Mark Your Calendar: Critical Deadlines for May and June

Tax season never truly ends, it seems, as there are many more upcoming tax filing, investment planning and education milestones to discuss with your clients over the next six months. Check out our handy checklist below and then test yourself – what are the conversation openers you’ll use and with which clients? It’s your opportunity to shine with every member of the household:

Andrew Brash Update Andrew Brash, Knowledge Bureau Faculty member may be on one of the 20 plus teams in possession of their climbing permit from the Nepal Ministry of Tourism. According to MountEverest.net, more than 20 teams have received climbing permits for Everest, with about 10 plus teams still in the process. The permit contains more specifications than normal. One of the new requirement is: ìAll the news regarding the expedition must be conveyed to the Ministry of Tourism & Civil Aviation first of all, and only then it can be sent to others.î This may be one of the reasons why updates from Andrew have been slow to come. This climbing season is expected to have less climbers than usual ñ about 270 plus locals. We are still monitoring the situation and keeping our fingers crossed. We will continue to feature an ongoing update on his climb as part of Breaking Tax and Investment News or you can track his progress by visiting his website http://www.andrewbrash.com/ for live updates from the expedition. Stay tuned for updates!

With a flood of baby boomers approaching retirement, cash flow planning is an important issue, which is not surprising. However, what is interesting, is this appears to be more of a problem for the affluent, than for blue collar workers. A recent Statistics Canada report (Income Security in Retirement Among the Working Population ñ published March 10, 2008) indicates at age 75, most retirees had a family income of 80% of their earnings at 55, which is good news for the affluent; more sobering news for those who are not prepared for life after work. However, adjustment to a lower income after work is often more difficult for those used to earning a lot of money, it appears. The lower the income, the less change was felt in lifestyle during retirement, according to the report. In fact, many of Canada's poorest maintained 100% of their disposable income when CPP, OAS and GIS kicked in at retirement. The affluent, meanwhile rely more on their own RRSP investments, private pension, other savings, accounting for nearly 70% of their income during retirement; there is minimal reliance on public pension or OAS. So what's the problem? In a country where financial literacy is at best, weak, tax efficient retirement income planning is a critical skillset, particularly because the wealthy pay proportionately more tax. For the advisor prepared to meet this opportunity, success is knocking at the door, with this much-demanded skillset. For this reason The Knowledge Bureau has designed the MFA, Retirement Income Specialist designation program. Available not only to tax and financial advisors who wish to expertly advise on retirement income planning, the program also is of significant interest to clients who want to learn more about taking control of their cash flow when income from their day job diminishes or ends. This designation program, available conveniently by self study, is made up of six courses designed to teach the ins and outs of retirement income planning from a tax efficient viewpoint. The six courses are: Tax-Efficient Retirement Income Planning, Financial Literacy: Relationship Between Risk and Return, Portfolio Construction and Real Wealth Management, Advising Family Businesses, Owner-Manager Compensation Planning, and The Use of Trusts in Tax and Estate Planning. ìFor peace of mind, everyone should take the first course in the program,î says Evelyn Jacks, Program Director and co-author of Tax-Efficient Retirement Income Planning. ìA special bonus for our students is the retirement income projectors and tax calculators we have build for you to understand after-tax cash flow and capital encroachment required to fund your lifestyle wants and needs.î Retirement for boomers is really a ìtransitionî to economic inactivity, rather than a specific event as experienced by our parents or grandparents. Put yourself in a position to be the specialist ñ the one knowledgeable and trusted advisor who can deliver the right solutions and in the process gather more assets and referrals than ever before. For more information call 1-866-953-4768 or visit knowledgebureau.com.

How do the new Tax Free Savings Accounts, on deck for investors starting in 2009, affect those who are leaving Canada? What are the right planning opportunities for minimizing departure taxes? These are questions advisors serving clients this tax season may hear. Consider these facts, from Knowledge Bureau Faculty Member John Mill, author of the Knowledge Bureau Certificate Course Cross Border Taxation, for his research on the subject: In Canada, the new Tax Free Savings Account (TFSA) is not caught by the departure tax rules. However, no TSFA contribution room is earned for those years where a person is non-resident. In addition, any withdrawals while non-resident cannot be replaced. The US does not recognize the TFSA, therefore any realized income ought to be non-taxable when removed after emigration. However any capital appreciation will be taxable. Therefore it will make sense to remove capital properties from the TFSA on a tax free basis immediately prior to emigrating and then trigger the deemed disposition on a nominal gain on departure. Residency and Non-residency issues are covered in detail in The Knowledge Bureau's EverGreen Explanatory Notes. . .can you really afford not to have EverGreen at your fingertips this month? For more information and to subscribe: click here.

