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?

An Alida, Sask., couple have learned the hard way that the Canada Revenue Agency (CRA) does not tolerate tax evasion and does not shy away from seeking onerous penalties. On May 14, the Estevan Provincial Court meted out hefty fines and jail time to Alida residents Norman Luke Desautels and Dorothy-Anne Denise Desautels for tax evasion. Norman Desautels was sentenced to one year in jail and fined $105,922.47. His wife, Dorothy-Anne, was sentenced to six months in jail and fined $99,548.80. The couple was given five years to pay the fines, which represent 100% of the taxes that the Desautels sought to evade. As well, the Desautels have to pay the outstanding taxes and the benefits that they received. On Feb. 27, 2012, the Desautels were found guilty of failing to report income from their farm, surface leases and a family trust. Norman also failed to report income from his oil-well servicing business. Nor did the couple report income of $494,671.36, earned from 2004 to 2008; they also evaded personal income taxes of $90,679.80. In doing so, Dorothy-Anne received $8,869 in Canada child tax benefits to which she was not entitled. Norman collected GST from his customers that he did not remit, totaling $6,373.67 for the period 2005 to 2008. Don't confuse tax avoidance with tax evasion. As the Desautels discovered, tax evasion ó which involves the non-declaration or falsification of tax-related information ó is illegal. Tax avoidance, which involves using specific transactions to lower the amount of taxes payable as a result of a technical reading and application of the law, is not; in some cases, however, the courts may later deny the tax benefit. If you are concerned about your own tax-filing liabilities, remember the CRA's Voluntary Disclosures Program. The CRA allows taxpayers to correct inaccurate or incomplete tax-related information, or to disclose information they omitted to report to the Agency, in some cases without facing prosecution or fines.   Additional Educational Resources: Introduction to Personal Tax Preparation Services and EverGreen Explanatory Notes.  

Canada's number one commodity export, crude oil, has been losing value steadily over the past month. Weak economic growth in the U.S. and China is partly to blame, as is the continuing financial mayhem in Europe. Crude dropped to less than US$82 a barrel on June 4, from US $106 a barrel a month earlier. At the same time, the price of one of Canada's favourite imports ó coffee ó has been climbing steadily. And there is no relief in sight ó for either commodity. Certainly there has been pressure on the U.S. central bank, the Federal Reserve Board, to unveil a stimulus plan that would get the U.S. economy growing ó and Americans buying Canadian oil. But those pleas have fallen on deaf ears; Fed Chairman Ben Bernanke told Congress June 7 that, as yet, no plans have been made. At the same time, Canada's obsession with the dark drink has intensified. Canada's consumption per capita now ranks second in the world, behind only Italy, a large leap from ninth only five years ago. A survey conducted for McDonald's Restaurants in late 2010 by Ipsos Reid found that almost 90% of Canadians drink at least one cup of coffee a day, with most indulging several times daily. In fact, the average Canadian drinks 3.2 cups a day. This Canadian obsession is getting expensive, however, as coffee prices climb in the slowing global economy. The highly sought-after Arabica beans, which can only be grown in altitudes above 610 meters, have soared in price ó until recently, that is, when the traditionally less-favoured Robusta beans have overtaken them. In the past year, Arabica shipments have dropped by 8%, while Robusta exports are up 10.4% in the same time period.   It seems the price curve of these two beans has been inverting. According to Bloomberg LLP data, coffee is both the best- and worst-performing commodity investment so far in 2012. The spot price for the Arabica beans recently fell to US$1.75 a pound, or 77% of what it was at the start 2012. Traditionally, the floor price for these beans has been about US$2 a pound, with the price hitting an all-time high of US$3 a pound in April 2011. Robusta beans, meanwhile, are priced at US$1.17 a pound, 22% more expensive than they were at the beginning of this year. As a result, cost-conscious Canadians have begun forsaking their $5 lattes and reverting to their traditional cup of joe. They have even begun brewing their own coffee at home to save money. "People decided it was costing too much to gas up their bodies,î commodities watcher John Stephenson, a portfolio manager with First Asset Investment Management Inc. in Toronto, told the CBC recently. This is good news for McDonald's and Tim Horton's, those purveyors of lower-priced brews, but bad news for the numerous, independent coffee shops that have popped up throughout Canada during this period of crazy coffee consumption. These small-time players now face penny-pinching Canadians who will either settle for a regular cup of coffee, or simply brew at home. To add to this, McDonald's and Tim Horton's are now pricing their specialty coffee drinks for less than most independent shops. So, the future of the small Canadian coffee shop may be in jeopardy. John Rufino, who owns Classic Coffee, a roastery that sells its beans to several hundred shops around Toronto, has taken note of the crowded marketplace. When a new shop opens within a certain distance of existing customers, Rufino refuses to sell to it. "I don't feel its right when they have to compete with the same product,î Rufino told Toronto newspaper, The Grid, recently. "If there's a certain amount of business within a block, and two or three cafés share it, it doesn't make sense. They work 12 hours a day and they won't make it.î Canadians will be paying close attention to these commodity prices in future months, as they strategize the best route to weather this global financial stalemate. Greer Jacks is updating jurisprudence in the EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.  

