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. 

We are fortunate to live in this great country, which allows us to participate freely in democracy.  All parties and their candidates are to be congratulated!  With a majority government, the people and government of Canada can put their focus on important things over the next four yearsñ families, jobs, health and security to name a few ñ without the distraction of an imminent election call.  One of the first items on the agenda may be a reintroduction of the federal budget, which died with the election call.A review of key provisions follows, some of which will be discussed at the Knowledge Bureau's Post-Election Tax and Economic Review, to be held in Winnipeg on Friday, May 6, Calgary on Monday. We can expect to see the reintroduction of tax measures such as the Children's Arts Credit, Family Caregiver Credit and the Volunteer Firefighters Credit. New initiatives announced during the election to take effect when the deficit is eliminated will almost certainly be included ñ look for the doubling of the TFSA limit and the Children's Fitness Amount, as well as a tax credit for adult fitness. Also announced during the election, the Family Tax Cut will allow up to $50,000 of household income to be shared by a couple with children under the age of 18. Changes to curtail tax avoidance using RRSPs, charitable donations, Individual Pension Plans and Employee Stock Options were introduced in the 2011 budget ñ no doubt they will reappear. Pooled Retirement Pension Plans ñ first unveiled in December, 2010 ñ may well be included with other measures to assist those saving for retirement. Easing of rules for RESP beneficiaries who are siblings, and further access to student loans and loan forgiveness, tuition and education credits will benefit students and young workers. Small business may see the temporry Hiring Credit reintroduced along with the extention of accelerated CCA rates for equipment and machinery. Some seniors could see their Guaranteed Income Supplement boosted and RDSP owners with shortened life expectancy can look for relief to early withdrawal rules. Financial literacy and consumer protection measures were highlighted in the March, 2011 budget - we hope to see that and even more opportunities for Canadians to engage in financial education.  Take a deep breath ñ there are sure to be lots of tax and financial changes ahead!   Join us at one of our VIP Breakfasts for a Post-Election Tax & Economic Overview.  

Around the world communities are grappling with record-setting natural disasters. The recent earthquake and tsunami in Japan, flooding in the North American mid-west and killer storms in the U.S. are recent examples. It is hard to imagine the disruption to daily routines endured by those who survived the devastation. Once the basics of survival are taken care of, how do victims of these events begin to deal with mundane tasks such as income tax filing? In Canada, there are Taxpayer Relief Provisions available to taxpayers affected by natural disasters. On April 28th, CRA announced that those who have been directly impacted by spring flooding or natural disasters outside of Canada, and those who are participating in relief efforts, may apply for taxpayer relief if they are unable to fulfill their income tax obligations by the May 2, 2011 deadline. Those who may have other deadlines, such as business owners and the self-employed, are included as well. Form RC4288, Request for Taxpayer Relief, should be submitted by anyone who is not able to complete tax requirements by his or her deadline. This may allow interest and/or penalties to be waived under appropriate circumstances. CRA encourages taxpayers to register for e-services so that they are able to access information and make payments online when it is difficult to physically access their financial institutions.   ADDITIONAL EDUCATIONAL RESOURCES:  Investment Strategies in Charitable Giving      

Evelyn Jacks, President of the Knowledge Bureau,   Cordially Invites You To   A VIP BREAKFAST                        Please Join Us For An Important Update on Current Issues:                                             Post-Election Tax & Economic Overview                                    Financial Literacy: Your Role as Financial Educator                          Including Strategy & Process in Your Strategic Education Plans                                             Knowledge Bureau CE Credits: 1 hour                                                     DATES & LOCATIONS       May 6th WINNIPEG 7:45-9:00 am Knowledge Bureau Offices ñ 187 St. Mary's Rd                          May 9th CALGARY 7:45-9:00 am The Petroleum Club                            May11th VANCOUVER 7:45-9:00 am Terminal City Club                                            May 18th TORONTO 7:45-9:00 am The National Club                   Our educational consultants will be available to discuss new options                                       for professional development only from:                                                      RSVP By May 4th, 2011                                            Suzanne@knowledgebureau.com                                                         (204) 953-4767

