Opportunity: Canadian Dollar Stabilizes, Somewhat

Things have started to turn around for the Canadian dollar in the second quarter of 2025. It hit a 22 year low in January of 2025. Investors and property owners, who have been swooning at the high burn rate in their travel plans and property maintenance abroad, may wish to consider recent more positive trends and consider some risk mitigation opportunities now that the dollar is stabilizing somewhat.  

How many people have you run into lately who are trying the "cash" diet? Do you remember the last time you paid for groceries with actual money? Well, debt-reduction regimes are the rage this year, and one that tax and financial advisors can help their clients address this tax season as a part of the discussion of deductible and non-deductible debt. To help initiate the discussion, there are two new reports on household debt in Canada which may be of interest. Last month, the Task Force on Household Debt released its report, Debt Crunch: Policy Recommendations for addressing Canada's Record Level of Household Debt.  Higher interest rates will likely exacerbate mortgage and debt defaults and reduced consumer spending, putting a damper on the economy. In the report, financial stakeholders are given responsibility for proactive measures to slow down the debt accumulation in this country. Consumers are encouraged to do their part as well. The report articulates the most compelling reason for overspending: "A lack of general awareness around daily financial decisions and transactions is a risk to overall consumer financial well-being. In particular, consumers behave differently when using credit than when using savings to make purchases, making larger purchases with credit without the associated feeling of money "leaving their pockets." This speaks to the need to study and discuss behavioral finance as an issue, as well. In his article Back to Old Fashioned Savings, CIBC economist Benjamin Tal notes that the Canadian savings rate is at an all-time low, lagging the U.S. savings rate by 1.6%. He points out that Canadians have been saving passively through increased value of their homes. But, the housing market is expected to soften and Canadians will be forced into active saving - putting real dollars into savings vehicles ñ to shore up their personal net worth statements. Mr. Tal predicts that, as in past recessions, reduced spending on non-essentials will result, in order for Canadians to find the extra money to put away each month. With those observations in mind, it is important for advisors and clients to discuss a plan for tax reduction and active savings opportunities. And while chats about cash flow and household balance sheets may not generate immediate compensation for the advisors, a solid professional financial practice must provide this service with a long-term outlook in mind. Advisors who can help clients and their families achieve financial stability now, will deepen relationships as well as strengthen balance sheets. Taking the time to read more about this topic and finding the right tools and resources to recommend is a worthwhile endeavor. Additional Educational Resources: MASTER Your Real Wealth ñ How to live your life in financial security<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com🏢office" />

Canada Revenue Agency is warning taxpayers about identity theft during Fraud Prevention Month. There are some interesting tips for tax and financial advisors and their clients to discuss with the whole family on how to protect yourself from fraud, including: (a) not sending personal info by email, (b) notifying the government when your address has changed, and (c) keeping passwords and access information private. Taxpayers are also advised to shred confidential information - even unsolicited credit card applications can be used to steal your identity. During this spring break month in particular, make sure that you don't leave signs that you are away - have your mail picked up by someone you trust or arrange to have it held at the post office. Another good observation: don't broadcast your travel plans on Facebook. Also check your credit rating annually to make sure that someone else is not using your identity. In addition, The Canadian Foundation for Advanced Investor Rights just released A Report on A Decade of Financial Scandals. Recent Canadian financial fraud cases were studied and findings point to a fragmented regulatory system that impedes investigation and prosecution. The report recommends a major consumer education campaign, enhanced fraud detection capability and dedicated legal resources to combat financial fraud. Registrants should be regulated by an organization with a compensation fund and the authority to order compensation when it is justified. The Canadian Securities Administrators also provides resources for Canadians to learn about investment fraud. The CSA website includes descriptions of various schemes and warnings about demographic target groups. The "Investor Tools" section is particularly helpful. In this time of economic belt-tightening Canadians cannot afford to lose hard-earned assets through investment fraud. The proliferation of the internet has made it easier to reach potential victims and many computer users may not be aware of how vulnerable they are. Providing clients with tools, particularly on-line resources and reports such as these can help to educate our clients about these dangers, and hopefully prevent fraud as well. ADDITIONAL EDUCATIONAL RESOURCES: Financial Literacy: Assessing Risk and Return

