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. 

Given the current economic environment, it's a good time to monitor interest rates. The Bank of Canada recently released its 2012 schedule of eight dates for announcing decisions on its key policy interest rate and confirmed the announcement dates for the remainder of this year. The announcement dates from September 2011 through December 2012 are: Wednesday, 7 September 2011Tuesday, 25 October 2011Tuesday, 6 December 2011 Tuesday, 17 January 2012Thursday, 8 March 2012Tuesday, 17 April 2012Tuesday, 5 June 2012Tuesday, 17 July 2012Wednesday, 5 September 2012Tuesday, 23 October 2012Tuesday, 4 December 2012 The recent market volatility is sure to put interest rate increases in focus - stay tuned for updates from the Bank of Canada as the situation unfolds. ADDITIONAL EDUCATIONAL RESOURCES: The Smart Savvy Young Consumer  

Voter turnout numbers for the HST Referendum in British Columbia are expected to be announced this week, with the outcome disclosed at the end of August or early September. What are the issues in this debate? According to the Government of B.C., the province's households have seen an average annual increase in sales tax of $350 on most of their day-to-day expenditures as a result of the HST. However, families earning less than $10,000 annually have had a net gain as result of the B.C. HST Tax Credit. The province has increased the basic personal exemption for all British Columbians and will lower the HST rate from 12% to 10% by 2014 if the voters decide to keep it. There are pros and cons for businesses when it comes to the HST. It should be a simpler system than the old GST/Provincial tax regime. Lower prices on supplies should be the result of the new tax but that is not always the case. Enterprises dealing in high-end goods and services such as home renovations have reported that the higher sales tax can be a deterrent for sales. If the province retains the HST it will postpone the planned small business tax rate cut and increase the corporate tax rate from 10 to 12%. Alan Rowell, DFA-Tax Services Specialist from Stoney Creek, ON, where the HST is alive and well, weighs in with this comment: "On the surface this may appear to be six of one and half a dozen of the other; however, other issues do come into play in this referendum. With HST legislation, input tax credits received by suppliers will reduce operating and supply costs to businesses which should, by virtue of competition, result in cost savings being passed on to consumers.î Anticipated increased corporate taxes in conjunction with the proposed elimination of HSTand return of PST rates will increase the cost of operating a business. That's worrisome, says Mr. Rowell, as it could ultimately affect employment in B.C., given the current economic storm. For detailed information on the HST in British Columbia check out the provincial website: HST in BC. An opposing view can be found here. ADDITIONAL EDUCATIONAL RESOURCES: Make Sure It's Deductible

Starting in 2014, the U.S. Internal Revenue Service will require foreign financial institutions to identify all accounts held by Americans, and this means that many Canadian banks and brokers will need tobegin documenting customers withties to the U.S. The United States requires its citizens to report their worldwide income to the IRS every year no matter where they live, as their tax system is based on citizenship, not residence as it is here in Canada. Those who have filed in Canada will be in better shape than those who don't on both fronts: with CRA and the IRS, which gives credit for taxes paid in Canada. However, the IRS will penalize those who have not filed; and frankly, Canada will too, if money is owed. If you have not filed in Canada it's best to see a qualified tax practitioner now to make a voluntary disclosure and file under our Taxpayer Relief Provisionswhen applicable. If you are a U.S. citizen living in Canada you are required to file both U.S. and Canadian tax returns. The IRS Voluntary Offshore Disclosure Program offers reduced penalties for delinquent U.S. tax citizens when they file their outstanding tax returns from 2003-2010. This program expires on August 31st, so check now with a U.S. tax specialist for assistance in completing your U.S. tax filing obligations. ADDITIONAL EDUCATIONAL RESOURCES: Essential Tax Facts 2012