What are you taking in summer school this year? Whether you are a financial professional or a consumer of financial services, investing in your financial education is a good idea. After all, you should be prepared to deal with important life events such as financing an education, purchasing and/or selling a residence and selecting financial assets that will produce adequate retirement income. In the four years since the outbreak of the global financial crisis, it has become increasingly clear that the responsibility for financial well-being and decision-making resides with individual households. Crushing debt has tied governments' hands, requiring a postponement to universal pension benefits and an increase in user fees. At the same time, uncertain economic conditions have forced both public and private sector employers to trim costs ó including employee benefits. More than ever, it is up to you to take care of yourself and your family's future: is your current level of financial ability ready for that challenge? If you feel incapable or unsure of grasping new concepts and turning them into meaningful strategies, actions and investment results for your family, you are not alone. We are all in uncharted waters. Global risks are greater; the financial recovery is fragile and market behaviour is unpredictable. But there is good news. There are tremendous opportunities to increase your understanding of the decisions you have to make through a variety of educational opportunities. This year's Distinguished Advisor Conference (DAC), entitled "Navigation: Charting a New Course,î to be held in Naples, Florida, Nov. 11-14, is one example. In its ninth year, this conference was born out of the need to take Canadian advisors to the places where their clients will retire. That way the advisors can understand the economic environments in which clients will spend their life savings and together they can plan their savings to accommodate future health vulnerabilities. The DAC program focuses on cutting-edge issues ó from taxes to retirement to global investment strategies ó and gives delegates access to the most experienced and knowledgeable people in their respective areas of specialization. For example, on Nov. 12, Scott Mackenzie, president of Morningstar Canada, will explain how to improve portfolio construction in today's self-reliant, highly technical world, while celebrated economist Patricia Croft will analyze equity markets and Terry Jenkins, executive vice president and head of U.S. Private Banking for BMO Harris Bank, will discuss the behaviour of high-net worth families in a fragile economy. "In the last half-dozen decades, research and technology have continued to evolve and improve,î says Mackenzie. "The result: better portfolio construction designed not only to perform in good times and bad, but with a firm reins on the attendant risks. What's more, each financial crisis has provided insights into which techniques work well, as well as those that could use improvement.î Make no mistake, managing your accumulated wealth ó particularly if you have accumulated sizable net worth over the course of your lifetime ó is akin to managing a business. You need a strategic framework in which to set goals and budgets; you need financial knowledge and skills with which to make sound decisions. Abdicating your financial responsibilities ó having no strategic framework around which to make consistent and informed decisions ó is no longer an option for families of wealth, no matter how large or small the pot. That's because, to a large degree, you are on your own. The right financial education can help you make those important decisions. It's Your Money. Your Life. This summer, challenge yourself ó consider adding knowledge and skills to your "intellectual capitalî by taking a course, workshop or conference in a new financial discipline, be it tax, retirement, investment, estate planning, bookkeeping, wealth management. You will gain by making better financial decisions for your family and, if you are an advisor, those insights will spill over helping you improve results for your clients. Next week: What are the best ways to put your money to work? Evelyn Jacks is president of Knowledge Bureau and founder of the Distinguished Advisor Conference (DAC), now in its ninth year. This annual event attracts hundreds of top advisors from across Canada to discuss recent trends in economics, tax, investment, retirement and estate planning. Additional Educational Resources: Distinguished Advisor Conference and MFA Designation Program.  