On July 1st, 2010, the Province of Nova Scotia raised the Harmonized Sales Tax rate from 13% to 15%. Included in the 2010 provincial budget were measures to offset this increase for low-income taxpayers. The Nova Scotia Affordable Living Tax Credit is a refundable tax credit paid quarterly, and the Poverty Reduction Credit is a quarterly payment to those receiving Social Assistance through the Income Assistance Program. The Province of Nova Scotia also made a very important commitment to low-income seniors in the 2010 budget. Anyone receiving the Guaranteed Income Supplement would no longer have to pay provincial income tax! In Nova Scotia the basic personal amount is $8231 and the age amount is $4019 for a total of $12,250. When the low-income tax credit is factored in, a single senior in Nova Scotia will pay provincial tax when taxable income (line 260) exceeds approx. $13,955. Subtracting the maximum OAS payment for 2010 ($6222) from this amount results in an income of $7733 for GIS purposes (assuming that it is not employment income). The cut-off for GIS for single, widowed or divorced pensioners for the current quarter is $15,888, so there are lots of senior GIS recipients in Nova Scotia paying provincial tax. This measure to eliminate provincial tax for GIS recipients is not currently administered by CRA. This means that, for the 2010 income tax filing, the province will rebate seniors the full amount of the net provincial tax paid. There is no application form as eligibility will be determined by information from the tax return. Rebate cheques will be mailed during the summer and fall of 2010, so Nova Scotia seniors are encouraged to file on time to avoid delay. ADDITIONAL EDUCATIONAL RESOURCES: Advanced Tax Preparation and Research

GST/HST Netfile is available to GST/HST registrants everywhere except Quebec. This allows GST/HST returns to be completed online and filed electronically. Using the four digit access code supplied by CRA, GST/HST Netfile can be accessed through My Business Account or here. Misplaced access codes or information for new businesses may be found by calling 1-877-322-7849. CRA has produced a video that guides business owners through the GST/HST Netfile process. Filers are shown how to access the site then are guided through the entire process. This video incorporates the new HST tax in Ontario and British Columbia and the HST increase in Nova Scotia. Form GST284, Application for GST/HST Public Service Bodies' Rebate and Self-Government Refund may be filed with the GST/HST return and instructions are included in the video. ADDITIONAL EDUCATIONAL RESOURCES:   Tax Preparation for Proprietorships, EverGreen Explanatory Notes    

CRA administers the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program for participating provinces. This program encourages innovation in business by means of refunds and tax credits for research and development work conducted in Canada. A summary of provincial SR&ED tax credits has recently been posted on the CRA website. Businesses of all sizes may qualify for these incentives. Eligible projects may include experimental development to create new products or technologies or improve existing ones, and basic or applied research. Work that supports these endeavors qualifies as well. Free public information sessions are being conducted across Canada. You can consult CRA for registration details and general information on the SR&ED Tax Incentive Program. ADDITIONAL EDUCATIONAL RESOURCES:EverGreen Explanatory Notes

Only 5% of the new jobs created since mid 2009 went to young workers, according to The Vanier Institute of the Family. Its 12th report on the financial health of the Canadian family, The Current State of Canadian Family Finances 2010 Report warns that the group most keenly affected by under-employment in Canada is youth in the 15-24 age range and as a result "this will force more students to increase their already high debt loads and put more pressure on families for financial support.î How can financial advisors help at tax time? Financial professionals can provide education to young people on how to save money on their taxes with an RRSP and then tap into the savings tax free under the Lifelong Learning Plan. Parents can be educated on tax preferred savings and investment vehicles such as RESPs and TFSAs to begin saving for younger children. Preparing taxes as a family, rather than individual tax filing, can also help. This will ensure that transferrable provisions like the tuition, education and textbook credit are maximized. Because thirty seems to be the new twenty, advisors need to be prepared to help families deal with longer periods of support for young adults in the post-recession world. This must be factored into the tax and financial planning exercise. ADDITIONAL EDUCATIONAL RESOURCES: EverGreen Explanatory Notes Introduction to Personal Tax Preparation Services