Knowledge Bureau Poll: Tax Cut Doesn’t Cut It!

The Notice of Ways and Means Motion was released on May 27, but the 1% tax rate cut going into effect on July 1, didn’t cut it with Knowledge Bureau Report readers who responded to our May Poll.  A decisive 90% of respondents said “No” when asked: does the new government’s promise to cut the lowest personal income tax rate by 1% to 14%, (14.5% in 2025) go far enough to help Canadians impacted by high costs?  Here were their comments and suggested alternatives based on real life experiences with the after-tax income their struggling clients are left with:

Just how good is your tax knowledge these days? Are you up for a little year-end tax test to see just how much you need to “shake out the cobwebs” before tax season 2016?  Here’s how it works: tell us the significance of these numbers that will appear on the 2015 T1 Return: $2093, $7033, $7899, $11,327, $15,255, $25,370, $35,466, $72,809 and $140,944.

It’s more important than ever for Millennials and their Boomer parents to start discussions about multi-generation tax, retirement and financial planning, and after dinner story-telling over the holidays is a great way to start a new financial journey in 2016.  Just how do you build a Wealth Purpose with a Tax Strategy?  Evelyn Jacks’ Family Tax Essentials will provide you with some great new ideas!

How can you be a better steward of your clients’ wealth? How can you communicate effectively to them your role as a financial fiduciary? The trend in the financial industry is towards greater transparency as the value of advice trumps a transaction-based service. But to create a more powerful value proposition for your advisory practice in 2016, you need to refocus on your fiduciary duty.

The Federal Government introduced a Ways and Means Motion on December 7 that will implement the promised middle income tax cut to 20.5%. In addition, there are a host of new tax increases for high net worth clients: Canadian retirees and business owners that tax and financial advisors will want to reach with planning advice soon.

The recent judgment in Ellis v. The Queen shows that it is possible to successful challenge the Crown’s case for penalties, after a third party re-assessment of taxes to a delinquent taxpayer’s spouse. The appellant had been assessed $10,199.73 in penalties under section 163 of the Income Tax Act (the Act) when her husband transferred 50% of their matrimonial home, targeted by CRA to cover his $50,000 federal tax bill.

Although the government is limited to three years to reassess returns in most cases, taxpayers have 10 years to make changes to their returns.  That’s why it’s important to call clients now- especially delinquent filers to preserve tax filing rights.  Specifically, they will have until December 31, 2015 to make changes to or file their 2005 return before it becomes statute-barred.