By this time next week we will know the outcome of the federal election on May 2, and the personal tax filing deadline, which occurs at midnight May 2nd, will have passed.  Most Canadians will have filed on time to avoid interest and penalties on balances due, and many will be adjusting prior filed returns for errors or omissions.  Last week, CRA released a revised T1ADJ form for those purposes.  However, the vast majority of taxpayers will be focused on a refund for the current year, so here are some tips to help you spend it wisely: 1. Leverage Your Tax Refund Resist the temptation to buy yet another flat-screen TV. Now is the time to make the commitment to your RRSP, your Tax Free Savings Account and paying down your consumer debt. But what comes first? This may be a question for tax advisors, financial advisors and their clients to review together. Your RRSP will reduce your net income, the figure used to determine the size of clawback to refundable tax credits like the Child Tax Benefit or GST Credit and social benefits like the Old Age Security or Employment Insurance. It will also increase non-refundable tax credits for 2012, based on net income: Age Amount, Spouse Amount and Medical Expenses to name a few. Only 6% of Canadians maximize their RRSP room each year. Find out what you missed out on by not making the contribution last year. Then find out just how effective your RRSP savings will be in helping you build wealth this year. 2. Catch up on late-filed returns. Whatever your reason for missing your tax filing deadline, again and again ó too busy, afraid you'll owe, too disorganized ó make it your plan to catch up, especially if the government owes you a refund.  It doesn't make sense to give the government an interest-free loan which could instead be working for you invested in a TFSA, RRSP or other savings account. Failing to file tax returns also causes other misses with your tax-efficient investment strategies: RRSP room is not calculated for the missed years, capital losses are not reported and refundable tax credits to which you are entitled languish for your attention in government coffers. 3. Know What's Coming. There is a lot we know about your tax advantages for the current tax year, 2011. For example, provincial budgets have recently been tabled in all provinces and territories, and we also know the federal tax brackets and rates, and the indexed amounts for non-refundable tax credits. In addition, the last federal budget introduced changes to tax law that were shelved for now, but it would not be surprising to see many of the provisions re-introduced in the future. As a minimum, do consider whether you can reduce withholding taxes as a result of your tax reporting in 2010, and in addition, review whether instalment payments will be necessary for the rest of 2011.  If not, you'll be able to invest the difference, or pay down debt, both of which would be to your fiscal advantage. For a post-tax season, post-election review of those provisions, do join the Knowledge Bureau in Winnipeg, Calgary, Vancouver and Toronto for a VIP breakfast event. For more information and to register, please see our KB Community page! ADDITIONAL EDUCATIONAL RESOURCES: Master Your Taxes  

Financial education is alive and well in two provinces ñManitoba and Quebec-- let's spread the word! On April 18th the Manitoba Securities Commission launched a financial literacy initiative targeted at women. Entitled I'm Worth It , this knowledge initiative features videos, stories, ideas and strategies for independent financial management that will help women to gain control of their finances. Materials are available in French and English and there is no cost. You go, Manitoba! In Quebec, the Autorité des marchés financiers announced $750,000 in funding on April 18th for projects through its Education and Good Governance Fund. These initiatives include funding for: Universities for course development, research and designing on-line financial education tools The Jamaican Canadian Community Women's League of Montreal for its Dollars Make Sense Leadership Project for youth Elementary school teachers for The ABCs of Finance, an on-line financial education learning and evaluation tool Schools and youth centres to continue and improve the Best Ads Awards, designed to teach 13-17 year olds critical thinking when it comes to advertising Rosemont College, a financial literacy institution that will be created to deliver financial training and education I'm Up to my Neck in Debt, a credit debt and awareness campaign that will be revised to focus on the 30-45 year old demographic ADDITIONAL EDUCATIONAL RESSOURCES: EverGreen Explanatory Notes

Did you know that between 1984 and 2009 Canadian real average household debt more than doubled? Mortgage debt accounts for most of this, and as interest rates decreased during that period, the household debt load increased. Things really took off in 2002 and we all know where things ended up in 2008 and 2009. Now, as we dust ourselves off and look around, it is important to reflect upon what we have learned, and to ask: Where is this heading? Consumer prices rose 3.3% during the 12 month period ending in March, 2011 ñ this is the largest increase since the year that ended in September, 2008. Food, energy, gasoline and clothing are some of the items that rose in price. A higher cost of living coupled with increasing interest rates is a distinct possibility in the not-so-distant future.  Canadians need to keep up-to-date on issues that may affect financial security.  Canadian Social Trends is published by Statistics Canada every 6 weeks. The latest edition, published April 21, 2011, contains some alarming date in the article Debt and Family Type in Canada. Surprisingly, increased household income as a result of women entering the workforce prompted more borrowing during the past 25 years. Between 1970 and 2009, real disposable household income rose by 37% and this allowed greater access to debt. There were other factors: consumerism, a hot housing market due to demand from the baby boomers, less stringent tests of creditworthiness, wild and wonderful financial products and government "hands offî policies for the financial sector. This produced the perfect environment for the "buy now, pay laterî generation and here we are, facing rising prices and on the cusp of an inevitable climb in interest rates. Stats Can used data from the 2009 Canadian Financial Capabilities Survey to analyze the types of households that are more likely to have problems with debt. The results of the survey show that, among households with debt, the average debt level is $119,000, and younger Canadians are more likely to have debt than older Canadians. Unattached individuals carry less debt than other households, perhaps because they are less likely to own a home and carry a mortgage. Indicators such as the debt-to-household income ratio, which rose from 93% to 148% from 1990 to 2009, are significant. Research indicates that if interest rates rise 3%, this ratio has to fall to 125-130% just to keep the interest payments on the debt stable.  In other words, pay down debt now, before interest rates rise, otherwise your payments are going to take a bigger chunk of your income. The total debt service ratio measures the ability of a household to pay off its debt. The Bank of Canada defines a high total debt service payment to be more than 40% of pretax household income. Dual parent households with children are just as likely as households led by lone parents to have a debt service ratio of 40% or more.  This is high - most banks use 30% or less to approve mortgages.  One financial emergency can cause a household to exceed the family budget and miss payments, losing ground that is difficult to regain. The conclusions? Family type is significant when looking at indicators such as debt to income ratio. However, households of all types struggle with debt as measured by debt-to-asset and total debt service ratios. What does this mean? No one is immune to indebtedness, and financial education should be directed at Canadians from all walks of life. ADDITIONAL EDUCATIONAL RESOURCES: Certificate of Achievement in Personal Finance