Need some good news on debt ratings? Moody's Investor Services is renewing Canada's debt rating at AAA--the highest possible, due to our high degree of economic resiliency, efforts by Ottawa and the provinces to deal with their debt ratios over the coming years, as well as other factors. In addition, Moody's says the state of Canada's housing market and Quebec's sovereignty issues do pose some risk, but the risks are low. The full report "Credit Analysis Canadaî is available at www.moodys.com. Further, the G7 Finance Ministers and the Central Bank governors of those G-7 nations, have reaffirmed a shared interest in a strong and stable international financial system, including market-determined exchange rates, and to consult closely and cooperate as appropriate on the volatility in the exchange markets Over the next few issues of KBR we will focus on some concrete steps advisors and their clients can focus on in the meantime to calm jitters.  ADDITIONAL EDUCATIONAL RESOURCES: Debt and Cash Flow Management

Many 50-something parents may not find this particularly surprising, but sometimes validation is gratifying. Stats Canada has found that, at ages 20 to 29, members of Generation Y (born between 1981 and 1990) were more likely to be in school and at home with their parents than their counterparts in the Baby Boom and X generations. This will have implications on pension accumulations (CPP and private) and pension vesting later in life for this generation. Here are the statistics: At age 20-29, 31% of members of Generation X (born between 1969 and 1978) lived at home with their parents as compared to 51% of Generation Y. At the same age, 29% of Generation X members had children, compared to 19% of Generation Y. So, if Generation Y is just getting on its feet at age 30 or so, what does this mean for them and their parents? Lifestyle choice is paramount ñ the days of overextended credit to fuel lavish spending should be over for everyone, especially when the time horizon for asset accumulation has been shortened for Generation Y, and pre-retirement saving opportunities for their parents have been diminished due to other financial demands.   But possibly the most important long term issue for Generation Y is this: retirement planning begins with the first dollar saved, the subject of Evelyn Jacks' blog this week.  Financial education and the implementation of a savings strategy is of great importance to both generations ñ with shorter time horizons, everybody will have to make sure that they get it right sooner rather than later to benefit from tax efficient compounding and expected higher interest rates on the horizon! BLOG: RETIREMENT PLANNING STARTS WITH DOLLAR ONE ADDITIONAL EDUCATIONAL RESOURCES: Debt and Cash Flow Management

Minister of State (Finance) Ted Menzies launched a summer tour in Toronto on July 18th to discuss Pooled Registered Pension Plans with stakeholders and the public.  He will be meeting with provincial and territorial finance ministers to prepare to discuss PRPPs at the next Finance Ministers' meeting scheduled for December, 2011. So far, media availability has been scheduled at small business locations in Fredericton on July 19th and in Halifax on July 20th. "PRPPs will play a critical role in improving the range of retirement savings options available to Canadians by providing a low-cost retirement savings opportunity for employees as well as the self-employed,î said Minister Menzies. "This is especially important for small business and its employees who will now have access to a private pension plan for the very first time.î It is well known that many Canadians are not able to save enough for retirement. Pooled Registered Pension Plans are being developed to allow employers to offer a low cost, flexible savings vehicle that may encourage regular retirement contributions. Self-employed individuals will be able to take part too. This initiative is especially targeted at the 20-40 demographic, who still have many years in which to build a retirement nest egg. The consultation process will fill in the framework for PRPPs that was announced by the federal government last December. There are many financial experts who would rather see the Canada Pension Plan expanded than a new savings plan put into place. The federal government has not ruled out further changes to the CPP. However, it is hoped that once the details of Pooled Registered Pension Plans are established they will be seen to be a welcome addition to the retirement vehicles currently available, offering the benefits of pension plans to a wider group of working Canadians. According to the Framework for Pooled Registered Pension Plans announced in December, 2010, "A PRPP will be subject to most of the existing rules applying to defined contribution RPPs (referred to as money purchase RPPs in the tax rules), but with some exceptions as well as new requirements to deal with its broad-based nature.î The benefits of pension splitting, access to the pension amount before the age of 65, ease of portability between employers and a low fee structure would be welcome news indeed! ADDITIONAL EDUCATIONAL RESOURCES: Master Your Real Wealth