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. 

" People are getting older, and many will lose legal capacity. Make sure all of your clientsí- and their parentsí planning documents are in place. You will expand your market and grow your book - and make your clientsí lives much easier - by making this part of your regular client process."   David Christianson, speaking at the 2009 Distinguished Advisor Conference in Tucson, Arizona By David Christianson, BA, RFP, CFP, TEP The Need:<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com🏢office" />   The majority of advisorsí clients are boomers, whose parents are aging.  As well, many advisors have a clientele made up increasingly of older, retired people for whom estate planning issues are becoming more and more important.   The passing of an expected trillion dollars of estate assets over the next 20 years has been well documented.  What has been largely ignored, however, are the issues of incapacity and diminished capacity planning.  Few advisors have either a plan or experience in dealing with substitute decision makers (SDMs), and these parties ñ family members acting as attorneys or committees ñ may be similarly unprepared for their tasks.  They need the leadership and the help of advisors who are properly trained and prepared.   Two million Canadians are caring for older relatives and by 2031, one in four Canadians will be over the age of 65.   The Risk:   Failure to prepare properly for the incapacity of clients can have the following negative effects: Severe disruption and impairment to the lifestyle enjoyed by the client; Compromise to the level of care potentially available; Great stress for the family and often conflict between family members; Significant loss of assets under management for the advisor; Exposure to legal proceedings against SDM and/or advisor, if proper protocols are not followed. Join us in the next edition of Breaking Tax and Investment News for opportunities and processes to ensure a smooth transition for your clients with estate planning issues.   David Christianson is a Knowledge Bureau faculty member.

CRA has once again provided us with the lowest prescribed rates in recent history - a 1% rate for certain taxable benefits and loans has been in place since April 2009.  This is a great opportunity to use low-taxed corporate dollars to fund family income splitting, the purchase of new vehicles, new investments or to fund employer-required moves. Advisors should also consider speaking to their clients about opportunities for inter-spousal and shareholder loans with the low rates in effect.   The Canada Revenue Agency announced the prescribed annual interest rates that will apply to any amounts owed to the CRA and to any amounts the CRA owes to individuals and corporations. These rates are calculated quarterly in accordance with applicable legislation and will be in effect from January 1, 2010, to March 31, 2010 and have remained unchanged since April 1, 2009. Income tax The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance Premiums will be 5%. The interest rate paid on overpayments will be 3%. The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 1%. Other taxes The interest rate on overdue and overpaid remittances for the following taxes will be: Tax and Duty Overdue remittances Overpaid remittances GST 5% 3% HST 5% 3% Air Travellers Security Charge 5% 3% Excise Tax (non GST) 5% 3% Excise Duty (except Brewer Licensees) 5% 3% Excise Duty (Brewer Licensees) 3% N/A Softwood Lumber Products Export Charge 5% 3%   <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com🏢office" />  Educational Resource: For more information on tax planning provisions and compliance requirements subscribe to The Knowledge Bureau's online tax reference for taxpayers, financial advisors and their clients: EverGreen Explanatory Notes.  

"An opportunity exists to blend the unique benefits of a family business with the strengths of a market driven business, providing the basis for greater wealth creation for the family over a longer period of time."   Jenifer Bartman, speaking at the 2009 Distinguished Advisor Conference in Tucson, Arizona By Jenifer Bartman, CA, CMC   Small to medium sized businesses make up a significant portion of Canada's business community and account for a large portion of the country's economic activity. Most people either know someone who runs a business, owns a business, or may be a business owner themselves. People may be employed by a business that is owned and/or managed by an independent group of parties, or perhaps it is owned by an individual or family. Sometimes businesses start off as closely held family businesses that later become more widely held, perhaps by parties including the original owners, or even by parties independent of the founder. Some businesses stay small; some grow moderately, while others grow to become very large businesses, even with operations spanning a number of countries. Some businesses operate for a period of time, experience moderate growth, and then fade into decline. Others, sadly, are wound up and no longer exist, often when the owner retires. Performance, profitability, and value can vary significantly from business to business, with some companies being sought after by customers, partners, and potential acquirers. Others go virtually unnoticed. Why do some businesses become the recognized name or ìprovider of choiceî within their industry, while others fall to ìcommodityî status? Why do some companies remain strong throughout the years, perhaps even over generations, while others flounder when the original driving forces behind the business are no longer involved? Consider the following: Some family businesses exist solely to meet the economic needs of the family unit. The founder generates business within his or her network and does not have any significant initiative to grow beyond this point, so long as the family's economic needs are met. This type of business can be referred to as a Lifestyle Family Business. Some family businesses are opportunity driven, in that the founder wishes to identify unmet needs or areas of potential within the marketplace and seek to position the business to meet and benefit from these needs. The founder is motivated to grow the business beyond the current economic needs of the family and may be driven by factors other than basic economic need, such as being the best provider in their industry. This type of business can be referred to as a Market Driven Family Business. Many family business leaders have never considered their business in this context, including the risks and rewards associated with each category. The challenge is attaining Market Driven Family Business status, and understanding what is required to successfully operate at this level. Jenifer Bartman is a Knowledge Bureau faculty member and is a co-author of MASTER Your Investment in the Family Business ñ How to Increase After-Tax Wealth.

