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. 

ìEmpathy is one of the cornerstones of effective, people-centered leadership. It is a skill demanded by today's increasingly savvy clients who expect personalized, perceptive service and judicious, insightful advice,î says psychologist Ron Thiessen, a member of the Order of Psychologists of Quebec.   Ron will discuss the hallmarks of an empathic leader at the Distinguished Advisor Conference, November 8 -11 at the Loews Ventana Canyon Resort in Tucson, Arizona. He will explore ideas to cement your relationship as an indispensable advocate for your client, discuss how you can seize the opportunity to consolidate your position as a most trusted advisor through the exercise of your formidable people skills, and investigate how an advisor's role as a thoughtful empathic leader can augment your influence with clients in turbulent times.

ìUnderstanding how your practice will need to adapt to meet changing client expectations is critical to your success in capitalizing on new opportunities,î says Mick Kelly, Vice President, Sales, Retail Markets at Standard Life, who will explain how to implement proper Change Management within your advisor team at the Distinguished Advisor Conference on November 9. Mr. Kelly will show advisors at the event how to use Market-based decision-making to survive and thrive beyond current turbulent times.

One of the biggest challenges facing Canadians today involves helping aging and infirm parents with their finances, their health and their day-to-day activities. ìAdvisors need to be ready to lead their clients through the financial aspects of this dynamic situation,î said Dave Christianson, Financial Planner and Faculty Member with the Knowledge Bureau. ìThose advisors who exercise leadership at this challenging time will develop a special bond and fortify a lasting relationship with their clients.î   Mr. Christianson will conduct a case study session at the 6th annual Distinguished Advisor Conference to be held November 8-11 at the Loews Ventana Canyon Resort in Tucson, Arizona. His interactive session will explore ways to lead clients through this difficult time, with special emphasis on working with people who have been named power of attorney or committee for these clients.

ìCompliance is taking a front seat -- both in firms and with clients. And clients have complained about unauthorized trading in their accounts, and in some cases, fees being in excessof what their commissions ever would have been,î said Lisa Langley, President, International Product & Service Group (IPSG). ìAnd, though client complaints need to be gauged carefully, there certainly are documented cases of bad advice, poor client management, and client portfolios which did not reflect material changes in their profile and investment objectives,î she added.   The number of complaints from unhappy investors is rising every day while regulators are increasing scrutiny and developing policies to address the gaps. This, together with the constant buzz of fraud and ponzi schemes in the press, is causing clients to ask questions they have never asked before. One of the goals of the recently enacted Registration Reform is to make the representations of advisors and their capacity to advise clearer to the investing public.   Ms. Langley offers insights about what your clients are thinking and how you should respond to their growing concerns. At the 6th annual Distinguished Advisor Conference, November 8 -11 at the Loews Ventana Canyon Resort in Tucson, Arizona, Ms. Langley will explain the current environment, upcoming regulatory changes, registration reform and what they mean to you.

