Confirmed:  The CCR for Small Business is Tax Free

Ottawa has confirmed that the CCR for Small Business received by eligible Canadian-controlled private corporations (CCPCs) will be tax free for the 2019-20 to 2023-24 fuel charge years, as will the final payment for the 2024-2025 fuel charge year.  Draft legislation was released on June 30, 2025 with this announcement; and will be introduced for law making in Parliament this Fall.   Some of the more significant details are discussed below.

An Interview With Richard Croft "We have thought for some time that the end game in the credit crunch would ultimately result in the government buying back the debt. What I find interesting about this is that the marketplace in the US is forcing the financial system to look like a system like we have in Canada. The US has always had thousands of independent banks; we have always had 6 major banks which are impenetrable. We are now seeing the emergence of "superbanks" in the US, which from a regulation viewpoint, look a lot more like the Canadian banking system, so maybe we had it right all along." Commenting about the bailout itself, Richard says this: "The underlying assets in question acquired by the US government currently have no buyers, but may still have a value. The big difference is that the government has time, banks don't, so it can take those assets and sell them off at some price in the marketplace over time. So that's the key benefit of the bailout package; it will filter the assets back into the system eventually. In the end it may not cost the taxpayer much; but we have managed to avoid a long recession, which cuts into government revenues and costs lots of money in term of unemployment insurance or deposit insurance required to be paid in the case of bank failures. So at the end of the day, the bailout will end up as a wash, and together with the tax breaks introduced with it, put more money in the hands of taxpayers." "Another interesting point, is that many large US banks can't go bankrupt nowóexamplesóJP Morgan, CitiBank, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo, óthey are now too big to fail." "What we are left with is an interesting balancing act between the effect of regulation on financial services and free market activity. One of the reasons why the Great Depression went on as long as it did was tightening regulation in the period. Liquidity, we have learned, is important." So the bailout was a good thing? "The bailout may bring liquidity back, which will shorten the recession, but I expect that markets won't do anything much more than find stability around the bottom. There won't be a great turn around soon. But the credit issues are also being addressed with the bailout and this is key to recovery. The longer term moral hazard is that the government is seen as the pot of gold at end of rainbow." Is this a good thing or a bad thing? "You want regulation to prevent the proliferation of the structured products that have emerged to meet investor demandóbut the flip side is less regulation allows more growthóin Canada we have always operated on regulatory regime, but we never got the same level of growth, nor the boom and bust scenario the Americans have scene. If you want a scorecard, look at currency. The fact that the Canadian dollar rolled down to 64 cents, measures and gauges merits of a capitalist economy. We are now seeing a downside of a lower regulation environment but more regulation may not allow needed growth. " There is so much yin and yangónobody really knows what the immediate future will hold, so what's an investor to do?. "That's true, so the best defence is a diversified portfolio. Decisions made at this moment should be made on whether you can tolerate the risk level of the portfolio you are in." "If investors are comfortable with risk in the portfolio, some may raise it. There are great buys to be had. Warren Buffet boughtósome investors might also wish to step up to the plate and take a look at great companies undervalued now. " So the bottom line? "The bottom line is that investors holding portfolios came through this kind of cycle did better than those who did not have one. Many had only a 3-4% downsideówhich is not so painful at all. A well balanced portfolio is what you need to work with to weather these kinds of storms." Richard Croft is an investment counselor / portfolio manager, and principle of R. N. Croft Financial Group Inc. Richard will also be speaking at the Distinguished Advisor Conference in Monterey, California next month on the subject of portfolio construction with new tax efficient investing tools.

IN AN EXCLUSIVE INTERVIEW WITH Breaking Tax and Investment News, DR. JACK MINTZ, Palmer Chair in Public Policy at the University of Calgary, told Knowledge Bureau President Evelyn Jacks that while markets will follow history and eventually recover, what we have seen over the past two dramatic weeks south of the border is a significant event. Advisors and their clients need to be very careful and not overreact, as there is both good and bad news. "Canada is in a better position than the US because we have done a lot of good things lately," said Dr. Mintz. "We've had good fiscal policy. Corporations on the whole are in a strong position, debt is down, and in general we are not over levered. Strength of the balance sheet is key today. In addition, Canadian consumers are not as heavily in debt as their US counterparts, and that for the moment is good news in a volatile environment." But there is plenty of cause for caution as well, something to be discussed in earnest between advisors and their clients. "The biggest concern is for those who need credit or immediate cash flow. Many people moved into cash a while ago, but the uncertainty in the marketplace today makes it difficult to play the markets, because we really don't know how long it will take to come out of this bear market," says Dr. Mintz, recommending that it is best to avoid unnecessary indebtedness, and to understand that credit will get tighter, especially in the US." In terms of strategy, Dr. Mintz cautions that "anyone who was retired should have thought about safety in assets when designing their portfolios. Over the long haul, 10-15 years from now, markets will be up again, but it's going to take time." For those about to retire, it may be best to think about Dr. Mintz's words above and think about a longer term horizon in planning. "Stay diversified, he says, "and don't overreact." Dr. Jack Mintz is the Palmer Chair in Public Policy at the University of Calgary and lead speaker at The Distinguished Advisor Conference in Monterey California, November 2 to 5th.

