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:

For people who want to think strategically about the role of money in their life.   Click here to read the latest blog entry by Evelyn Jacks.

Businesses purchasing new computers and systems software from January 27, 2009 until midnight of January 31, 2011 can claim a 100% capital cost allowance with no half-year rule. These purchases are included in Class 52 of depreciable properties. Now is a good time for advisors and clients to be in contact to review asset acquisition strategies with business owners to benefit from preferred timelines for tax write-offs. Included in other common year end asset reviews are purchase of vehicles, buildings, furniture and fixtures. Purchases of any of these assets before year end will increase the opportunity for tax savings using capital cost allowances. Additional Educational Resources: Enrol in Tax Preparation for Proprietors

On October 19, 2010, CRA released the updated RC4022, "General Information for GST/HST Registrants, which provides information on several new developments on the GST/HST front. Advisors and their clients have been working through the introduction of the HST in BC, ON and Nova Scotia, on July 1, 2010. For the Province of Ontario the HST combines the retail sales rate (8%) with the G.S.T. (5%) for a combined HST of 13%. In British Columbia the retail sales tax (7%) harmonized with the GST (5%) for an HST of 12%. Nova Scotia increased its HST from 13% to 15% on July 1st combining a 10% provincial sales tax with the 5% GST. Of note in the news: Electronic filing of GST/HST returns will be mandatory for most registrants and this document outlines several options for this. As of April 12, 2010, four-digit access codes will be assigned by CRA for all GST/HST registrants for e-filing purposes. Penalties will apply if you are required to file electronically and you fail to do so. The "place of supplyî rules determine whether suppliers must charge GST/HST. New rules as of May 1, 2010, use the location of the consumer of the supply rather than the location of the supplier. For example, if a resident of Nova Scotia purchases and receives delivery of an item from Ontario he will pay 15% HST. A resident of British Columbia purchasing the same product would pay 12%. There are new rules for financial institutions and simplified reporting for network sellers (direct sales). CRA now offers an installment calculator for businesses that can be accessed under "My Business Accountî www.cra.gc.ca/mybusinessaccount To view RC4022 in its entirety you can visit: http://www.cra-arc.gc.ca/E/pub/gp/rc4022/README.html These changes will be discussed in detail at the Distinguished Advisor Workshops, one day CE workshops featuring November Year End Planning Strategies for business owners, coming to Winnipeg, Calgary, Vancouver, Toronto and Ottawa, November 3 to 9 . To register Click here

October 31, 2010 is an important date for Ontario and British Columbia businesses that have now converted from the Retail Sales Tax System to the HST system. It is the last date that these business can file with their respective Ministries of Finance for adjustments, refunds or rebates for RST adjustments that occurred after June 30, 2010. Under the transition provisions, Ontario and BC businesses are required to; file RST returns for any outstanding work that required RST remittances prior to July 1, 2010 even if an invoice has not yet been issued. Claim any rebates of RST due to refunds of sales after July 1st where RST was applied As of November 1, 2010 any claims for refunds or adjustments relating to RST must be made directly by the consumer to the respective Ministry. The Vendor no longer will have any authority to act on behalf of the Provincial Ministry. While vendors will no longer need to deal with the Ministries of Finance and Provincial sales tax issues, it is important to note that businesses must retain all records from July 1, 2007 through to June 30, 2014 for audit and verification purposes. This is an extension of the normal three year period to allow Provincial Ministries to audit past the statutory time frames. For complete details on vendor requirements and transitioning rules, please visit the respective Ministry of Finance websites for your province. Special thanks to Alan Rowell, DFA-Tax Services Specialist of The Accounting Place for this special report. Additional Educational Resources: DFA-Bookkeeping Services Specialist Designation Program; EverGreen Explanatory Notes.

The Bank of Canada released a Monetary Policy Report summary today, outlining its outlook for the Canadian economy based on data received to October 15, 2010. Of significance to the upside are higher commodity prices, a stronger-than anticipated recovery in the US and the possibility of greater-than-projected momentum in the Canadian household sectors. However, three downside risks offsetting those factors include Canada's international competitiveness, global growth prospects, and a greater-than-anticipated correction in the Canadian housing market. What does this mean to the financial services sector and their clients? According to Mark Carney, Governor of the Bank of Canada, Canadians can respond by managing debt and boosting productivity. The Bank in the meantime will try to keep inflation low and stable. And debit is high, according to several studies including Where the Money is Now by the CGA Association of Canada, released in May 2010: Key findings included: Household debt in Canada reached $1.41 trillion in December 2009. If spread evenly, each Canadian would hold $41,740 in outstanding debt in 2009, an amount 2.5 times greater than in 1989. While growth rates of mortgages (secured credit) somewhat slowed over 2008-2009, consumer credit (debt typically not supported by appreciable assets) accelerated during most of that period. That means specifically that Canadians were not borrowing more to build wealth. Cars, however, were popular items. At the end of 2009 75 cents was borrowed for each dollar spent on the purchase of new or used motor vehicles. Click here to read the Monitory Summary Report. Click here to read the CGA report. Strategies for advisors in working with their clients, from a year end planning point of view will be discussed in a peer-to-peer learning exchange when the Knowledge Bureau visits major centre across Canada November 3 to 9 with its Distinguished Advisor Workshops. RSVP by calling Shannon or Carol at 1-866-953-4769.

This week's announcement by the Bank of Canada that it expects to hold its key policy interest rate (also referred to as the "target for the overnight rateî) at 1% for a protracted period of time confirmed what many people already thought to be true ñ the global economy, including the Canadian economy, is still struggling to recover from the economic contraction of 2008-2009 and the odds of a double dip have increased. What does this mean for financial advisors and their clients? First, the struggle to find positive rates of return continues. For the risk adverse client used to buying GICs and T Bills, the news is dismal indeed. Today's low interest rates are likely here to stay for at least another year, maybe more. This is creating a real strain for many seniors who don't want to dip into their capital but who are being forced to because of the extremely low yields available in the market. From a planning perspective, it also throws into question the correct assumptions about an appropriate real rate of return to use on a go forward basis. The lower the real rate of return, the more money people have to save to ensure they have sufficient capital prior to retirement. For example, if a retiree wants $5,000 a month of actual purchasing power for a 25 year retirement and real rates are expected to be 5%, they need to have saved $855,000 as of their retirement date (assuming they will exhaust their capital at the end of the 25 year period). However, if real rates are only 2%, they need almost $1,200,000 of savings. And with today's real rates hovering around 1%, they would need about $1,327,000 of savings. Unfortunately, the problem doesn't end there. High real rates prior to retirement make the process of saving for retirement easier. With today's extremely low rates, much more of the heavy lifting has to come from actual savings and much less can be expected to come from compounding within the portfolio. As if this were not enough, the final problem is the rapid rate at which Canadians are piling up debt. Induced to take on more debt by today's extremely low interest rates, the average individual in Canada has debt equal to 146% of disposal income, which is approximately equal to the debt carried by US citizens prior to the meltdown of 2008/2009. However, whereas the US consumer has rediscovered the virtues of thrift and the value of saving money, Canadians are continuing to add to their debt loads at a rapid pace. When interest rates eventually start to normalize, the increased burden of carrying this debt will reduce their ability to spend on other goods and services, potentially putting a drag on Canadian growth rates for several years in the future. Advisors will want to cover these two points with their clients.