May 2025 Poll

Does the Liberal promise expected soon to cut the lowest personal income tax rate by 1% to 14%,  go far enough to help Canadians impacted by high costs?

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

The 2011-2012 budget for Newfoundland and Labrador was tabled on April 19, 2011. Theprovincial  economy grew in 2010, with a real GDP growth of 5.6%, the highest of all the provinces. Employment has returned to pre-recession levels, and retail sales grew by 3.7%. Housing starts were up by 18% and investment and real exports experienced significant gains. A surplus of $485 million was the 5th in 6 years, with net debt down 31% since 2004-2005.  The economic outlook for 2011 is healthy, with a $59 million surplus forecast and a further reduction in net debt expected. With a theme of "Standing Strongî, the budget speech extolled the benefits of the Muskrat Falls and Gull Island hydroelectric projects. They will give the province the ability to provide clean energy to the Maritime Provinces and New England.  Infrastructure, especially in remote areas, will maximize the potential of these projects in terms of job creation and industrial expansion. Support of traditional fishing communities and innovative practices such as fish farming is maintained so that Newfoundlanders can continue to earn their livelihood from the sea. Agriculture and the forestry sector continue to receive government support through outreach to rural areas. Tourism and Culture are thriving, up 7% in 2010, and visitor numbers are steadily increasing. Newfoundland's Innovation Strategy has strengthened the research and development capacity of the province, with $19 million available to help bring new products and technologies to market. A Climate Change Action Plan and Energy Efficiency Strategy will enable all citizens to take part in greenhouse gas reduction initiatives. And an economic and trade agreement with the European Union will further strengthen economic opportunities, attracting business and investors and giving young people a reason to stay in the province. Initiatives to support in-home child care small businesses and early learning are included in the budget. Money for schools and post-secondary infrastructure has been allotted and the university and college tuition freeze is maintained.  An Adult Dental Health Care program is being developed and investment in affordable housing, employment and education programs are some of the other poverty reduction measures announced. Healthcare spending includes a web-based e-mental health service, enhanced long-term care delivery and initiatives to retain healthcare professionals.  Autism, addictions and prevention are given special mention.  Medical facility renovation and construction is planned throughout the province. New tax announcements include a new, non-refundable child care tax credit beginning in 2011, based upon the child care expenses that are currently deducted from income. The budget document refers to this as an additional measure that will save a taxpayer with $7000 in childcare expenses another $539 in provincial tax. Clawback of tax refunds for income support clients is eliminated in this budget, and the new Residential Energy Rebate of 8%, equal to the provincial sales tax, will provide relief for many facing climbing home heating costs. This comes into effect October 1, 2011 and is available to every household in the province. A new, non-refundable Volunteer Firefighter's Tax Credit in the amount of $3000 has been announced; that will generate a tax saving of $231.00. The budget lauds examples of cooperation, such as municipal amalgamation, combining and sharing services and strategic partnerships. It speaks of Newfoundland and Labradorians, at home and abroad, who have shaped the success of this province in good times and in bad.

In the April, 2011 edition of The Canadian Economic Observer, the section on Current Economic Conditions discusses the provincial, national and global economies. It observes that the first months of 2011 saw economic growth in Canada due to energy and auto exports, while the U.S. improved with the credit going to retail sales, auto assembly and a strengthening labour market. Overseas, Britain, France and Germany continued a slow recovery while developing nations such as Brazil experienced rapid growth coupled with rising prices that have prompted high interest rates. In the provinces, this issue of the Canadian Economic Observer reports that central Canada benefitted from a rise in manufacturing while retail sales declined. In British Columbia manufacturing grew, especially in forestry-based industries, while retail sales and housing starts were down. The prairies experienced a loss in manufacturing sales but household spending and housing starts posted gains as winter ended. Are you looking for a reliable source of economic statistics and interpretation?   Look no further than the Canadian Economic Observer.  With a federal election on the horizon, why not vet economic issues through the lens of this venerable Canadian publication?  A monthly journal published by Statistics Canada, this compilation of economic data contains interesting facts and analysis and a topical feature article. There are twelve main sections: Current economic conditions Economic events Feature article and Recent feature articles National accounts Labour markets Prices International trade Goods-producing industries (manufacturing, construction and resources) Services (trade, transportation, travel and communications) Financial markets Provincial With so much information available out there, and not enough hours in the day, it is difficult to schedule time to keep up-to-date on the state of affairs in this country and beyond.  Here's an easy reminder  - you can sign up at Stats Can to receive notice when the Canadian Economic Observer is issued each month. Take a few minutes and read up on economies here and around the globe ñ a little education is always a good thing!