Terry Jenkins, executive vice president and head of U.S. Private Banking for BMO Harris Bank, joins the lineup of knowledgeable and respected speakers at this year's Distinguished Advisor Conference (DAC) in Naples, Florida, Nov. 11-14. Diana Juricevic, one of Canada's most powerful women, and author and portfolio manager Richard Croft are also among the speakers that highlight the newly released agenda. In its ninth year, this year's DAC, entitled "Navigation: Charting a New Course,î will focus on helping advisors of all stripes chart a course through the treacherous waters of the post-crisis global economy. Evelyn Jacks, Knowledge Bureau president and founder of the conference, says it's more important than ever for professionals from all disciplines ó tax, investment, retirement, and estate and succession planning ó to improve the quality of their conversations with their clients. "The calibre and experience of the speakers at this event,î says Jacks, "will impart significant knowledge, insights and skills to help advisors navigate the still-fragile economic recovery.î The speaker list includes: On Monday, Nov. 12, Leading economist Patricia Croft will discuss why our near-future includes a bullish equity market and strong Canadian dollar; Terry Jenkins will explore client segmentation in the high-net worth marketplace; Scott Mackenzie, president and CEO of Morningstar Canada, will explore better portfolio construction using research and technology; Financial guru Gordon Pape will look at investment options in 2013. On Tuesday, Nov. 13: Diana Juricevic will discuss humanitarian responses for financial advisors who are advocates for clients; Madeleine Dion Stout, award-winning Cree speaker, will discuss planning for Indigenous communities; Catherine Bell, international speaker, will show delegates how to link new client loyalty and effective professionalism; Dr. Paul Ziemer, senior advisor Gillian Stovel Rivers and author Rick Atkinson ó respectively health, wealth and retirement planning coaches ó will demonstrate how collaborative coaching can empower advisors and their clients. On Wednesday, Nov. 14: Well-known portfolio manager and author Richard Croft will discuss collaborative wealth management within a changing regulatory landscape; Knowledge Bureau authors Robert Ironside and Doug Nelson will analyze the importance of currency fluctuations when investing in foreign property; Lawyer John Poyser will take the audience through an "executor school.î Early registration discounts end June 30 and inexpensive airline seats are still available with DAC's group discount program. To register, call 1-866-953-4769 or fax the registration form  to 204-953-4762 or email to reception@knowledgebureau.com.