Record-breaking and severe global stock market swings followed the announcement of new tax breaks and deposit insurance protection resulting from the historic bailout of the US financial market, approved on October 3 by the US House of Representatives. The package was designed to kick start the flow of credit by US banks who backed impaired assets, like mortgages on homes which values have plummeted. What is the impact of these developments for Canadians? In this special report, we interpret Finance Minister Jim Flaherty's October 6 news release outlining Canada's relative fundamental strength as a means to comfort Canadians rattled by the volatility in the financial markets. Read in conjunction with the Bank of Canada Governor Mark Carney's message to the Canadian Club of Montreal on September 25, it appears that this correction should eventually be "cathartic" and "stabilizing" in restoring order to global financial markets. October 6 News Release: Finance Minister Jim Flaherty Financial Minister Jim Flaherty issued a news release today to comment on the severe shocks gripping the global credit system, in particular the US and now Europe, and to provide comfort to Canadians about their own financial institutions, which he described as "sound and well-capitalized, and less leveraged than their international peers." Mr. Flaherty explained: "The structure of our financial institutions continues to benefit Canadiansólarge Canadian investment dealers have been bank-owned since the late 1980s, and as a result are regulated on a consolidated basis by the Office of the Superintendent of Financial Institutions." "Canadian capital requirements for financial institutions are well above minimum international standards and higher than in other jurisdictions. Canadian institutions have met, and continue to meet, their capital requirements. The IMF has concluded that Canada's financial system is mature, sophisticated and well-managed, and able to withstand sizeable shocks." When it comes to real estate, our mortgage scene is also in better shape: smaller mortgages relative to home values, a small subprime component and sound economic factors, such as low interest rates, rising incomes and a growing population all make our housing finance model supportable. That's the good news. The bad news is that Canada's financial system will see the effects of the credit squeeze too, with the result that longer term credit extended to Canadian businesses and households will likely be affected. In response, the Bank of Canada has increased the availability of "term liquidity" to the tune of $20 Billion. As well the range of credit to be accepted for this liquidity has been widened, in an effort to keep credit affordable for Canadians. This announcement should provide comfort to Canadians panicking during the current ìtsunamiî of financial concerns. However, both Governor Carney and Finance Minister Flaherty cautioned that global markets are now at a critical juncture as many foreign financial institutions need to raise capital for lending purposes, but their ability to do so has been reduced. This affects all those who rely on credit for their future, particularly businesses and consumers. Without credit, business operations cannot be financed in advance, mortgages and auto loans cannot be provided to consumers. Survival depends for many on cutting costs in an attempt to shore up balance sheets. Knowledge Bureau faculty members spoke with President Evelyn Jacks to comment on these recent developments and their potential impact on Canadian, in this Special Report After the Bailout: The Impact on Canadians News Releases October 6 News Release: Finance Minister Jim Flaherty Bank of Canada Governor Mark Carney's message to the Canadian Club of Montreal on September 25 Commentary The Good News and The Bad News with Dr. Jack Mintz Canada and the New Super Banks with Richard Croft Brace Yourself: Why a Crisis on Wall Street in Coming to a Bank Near You with Robert Ironside Rebounds: Not Soon with Gordon Pape Are You Ready for a Bear Market? with David Christianson   Solutions   Financial Markets Meltdown - Severe Credit Crunch