Are singles who live alone without dependants treated fairly by the tax system? They are an economic unit on their own, assumed to have more disposable income because they don't support family members. Is this true or fair? Don't forget that the cost of living can be shared by couples and families, while singles have to bear the full weight of housing, food, transportation and other living expenses on their own. The last time I checked, the cost of a one bedroom apartment is not just half the cost of the two bedroom model! It is not often that we see a new deduction or credit for single taxpayers. Many initiatives are aimed at families, especially those with children, and no one can argue that this isn't important. However, it was interesting to note that when Nova Scotia presented its Financial Measures (2011) Act on April 15th of this year, there was a previously unannounced low income tax deduction aimed to assist a widowed person in the year of her spouse's death. Leveling the playing field for Canadian singles would not be difficult óa federal Singles Cost of Living Equity Credit, for example, might take up some of that slack. The province of Quebec has a tax credit for singles called the Amount for a Person Living Alone, and an additional credit for single parents.  Perhaps it is time for the tax system to recognize the cost of flying solo. More important, consider that many singles have unofficial roles caring for family members. They may provide support to parents, uncles, aunts, nieces and nephews that often is not recognized by the tax system. It is important that single taxpayers in these situations seek out professional financial and tax advice to maximize the few opportunities that will reduce the tax burden. Following are strategic planning tips to consider: Income: For singles, there is no income splitting with family members, but sharing with the communities as a philanthropist is recognized by the tax system. Transferring your accrued capital gains in publicly traded shares to your favorite charity will result in tax free gains, as well as a tax credit for the donation itself. So diversification of income sources is importantóincome from employment, self-employment, interest, dividends, capital gains, pensions all layered in varying amounts can often be timed to average down overall tax rates in your lifetime. Pension splitting with Public Plans: There is certainly a disadvantage to single taxpayers here as there is no income splitting with spouses when CPP/OAS benefits are paid. Strategies to counteract this imbalance include taking the CPP early so that you average out the tax on this income over a longer period; by the time OAS kicks in a smaller CPP benefit may also help singles avoid OAS clawbacks. The tradeoff is that the monthly CPP benefit is smaller, although it is received over a longer period of time. Private pensionsóRPP, RRSP, RRIF: Consider taking benefits out of them earlier, too, and over a longer period of time to average out the tax. Reinvest in non-registered accounts to make the strategy for tax free gains part of your charitable giving plan. Also remember the TFSA is a great way to earn tax free income. Other Capital: Saving for a home is very important in order to tap into tax exempt gains throughout your lifetime. Singles are nimbler (they don't have to ask anyone about moving!), so they can own sequential homes, potentially accumulating lots of tax free gains along the way. But be careful of adventure or concern in the nature of trade rules ñ CRA could consider you to be in the business of buying and selling real estate and challenge your principal residence exemption. Deductions: RRSP is key to tax savings and the building of a greater capital base, and childless singles should be able to save more, in theory. There may be an argument for building up capital outside the RRSP (with TFSA, homeownership, for example) in years when income is lower; as too much in the RRSP pot at the end of life will be heavily taxed. But if you are a higher earner, remember that one way to free up more capital is to make the RRSP contributions and invest the double-digit tax savings. Other tax deductions for singles include moving expenses, employment expenses, accounting expenses and union dues. Make sure you maximize them. Credits: Remember that in households where both spouses work, the tax filing profile looks similar to that of a single person. There is a basic personal amount, medical, charity claims and for seniors the pension income amount for qualifying pensions and the age amount. There is a disadvantage relating to the clawback of the age amount as singles don't qualify for pension income splitting; nor can they transfer over a lower earning spouse's age amount. Additional tax credits may be accessed by claiming the Canada Employment, Public Transit, Home Buyers, Tuition, and Student Loan Interest amounts. The Eligible Dependant, Caregiver and Infirm Dependant, and new Family Caregiver Tax Credit (if passed into law) provide equal recognition to singles who support and care for family members. Remember that medical expenses for other dependants can be used by the caregiver for the Medical Expense Tax Credit. The 2011 federal budget proposed to remove the $10,000 ceiling on expenses pertaining to other dependants. The income and living arrangements of your loved one are factored into the expense claim ñ so crunch those numbers! The Disability Tax Credit can be transferred to a supporting individual if unused by the dependant, but this is being challenged in some cases by CRA so document the nature of the support that you provide. More and more single Canadians are stepping up to the plate when it comes to caring for vulnerable loved ones. Make sure that single taxpayers in these situations know what tax relief is available to them. Professional help is available ñ make use of it every yearóand plan strategically for a lifetime of tax savings. ADDITIONAL EDUCATIONAL RESOURCES: Essential Tax Facts by Evelyn Jacks