By Alan Rowell , DFA, Tax Specialist and President, The Accounting Place     After eight months of waiting after the announcement of the Home Renovation Tax Credit (HRTC), the legislation is currently on the table in Parliament for passage. The proposed legislation will be a new section of the ITA, section 118.04 available by linking here.   Legalese Version 118.04(1) outlines the definitions applied to the new section: "Eligible Dwellingî is defined as a housing unit, including Ω hectare of land surrounding the unit and located in Canada that is; a) Owned by the individual whether jointly or otherwise for the sole purpose of habitation, including a co-operative housing unit. b) The housing unit is ordinarily inhabited at any time during the eligible period buy the individual, spouse or common-law partner (current or former), or by a child of the individual under the age of 18 anytime during the calendar year.. "Eligible Periodî is defined as the period beginning January 28, 2009 and ending January 31, 2010. "Qualifying Expenditureî is defined as an outlay or expense that is made or incurred and is directly attributable to a qualifying renovation by the individual, including permits and equipment rental. Not included as a "qualifying expenditure is; a) Goods that have been used, or acquired for use for any purpose prior to being acquired by the individual or a qualifying relation; b) Made or incurred prior under the terms of an agreement prior to January 28, 2009 c) To acquire property that can be used independently of the qualifying renovation; d) That is the cost of annual, recurring or routine maintenance or repairs; e) To acquire a household appliance excluding furnaces and other heating systems; f) To acquire an electronic home entertainment device; g) The cost of financing a qualifying renovation; h) Costs incurred for the purpose of gaining or producing income from a business or property; i) Goods and Services provided by a person not dealing at arms-length with the individual unless the person is registered for the purposes of GST/HST. "Qualifying Renovationî is defined as a renovation or alteration of an eligible dwelling and must be of an enduring nature and be an integral to the eligible dwelling. New section 118.04(2) covers the situation of a co-operative housing corporation and trusts where the eligible dwelling is owned by other than the "individualî. In these circumstances the individual's share of the costs incurred by corporation or trust are considered to be incurred by the individual. The corporation or trust must notify the individual in writing of the individual's share of the qualifying outlay or expense. s118.04(3) - The non-refundable tax credit is applied in the 2009 taxation year. The credit is determined as 15% of the qualifying expenditure in excess of $1,000 to a maximum of $10,000. s118.04(4) ñ The application of the HRTC to renovations or costs incurred that may also qualify for the Medical Expense Tax Credit under s118.2 will qualify for both credits, notwithstanding s.248(28)(b) s118.04(5) ñ Where more than one individual is entitled to the HRTC in respect of a qualifying expenditure, the total amounts claimed by all individuals cannot exceed the maximum amount allowable if one individual were claiming the HRTC.English Version If an individual, or a qualifying relation, own and live in the dwelling, you are entitled to claim the non-refundable Home Renovation Tax Credit. An individual that incurred the costs prior to January 28, 2009 you will not qualify for the credit regardless of when the actual work and payment occurred. Consequently, if the costs were incurred during the eligible period, you will be able to claim the costs, even if the work is not performed and completed until after the eligible period. Example: Mary entered into a contract to have her roof replaced on January 27, 2009 and provided a deposit to the contractor. The work was performed and completed on April 15, 2009, within the qualifying period. Mary is not eligible for the Home Renovation Tax Credit on this renovation. John entered into a contract on January 29, 2010 to have the windows replaced in his home and provided a deposit to the contractor. The work was completed on April 15, 2010, outside the qualifying period. John is eligible for the Home Renovation Tax Credit on this renovation. If the renovation or alteration is an integral part of the home and will last a long time, it will qualify for the Home Renovation Tax Credit. This includes a provision allowing for homes owned by a trust or co-operative housing corporation to "flow-throughî the portion of the costs incurred to the individual. The trust or corporation must provide in writing the portion of the expense attributable to the individual. If the renovation or alteration incurred also qualifies for the Medical Expense Credit under s.248(28)(b), both credits may be claimed on the 2009 tax return of the qualifying individual. The credit, if it is shared between individuals, cannot exceed the amount that would be available if claimed by one individual. It is important to note that, as of this writing, a Federal election call is looking less likely, the proposed legislation is not yet passed into law. If an election were called prior to passing the legislation through Parliament, the legislation would die on the table and require re-introduction and passage under the new Government to become applicable.   Alan Rowell, DFA, President and Tax Specialist of The Accounting Place, specializes in working with individuals and small to medium size businesses by providing accounting and taxation services that are unique to each client. Alan is a faculty member of The Knowledge Bureau, and presented on the Tax Consequences of Debt for their January 2009 workshop tour.