David Christianson, BA, CFP, R.F.P., TEP I always like to ask that question when the markets are high, as that is the ideal time to assess your preparedness for a bad market. I ask the same question in sideways markets and bad markets. That's why I asked the question in 1994, 1998, 2000, 2005 and again last year. Why this theme? Because investors must always be ready for a bear market. Bears follow bulls as surely as winter follows summer. (Good news is that, unlike Winnipeg winters, bear markets are shorter than their opposite season.) In our professional practice, we are always looking at our client portfolios and asking, "Is this financial plan ready to withstand a bear market? If stock prices collapsed tomorrow, do we have enough cash, short-term and guaranteed investments set aside to provide all the client's spending requirements until the markets recover?" It takes a lot of discipline to consistently ask this question when the markets are at record highs and clients are resisting investments into boring old bonds that will only pay them 4%. However, it's those preparations that carry us through tough times like 2008. It's a lot tougher to ask the question after the markets have declined 20%, but you still have to ask it and make the necessary adjustments and provisions. Bear market facts. The accepted definition of a bear market is a stock index declining 20% from its previous peak. We are now officially in a bear market. Since 1970, there have been six bear markets on the Toronto Stock Exchange. The declines ranged from 20% to a high of 43%, for the longest bear, from 2000 to 2002. (Remember that much of that decline was due to the decline of Nortel, which made up over 20% of the total market at its peak.) In all cases except 2002, the stock market started its recovery before the economy emerged from recession. The 2002 stock market recovery was delayed by historic events like 9-11, and the crush to confidence from accounting fraud in companies like Enron, WorldCom and others. What about recoveries? The average return has been 25% for the 12-month period after the end of the last four bear markets. The lowest 12-month return was 15.2%, and that was produced even while the 1991 recession was still working its way through the economy. A bear market is different than a quick correction, in that it can last quite a while. A rapid correction is easier in many ways, because the pain is over quickly. In a real bear market, the market can decline for months or even years, with short rallies in between to keep our hopes up. The possibility (or the reality) of a bear market is not a reason to pull out of the markets or to stop investing. Like a bull market, a bear market can stop at any time and turn around. It usually happens when things look very bad for the economy. The important thing is to make sure you are ready, in case this bear market is not over. Are you ready financially? Will you be able to leave your investment portfolio for the two or three years that could be required? Better yet, will you able to add more money and buy stocks at real bargain levels? If you will need cash from your portfolio in the next year or two, make sure that you've put that money aside in money market funds or other guaranteed vehicles. Are you ready psychologically? Do you have what it takes to ignore all the pundits coming out of the woodwork, saying they told us so? Market gurus tend to want to make headlines by over-dramatizing a situation. The media tend to exaggerate these dramatic comments because they make great headlines. When these stories start to suggest that all of our assumptions about a rising market in the future were wrong and the market will never rise again, are you prepared to ignore the noise and continue to invest according to your personal investment policy? Hopefully, you examined the balance in your portfolio when the market was peaking, and made sure that you had adequate amounts in bonds and money market. If not, you might want to make sure you do that now. This is not to abandon the market, but rather to make sure that you have the staying power to remain invested throughout the bad market and volatility. And don't forget, if your advisor had seemed too conservative for you in 2006 and 2007, send him or her a thank you card. They may have been protecting you from your own enthusiasm. Things are different this time. Closed credit markets are threatening to bring the US economy (and all others by extension) to a grinding halt. But remember, nothing lasts forever and better times will return eventually. The important thing is to look at your time horizon for your investments. If you have the staying power, then stay the course and remain invested according to your own personal optimal asset mix. If you don't have the time, then make sure you have enough money off the table to tide you through. David Christianson is a fee-only financial planner and investment counsel with Wellington West Total Wealth Management Inc. and author of a certificate course for The Knowledge Bureau entitled The Structure of Client-Centred Practices.

Bank of Canada Governor Mark Carney spoke to the Canadian Club of Canada in Montreal on September 25th and advised that Canada's financial system is in a good position to "weather the financial storm because it is prudent and soundly capitalized". In his speech he noted that the slowdown in the U.S. markets and the insecurity in the market have been international factors that have affected the Canadian economy.  A continuation of volatile commodity prices can be expected in the near future, although to date it has been a benefit to the Canadian economy. Governor Carney also noted that Canadian banking and financial institutions are in much better shape than many other international countries and credit growth remains strong in this country.   He also stressed that while international events might have an influence on the Canadian economy, the Bank of Canada would do everything in its power to monitor developments with due care and set monetary policy to achieve a 2 percent inflation target. At the Knowledge Bureau, we are interested in hearing your opinion on the current market crisis.  To what degree does the recent stock market crisis impact retirement and investment strategies of Canadians? Your comments would be appreciated.

Recent new forms issued by CRA should be reviewed by wealth advisors in the financial and tax services for changes that may be of concern to their clients. Of particular interest: GST370 Employee and Partner GST/HST Rebate Application (2008 version, updated to use the 5% GST/ 13% HST rates applicable to 2008) T2200 Declaration of Conditions of Employment (2008 version, changed to add a new question regarding the repayment of expenses paid by the employee) T1162A-1 Pre-Authorized Payment Plan (Personal Quarterly Instalment Payments) (this form allows for personal quarterly instalments to be deducted by automatic bank withdrawal for fixed or calculated amounts on the 15th day of March, June, September and December - no more late payments!) In an upcoming Breaking Tax and Investment News we will look at quarterly instalments and tax planning ideas so that no one makes an overpayment on December 15th.