Andrew Brash Update Andrew Brash, Knowledge Bureau Faculty member is en-route to Mt. Everest, against a backdrop of violence between Tibetan monks and the Chinese government. Andrew is in the right position to act quickly when climbing permits are handed out and start his trek to base camp. So after months of preparation and training, Andrew is ready for what lies ahead ... and to take The Knowledge Bureau flag ... and all of our best wishes for success, with him to the summit! We are monitoring the situation and will continue to keep you informed on Andrew's dangerous return to Mr. Everest, as a regular feature of Breaking Tax and Investment News or you can track his progress by visiting his website andrewbrash.com for live updates from the expedition. Stay tuned! To book Andrew on his return for your next educational event or conference please contact The Knowledge Bureau at 1-866-953-4769.  

Let's face it ... it's an impossible task for most business people ñ keeping the auto log to justify claims for auto expenses on the personal tax return.  The biggest audit trap for most employees, business owners and commissioned sales people who use their auto for both work and personal purposes may have become somewhat simpler, thanks to the February 26, 2008 federal budget. Starting in 2009 (after ìconsultationsî with the business community that will begin in 2008), it is proposed CRA auditors accept a logbook for a sample period of time, rather than the whole year, to represent how the motor vehicle is used, and support motor vehicle expense claims and taxable benefit calculations. In fact, most tax advisors in practice over the years know that CRA has accepted just such a sampling in their audit practices... nice to see it in print; however, to ensure consistent applications.    So keep working daily on keeping the log, but if you "fall off the wagon", you don't need to feel quite as guilty!     For more information about auto log and home office requirements, see Essential Tax Facts, and Make Sure It's Deductible, by Evelyn Jacks.

Retiring taxpayers may find their RRSP or locked in savings plan at risk if they acted on promotions of a particularly clever fraud schemes.  Amongst the schemes, perpetrators caused victims to purchase non-qualified investments in their RRSPs or use contents of RRSPs or RPPs as collateral for a loan. . .leaving the taxpayer to face not only a tax liability but funds that disappeared too!   CRA announced last week that over 300 investigators and other CRA officers have been executing search warrants across Western Canada to investigate alleged fraud related to fictitious Registered Retirement Savings Plans and other tax evasion scams.    This follows an earlier announcement last fall which said "RRSP and investment scams are popping up across Canada and the CRA is making its presence known by auditing and investigating the promoters who back these schemes."  A 2007 "Tax Alert" from the CRA indicated that 3,100 taxpayers had already been reassessed for participation in fraudulent RRSP schemes and that 1,800 additional taxpayers were being audited at the time of the Alert.   Typically, such schemes involve the use of a self-directed RRSP. The promoter of the scheme directs the RRSP holder to purchase a particular investment, such as shares in a private corporation, units in a co-operative, or a mortgage, often at inflated prices. The promoter then promises to return the money to the RRSP holder through a loan-back arrangement, off-shore bank account, or off-shore debit or credit cards. In some cases the promoter disappears with the funds and cannot be found.   On January 18, 2008, such a scheme lead to a conviction.  Laurent Boulianne, of Saguenay, Quebec was found guilty and fined $37,000 for his participation in a scheme in the 1997 to 1999. Mr. Boulianne was found to have enabled 16 taxpayers to not report amounts totalling $350,300 withdrawn from their RRSPs, RPPs, or LIRAs.   Taxpayers are warned to watch out for announcements which promise:  "Take advantage of your RRSP now - no tax to pay!!," or "I will loan you $5,000 to $250,000 over five years if your RRSP is locked in."   Participation in such schemes not only puts retirement savings at risk, but may also result in the inclusion in income of the full amount invested in ineligible investments or used as collateral for loans, plus interest and penalties for not reporting the income.   Best to check with a qualified tax advisor first before making a move.