Taxpayers might benefit twice by filing missed returns by year endóonce to ensure tax year 1999 doesn't fall off the boards because of the 10-year statute of limitations enforced by CRA for such voluntary compliance under the Taxpayer Relief Provisions. But those who file late and owe can also avoid expensive late filing penalties. Based on what The Knowledge Bureau heard from professionals on its recent Distinguished Advisor Regional Workshop Tour, there are plenty of late filers out there. This is never a good idea especially when CRA owes you money, as you have continued to give the government an interest free loan. Worse, however, is when you owe them; and yes, they will be charging you interestócompounded dailyóand more.  And remember, a return should be filed every year in order to accumulate TFSA contribution room and Registered Retirement Savings Plan room. Voluntary compliance can really pay off when you help a client to file a tax return to clear up their guilty conscience. CRA will not charge penalties if they are told about tax indiscretions before they uncover them ó and there are specific penalties that apply if you are a chronic late filer. There are several layers of penalties that can be invoked including interest, compounded daily, at the prescribed rate of interest, plus 4%. Those kinds of penalties can be downright painful! File 1999 Return Before December 31 To comply voluntarily, tax advisors should remind their clients to see them before year end for details regarding all under-reported income, over-reported deductions or credits and file form T1ADJ to correct errors or omissions. Remember, tax filing year 1999 will be statute barred after the end of this year, so if CRA owes a client a refund, it will be lost if it is not claimed in December. In fact, this could all turn out well if you hurryóan unexpected refund from an adjustment or late filed return could help your client with the credit card payments in January! Non-Compliance Penalties Late filing penalties ófirst time: 5% of unpaid tax plus 1% per month for 12 months; second time within a three year period after demand to file: 10% plus 2% per month for 20 months Failure to file a return ófor each such failure, the greater of $100 and the product obtained when $25 is multiplied by the number of days, not exceeding 100 during which the failure to file continues. Late or insufficient instalments ó 50% of interest payable exceeding $1,000 or 25% of interest payable if no instalments were made, whichever is greater. Failure to deduct or remit source deductions ó1 to 3 days: 3% penalty; 4or 5 days: 5% penalty; 6 or 7 days: 7% penalty; more than 7 days: 10% penalty Second such failure in same year if grossly negligent ó 20% of amount not withheld or remitted. To learn more about preparing T1 tax returns, register for Introduction to  Personal Tax Preparation Services or call 1.866.953.4769 today to make an appointment for your free professional development consultation.

Christmas brides and grooms take heed - there may be no tax benefits to marriage before year end, but that may not be a good enough reason to postpone the big day!  Conjugal relationshipsólegal or common lawórequire the combining, reporting, and sharing of financial resources under provincial marital property laws and for certain provisions of the Income Tax Act.   Here's what you need to know about the tax status of your relationships: ï Check ìmarriedî on your tax return if you are legally married, whether you are a heterosexual or same sex couple. ï Check ìcommon lawî if you have lived together with your partner for a continuous period of 12 months or if at December 31 you were parents of a natural or adoptive child together. Common law couples are treated like married couples for tax purposes. ï Check ìseparatedî if you have been apart for a period of 90 days or more, or you have a written separation agreement. ï Check ìdivorcedî if you have dissolved your marriage with a court order or decree. ï Check ìwidowedî if you lost your spouse or common-law partner to death during the year. These various conjugal relationships affect the filing of tax returns ­significantly, for example: ï They can increase or decrease your monthly cash intake from Child Tax Benefits. ï Maximize your opportunities to contribute to investments like RRSPs. ï They can help you maximize the use of each family member's ­personal ìtax-free zonesî by transferring certain credits between spouses, or win on pension income splitting if you are a couple receiving benefits from one partner's company pension plan. ï They can also restrict you to having just one tax exempt personal residence for your family unit. In terms of the tax preparation process, this requires a family focus, rather than individual, for the best tax advantages for the family unit as a whole, and understand that the family that files tax returns together wins more in tax savings. Mastering your taxes as a family will result in bigger resources for wealth creation. Educational Resources:  Now is a good time to look at retirement income plans, family succession and estate plans in an attempt to better understand financial needs for a future, which could certainly include tax increases on both income and capital.  To learn more consider the following Educational Resources available from The Knowledge Bureau: <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com🏢office" /> Tax Efficient Retirement Income Planning    Master Your Retirement       Master Your Taxes Tax Efficient Investment Income Planning                      Master Your Real Wealth      Master Your Investment in the Family Business  

By Roger Currie, Guest Columnist Wow! Ö So near and yet so far! That was the story of the 2009 Grey Cup for Canada's team, as they end up losing it 28-27, despite holding a 16-point lead over the beasts from the east early in the 4th quarter. A lot of clichés come to mind about now. It was the legendary Vince Lombardi who said ìWinning isn't everything. It's the only thing.î It's hard to argue against that one most of the time, but I hope Rider Nation doesn't sink too deep into doom and gloom, and I hope they don't lose any of that amazing loyalty that is something to behold. Cliché #2 says ìThe game lasts 60 minutesîósometimes more for the Riders, and the marvelous Yogi variation on that oneó ìIt ain't over till it's over.î Yes, someone on the sidelines made a horrible mistake by not doing a simple count of the noses on the field. But you don't keep a team like Anthony Calvillo and the Alouettes down forever. Anyway, this team that many picked to finish last, gave us more joy and entertainment this year than anyone could possibly have imagined. Unlike the 1976 Riders who broke our hearts and were followed by the infamous ëReign of Error', this squad is young and talented in many key areas. There's no reason to believe they won't be right up there giving their all in front of that sea of green at Commonwealth Stadium a year from now. The Roughriders have indeed achieved the goal of Jim Hopson and others, and have become an elite franchise. It's now an organization that players and coaches are more eager to embrace, and we can all be proud. So, no sad songs and no fingerpointing, please. It's only a game, and our team played it better than most in 2009. Roger Currie is the Director of News and hosts Currie's Corner on 620 CKRM in Regina.    Educational Resources:  Learn how to win with family dynamics, join us at the Distinguished Advisor Conference to be held in Orlando, Florida in 2010 where we will present topics relating to "Focus on the Family".