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. 

If you are an unincorporated small-business owner rushing to make your June 15 tax-filing deadline, or the shareholder of a corporation, you may be interested in several "red tapeî reduction initiatives the Canada Revenue Agency (CRA) has introduced. The goal is to make it easier for you to file to and communicate with the CRA using the "My Business Accountî portal. But remember: in the working partnership between you and the CRA, you still have important responsibilities, despite new online features. The secure "My Business Accountî portal features a new landing page which allows you to make online enquiries (the CRA will provide a written response within 10 days and it stands behind that promise), file GST/HST returns and make or transfer payments. As well, the CRA will provide detailed reports on corporate balances and allow you to calculate instalments and payroll deductions. Quebec-based consultant Christian Belanger ó who is giving a presentation at the Knowledge Bureau's Audit Defence Workshop at the National Club in Toronto on Monday, May 28,  ó says Canadian companies and their advisors should periodically review the possibility that money is lying idle in corporate tax instalment accounts. Belanger has written a guide to assist in the recovery of funds. The CRA's online enhancements will help businesses monitor possible overpayments. In the end, however, a successful relationship with CRA is all about the orderly retrieval of the documents supporting the numbers on your tax returns. From an audit perspective, the onus of proof is on you to ensure the hard facts match what's happening online. It is also up to you to ensure that you are paying the correct amount of taxes. In an electronic world, when the CRA requests an audit, the need to produce relevant backup documentation is immediate. The fact that we are doing so much more online muddies the retrieval procedures for some ó and makes reviewing your documentation storage and retrieval process crucial. Remember, there is a higher probability that business owners, commissioned salespeople claiming auto or other expenses, and taxpayers claiming discretionary expenditures such as childcare, moving expenses, donations or medical expenses will be audited. It's Your Money. Your Life. Convenient new online services for businesses will help the CRA streamline its business operations, improve review and response times, and save money. Be sure you understand the effect of these changes on your responsibilities as a taxpayer, to make sure it works in your favour, too. Evelyn Jacks is president of the Knowledge Bureau. Join us at the Audit Defence Workshop May 28 in Toronto, 29th in Winnipeg and 30th in Vancouver.  To enrol call 1-866-953-4769.

Knowledgeable and respected financial author Gordon Pape will take to the stage at the Distinguished Advisor Conference (DAC) in Naples, Florida, Nov. 11-14, 2012. On Monday, Nov. 12, Pape, the editor and publisher of the Internet Wealth Builder will examine the investment outlook for 2012-2013 and link macro economic trends to investment strategy. He will discuss the place for stocks, bonds, commodities and currencies in your portfolio and disclose his top picks for 2013. "[Pape] is arguably the best-known and best-selling business author in the country,î Quill and Quire magazine has said, "thanks primarily to a knack for delivering expert advice in a personal, plain-spoken way and an intuitiveness for what his readership wants.î Adds Knowledge Bureau President Evelyn Jacks: "Gordon brings to DAC an in-depth understanding of the current national and international situation as it relates to investing. What's more, his recommendations will be useful to advisors who are helping clients structure their portfolios.î Pape is also editor and publisher of The Income Investor and Mutual Funds Update. His best-selling books include The Ultimate TFSA Guide, 6 Steps to $1 Million, Get Control of Your Money and Retiring Wealthy in the 21st Century. He is a frequent guest on radio and television programs across Canada. To download the agenda of DAC, click here .  

No one is safe from fraud, it seems. The Canada Revenue Agency (CRA) is warning Canadians is be careful of emails, voice mails, even mail claiming to be from the CRA. These sophisticated and very believable "phishingî expeditions are after your personal information. It pays to be vigilant. So, what should you be watching for? Invariably, says the CRA, these communications claim to be offering a refund or a benefit payment. To get your cash, however, you need to identify yourself by giving your social insurance number (SIN) and provide credit card, bank account and passport numbers. The fraudsters seem to be well aware that when offered money ó especially from the CRA ó Canadians let down their guard. Another scam claims to be investigating accusations of tax evasion. Playing off taxpayers' fear of the CRA, an official-looking communication asks the recipient to go to the website via the provided link for more information. To "check in,î the recipient is asked personal information. (For examples of fraudulent communications, click here.) The CRA suggests that, when faced with any communication claiming to be from the CRA, you ask yourself the following questions: ï Am I expecting additional money from the CRA? ï Does this sound too good to be true? ï Is the requester asking for information I would not include with my tax return? ï Is the requester asking for information I know the CRA already has on file for me? ï How did the requester get my email address? ï Am I confident I know who is asking for the information? If you wish to verify the authenticity of a telephone number left on your voicemail, contact the CRA by using the telephone numbers listed on the CRA website. For business-related calls, contact 1-800-959-5525 and for individual concerns, contact 1-800-959-8281. It pays to be careful; don't be taken in by communications claiming to be from the CRA.   Additional Educational Resource: EverGreen Explanatory Notes  