In a recent decision concerning a bailiff firm and its insurer, the Quebec Superior Court made it very clear conflicts of interest must be avoided. When an insurer mixes self-interest with the best interest of its client, the client's interests are not served ó and the insurer pays the price. The case, Taillefer v Continental Casualty Company, involves a complicated set of facts pertaining to a bailiff firm, Paquette & Associés, and Continental, the provider of its professional liability insurance. The case evolved from the Cinar scandal, in which, in 1998, Cinar president Ronald Weinberg and other executives of the Montreal-based animation company were charged with 36 counts of fraud related to $120 million stashed in a Bahamian bank account. (For background on the Cinar scandal, click here.) As the case against Weinberg progressed through the courts, the court authorized the sale of Weinberg's properties. In 2006, Paquette invested the proceeds in asset-backed commercial paper (ABCP). Unfortunately for Paquette and Weinberg's creditors, by the time the Court of Appeal authorized the distribution of the proceeds, the ABCP had disappeared in the 2008 market meltdown. In May 2009, Paquette was forced to borrow close to $4.5 million to satisfy the creditors. The crux of Taillefer revolves around what happened next. As law firm Norton Rose Canada LLP outlines in its update, Paquette asked its professional liability insurer to indemnify it for the ABCP loss and to assume the costs incurred in defending its interests in the lawsuits that led to the situation. The insurers, however, refused to cover the loss, leading to a dispute before the Quebec Superior Court. The facts of this case are complicated but that does not mean that we cannot learn something from this jurisprudence. The court ultimately decided against the insurer largely because of the insurer's conduct from the time it was informed of a possible claim against Paquette. Most important for the court, the insurer gave Paquette contradictory information, sometimes even in the same communication. During one such instance, the insurer told Paquette that it was appointing a law firm to defend Paquette's interests in the case but that the same attorneys also had a mandate to defend the interests of the insurer. In view of this, Justice Jean-Yves Lalonde of the Quebec Superior Court concluded that the insurer created a confusing and ambiguous situation by appointing counsel with these dual mandates. This placed the attorneys retained by the insurer in a conflict of interest situation and asked them to act in a manner that was contrary to their duty to protect Paquette's interests. The court ultimately found in favour of Paquette. As the Supreme Court of Canada stated in the leading judgment on the issue of conflict of interest, Neil (2002), a conflict arises when there is a substantial risk that the lawyer's representation of the client will be materially and adversely affected by the lawyer's own interests or by the lawyer's duties to another client, a former client or a third person. As this decision clearly reveals, conflicts of interest must be avoided not only to avoid putting the administration of justice into disrepute, but also to avoid the massive fiscal and legal ramifications that might arise. Greer Jacks is updating jurisprudence in the EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.  

Checkmated once again by global economic events, the Bank of Canada kept the overnight rate at 1%, which would seem to indicate, despite pundits' earlier speculation, Canadians aren't going to see interest rates change anytime soon. And when they do change, the central bank has signaled, the direction will be upward, not downward. "To the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed,î the Bank of Canada press release said, "some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2% inflation target over the medium term.î CIBC economist Avery Shenfeld put it another way in his recent comment: "Governor [Mark] Carney, and his team at the Bank of Canada, are not ready to throw in the towel on their reasonably optimistic outlook, or the resulting need to raise interest rates down the road. While conceding that the global picture is more troubling than it appeared back in April, in contrast to financial markets betting on a rate cut, the central bank made clear that it still sees its next policy change as a hike from the low 1% rate it chose to retain today.î Certainly, Carney has guarded his language and hedged his bets. As this quarter indicates, the economic environment can change dramatically in a matter of months. As of April, Greece is back in the headlines and euro zone events have weighed on global economic health. Growth in China, Brazil and India has disappointed and economists worry about the "spillover effectî on the Canadian economy. The domestic scene is also worrisome with GDP up by a mediocre 1.9% in the first quarter, as CIBC economist Emanuella Enenajor noted, "tracking last year's fourth-quarter pace.î Exports have indeed slowed measurably. But, adds Enenajor, "home-grown momentum also waned, with final domestic demand slowing to 1.3%, the fifth straight quarterly deceleration.î On the bright side, noted the Bank of Canada, the Canadian economy continues to operate with "a small degree of excess capacityî with total CPI inflation falling below 2% and core inflation remaining around 2%. But the downside risks are piling up. And in Canada there is that nagging, consistent worry about rising household debt in an environment in which growth in household income is moderate ó at best. The Bank of Canada noted the "slightly slower than expectedî growth in the first quarter and the stronger than expected housing activity. That supports the need for the withdrawal of monetary policy stimulus ó or higher rates. As Leslie Preston, TD Bank Group economist, summed it up in a recent report: "Today's statement struck a very prudent balance, acknowledging the weaker global economic outlook, but also reminding markets (who had priced in a chance of a rate cut by yearend) that barring a global catastrophe the next interest rate move will be up, not down.î   Additional Educational Resources: Debt and Cash Flow Management and Financial Recovery in a Fragile World.