friends or acquaintances (73 victims per 100,000 seniors), followed by family members (61 victims per 100,000) and strangers (51 victims per 100,000). Grown children were most often identified as the perpetrator of family violence against seniors.î Financial abuse is also growing. "Financial abuse occurs whenever someone gains financial benefit at the expense of an older adult without his or her consent or lawful authority,î explains Juricevic. "This may include failing to use the assets of an older adult to support his or her own welfare, as well as other ways of misappropriating money or property.î At this year's Distinguished Advisor Conference, "Navigation: Charting a New Courseî ó to be held Nov. 11-14 in Naples, Fla. ó Juricevic will discuss the signs of elder abuse, as well as other human rights violations, and suggest strategies advisors can use in their practices when working with vulnerable groups. She takes to the stage Tuesday, Nov. 13. "Everyone has the right to live with dignity and respect in Canada,î she concludes. "We have a responsibility to ensure that all Canadians can benefit from the services that are available in our country ó and especially our seniors and those who are most vulnerable in our society.î