The OECD is calling on the Bank of Canada to raise interest rates this fall with a target for the overnight rate of 2.25% by year end. Yet with household debt at an all-time high and more than one million Canadian families burdened with a debt-service ratio of more than 40%, higher interest rates will be costly ó making reducing debt a top priority. The Knowledge Bureau's Debt-Reduction Solutions Calculator can help you do just that. The first step in reducing debt is to assess the family's current cash flow situation and address the issue of spending.  Clearly, debt cannot be reduced if spending consistently exceeds income.  Deficit financing may have been the only solution in tough economic times when income levels dropped, but the long-term effects are devastating.  Financial health depends on finding a way to spend less than you earn. Once you have balanced spending vs income, it's important to develop a plan to reduce, then eliminate debt.  Even for families whose income exceeds expenses, debt service can be a financial drain on family wealth. So, you need a plan to eliminate "bad" debt, even if you are doing well financially. The Debt-Reduction Solutions Calculator, which is featured in the Debt and Cash Flow Management course helps advisors crunch the numbers for three debt-reduction options.  After cash flow has been tamed and you have determined a monthly amount to be used to service debt, the calculator shows the way to becoming debt-free using the following three strategies: Maximum mortgage payment - by using the full amount available for debt service to pay the mortgage, the debt can be eliminated in the shortest possible time. Fixed-term mortgage - by leaving some cash available for emergencies, you can eliminate the debt over a planned mortgage period. All-in-one account - for maximum flexibility, the all-in-one account allows the family to deposit all income into one account and use that account to pay expenses and the remainder each month to reduce family debt. Additional Educational Resources: Debt and Cash Flow Management and The One Financial Habit That Could Change Your Life.     

  When it comes to eroding your capital, there is no match for the expensive penalties you pay for failing to file your annual income tax return. But, on the bright side, if you file overdue returns before the Canada Revenue Agency (CRA) comes after you, you can avoid the big penalties. So, if you are delinquent, file your returns now ó and save money. The CRA has been proactively slapping penalties on delinquents of $1,000 for each missed return, be it personal, corporate or GST. A real estate agent in Ontario paid $2,000 for failing to file her 2007 and 2008 personal tax returns and ignoring CRA demand notices. A British Columbia couple was fined $12,000 for failing to file 2006 and 2007 personal returns; four tax returns for their numbered company, five corporate tax returns and a GST return for one year. A New Brunswick man was fined $8,000 for failing to file his 2008 and 2009 personal tax returns and several GST returns and failing to comply with a court order. Unfortunately, the tax pain won't end there if you have a balance due. The taxes will need to be paid along with hefty late filing penalties: First failure to file a return on time: 5% of the unpaid taxes owing plus 1% a month up to a maximum of 12 months from the filing due date; Subsequent failure to file on time within a three-year period: 10% of unpaid taxes plus 2% a month to a maximum of 20 months from filing due date. If you try to pull any tricks when filing those late returns, the penalties get bigger: Gross negligence penalties of 50% of taxes payable, minimum penalty of $100, if you knowingly or under circumstances amounting to gross negligence make a false statement or omission; Tax evasion penalties of up to 200% of taxes payable if the CRA can prove you intentionally cheated by understanding income or overstating deductions or credits. Jail time is a possibly, too. Interest, too, will compound daily at the prescribed rate, plus 4% on all the combined amounts due. And take note: even if you have a June 15 filing deadline for your unincorporated business, interest is due on balances as the interest clock starts ticking as of the April 30 deadline. It's Your Money. Your Life. Up-to-date tax preparation is the mandatory first step in your wealth-management plan. Avoid big penalties and minimize interest charges by filing your late returns now. Doing so before the CRA comes after you will preserve your wealth. Evelyn Jacks is president of Knowledge Bureau and has authored several of its tax courses and books.   Additional Educational Resource: DAW Audit Defence Workshops and Advanced Tax Preparation and Research course.  

The Canada Revenue Agency (CRA) and the Manitoba Vital Statistics Agency have teamed up to offer a convenient and secure way for Manitobans to apply for child benefit programs for their newborns. RC4476-MB or "Birth Registration and Canada Child Benefitsî explains the new program. After the mother ó who must be a Canadian citizen or permanent resident and primarily responsible for the care and upbringing of the child ó registers the child's birth with the province of Manitoba and gives her consent, the Manitoba Vital Statistics Agency will send the registration information over a secure communication network to the CRA. There is no need for separate communication with the CRA. The CRA will then determine eligibility for benefits, including the Canada Child Tax Benefit, the Universal Child Care Benefit, the GST/HST credit and any related provincial/territorial programs that the CRA administers. To register, you must: complete and sign the registration-of-birth form; consent to the Manitoba Vital Statistics Agency sharing your information with the CRA; provide your social insurance number. For more information, download RC4476-MB on the CRA website. The CRA also recently released various forms related to reporting GST: ï GST20 Election for GST/HST Reporting Period  provides the necessary form and explains how to change your GST reporting period. ï GST20-1 similarly provides the form for a listed financial institution to change its GST reporting period. ï Excise and GST/HST News, No. 84 brings together in one document all the measures related to GST/HST and excise tax proposed in the March 29 federal budget.   Additional Educational Resources: The Smart, Savvy Young Consumer,  One Financial Habit That Could Change Your Life and Introduction to Personal Tax Preparation Services.