By Evelyn Jacks, President, The Knowledge Bureau     In advance of the September 24 Pittsburgh Summit, in which world leaders will gather again to discuss progress on the recovery of the global economy, it is appropriate to look at the numbers for the management of Canada's resources through the crisis. On the bad news side, federal and provincial government revenues fell further in the second quarter of 2009, down 4.7% and 1.7% respectively, and our short term anticipated budgetary deficits will be significant, particularly in 2010, to pay for the fiscal stimulus required to manage through the crisis. But it turns out that Canada has met a significant milestone through it all: our relatively strong fiscal position has reduced our dependence on foreign borrowing. As a result our net foreign debt (the difference between our liabilities to the rest of the world and the foreign assets we own) has gone down rather dramatically. In fact, Canada was in a net international asset position for the first time in 80 years in the fourth quarter of 2008. The bonus for us is that this phenomenon has lowered our exposure to global financial market shocks. Further, roughly half of the downward adjustments to the economic outlook of the private sector forecasters since the January 2009 federal budget has already been accounted for in budget-planning assumptions. A deficit of $3.9 billion is now projected for 2008ñ09 and a whopping $50.2 billion in 2009ñ10. Does that mean more taxes in the short term? Likely. According to the Department of Finance, more than half of the 2009ñ10 deficit is the result of temporary measures under Canada's Economic Action Plan, less taxes collected, higher EI benefits, and the decision to freeze EI premium rates. A prolonged recovery could require action; for example the ìunfreezingî of EI premium rates, which would increase costs to employers and employees at a time when increased purchasing power and savings rates are desired. The remaining deficit of $23.2 billion, or 1.5 percent of GDP, is primarily a reflection of the weak economy and is anticipated by government to be reversed as the economy recovers. [1] Will it recover fast enough to avoid tax hikes? No one is really quite sure yet. The bottom line for now is this: we're in pretty good shape all things considered. In fact, the International Monetary Fund (IMF) in its April 2009 publication World Economic Outlook has stated that it expects Canada to experience the smallest contraction of all G7 countries in 2009 and the strongest recovery going into 2010. See chart that follows. Looking ahead, most private sector forecasters have not changed their views since the January budget and continue to point to a sustained economic recovery beginning in the second half of 2009 and gaining momentum in 2010. See chart that follows. However, we are not entirely out of the woods. The reality is that as a trading economy, our recovery ìis highly dependent on a sustained recovery in the global economy, in particular in the United States. The global economic recovery, in turn, cannot fully materialize until dislocations in global financial markets are fully resolved and these markets are fully functioning.î[2] Therefore, it stands Canada in good stead to continue to work hard in the upcoming meetings together with the G20 Finance Ministers and their Central Bankers in their established process for managing the recovery of the global financial systems. Evelyn Jacks is President of The Knowledge Bureau and author of over 40 books on the subject of personal taxation, finance and Real Wealth Managementô. She has recently been appointed by Finance Minister Jim Flaherty to the Task Force on Financial Literacy.   For the latest economic numbers, tax updates and changes and the interpretation of those facts for you and your clients, be sure to participate in The Distinguished Advisor Conference. This year's theme: Leadership and Opportunity in Turbulent Times. The following chart updates the government's summary of new forecasts for 2009; stay tuned for new numbers as we head into year end 2009: Table 3.1 Average Private Sector Economic Forecast for 2009 January 2009 Private Sector Forecast May 2009 Private Sector Forecast (per cent) Real GDP growth -0.8 -2.5 GDP inflation -0.4 -1.9 Nominal GDP growth -1.2 -4.3 3-month treasury bill rate 0.8 0.3 10-year government bond rate 2.8 2.9 Unemployment rate 7.5 8.6 U.S. real GDP growth -1.8 -3.0 Source: Department of Finance Canada survey of private sector forecasters. All of that should be reason for Canadian investors to celebrate. Are you a Leader? If so you should be participating in The Distinguished Advisor Conference. This year's theme: Leadership and Opportunity in Turbulent Times. To Register: Link Here [1] Canada's Economic Action Plan A Second Report To Canadians June 2009, Department of Finance, Canada [2] Canada's Economic Action Plan A Second Report To Canadians June 2009, Department of Finance, Canada