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:

The Bank of Canada made an abrupt announcement this week, declaring that the economic outlook for Canada has changed, requiring a reduction in targeted growth rates in 2011 and 2012 to 2.3 and 2.6 per cent respectively, while the overnight rate remained at 1%. The next scheduled date for the overnight target rate will be December 7. These changes reflect a new phase in global economic recovery. Fiscal stimulus activities will shift to fiscal consolidation over the next several years. On the horizon are a weaker recovery in the US and other advanced economies, a slowing of growth rates in emerging economies and a "subdued profile for household spending" here at home. Notably, housing debt has become an important factor in a decreased capacity for consumer spending. The good news, however is that demand is expected to shift towards business investment, and net exports, the strength of which will be affected by currency rates, and external demand. Click here for the full report. What is the impact on advice? Several year end strategies may be employed to plan into a moderate recovery cycle: Tax efficiency of both active and passive sources becomes increasingly important as investment returns continue to be negligible. Debt management is critically important; therefore a critical view to instalment tax remittance requirements is necessary. Portfolio risk management is paramount. Transfer of financial and business assets amongst family members may be attractive Inter-spousal loans at low prescribed rates of interest may facilitate transfer strategies Tax loss selling is important; so is the tax free transfer of qualifying shares to charity, with the resulting offsetting tax credit. These and other strategies will be discussed in detail at the Distinguished Advisor Canada-wide Workshops starting November 3 to 9 brought to you by Knowledge Bureau and Dr. Tax.

Firms that do tax discounting transactions tend to pop up at year end, and they will prepare the return and electronically file it, but provide "instant refunds" at a cost of 15% of the first $300 and 5% of the rest of the refund. That means if your refund is $300, you'll pay $45 to have the return prepared and email and get $255 back immediately. If your refund is more like $1500óthe average refund in Canadaóyou'll pay $105 for this: $45 on the first $300 and $60 on the next $1200. This will put $1395 in your pocket instantly. Is that worth it? Consider the annualized cost of advancing yourself money this way. . .and then some alternatives. Perhaps if you have access to a line of credit or can earn extra income with a second job, you'll preserve more of that tax refund. Or, if you have errors or omissions on prior filed returns, you may be able to recover missed refunds or benefits that will cover costs in the short term. Your tax advisor can help. The form and sample cost calculations can be found at the following link: http://www.cra-arc.gc.ca/E/pbg/tf/rc71/rc71-10b.pdf Additional educational resources: Introduction to Personal Tax Course and Essential Tax Facts.

The Canadian Loonie had a strong showing last month, chalking up impressive present values, which helped travelers especially to the US and Europe with their exchange rates. The value of the Canadian dollar vs other currencies was as follows: Month US Dollar Euro Mexican Peso UK Pound September 1.033 1.3535 0.08073 1.61044286 July 1.04268571 1.3358 0.08139 1.59522857 Average 2009 1.14197729 1.5855 0.08448 1.7835578 Why is watching the fluctuations of the loonie important to the Canadian economy, and more specifically those who work, spend and save in it? According to the Bank of Canada "Specifically, a rise or fall in the external value of the Canadian dollar will make Canadian goods and services less or more expensive for foreign buyers, and this will tend to boost or hold back their demand for our products. Movements up or down in the Canadian dollar relative to other currencies will also make imported goods more or less affordable, thus increasing or reducing the volume of our imports.î So while travelers rejoice, the strong loonie can hurt manufacturers, exporters and those who work in those industries affected by foreign buyers. Apparently there is not much we can do to control the value of our currency. The Bank's research shows that . . .î the evolution of commodity prices is the main driver of the Canadian dollar over time. Commodity prices, however, are essentially shaped by global forces that are beyond Canada's control.î Lots of other factors also influence the value of our currency: the world prices for commodities. Our relative economic performance. relative inflation rates relative interest rates Canada's productivity record trade and current account balances the size of Canada's public debt relative to that of the United States, as well as Canadian tax policies and incentives. short-term capital flows domestic political turmoil For more information, a good background article on exchange rates appears here: http://www.bankofcanada.ca/en/backgrounders/bg-e1.html Additional Education Resources: Knowledge Bureau Courses: Elements of Real Wealth Management Financial Literacy: Evaluating Risk and Return Tax Efficient Investment Income Planning

The Finance Department Released its update on economic projections on October 12, a fitting encore to a Thanksgiving weekend that had Canadians basking in beautiful sunshine in much of the country. Sunny too is the mood of investors, particularly with the news about our financial recovery, which has taken us back to a pre-crisis environment. However, the fly in the ointment is certainly the deficit, which has increased moderately to almost $56  Billion, according to the report, since the March 4, 2010 budget, primarily due to an accrual of $5.6billion in transitional assistance payments for recent provincial tax decisions to be paid in 2010ñ11 and 2011ñ12. Personal income taxes will also rise by 8.8 per cent in 2010ñ11, as our progressive tax system takes more from the anticipated growth in personal income, combined with the expiration of the Home Renovation Tax Credit. Corporate income tax revenues are projected to decline by 7.6 per cent in 2010ñ11. The department underscored that the Canadian economy "fared much better than other major advanced economies throughout the recession and over the recovery to date.î Our decline in GDP during the global recession was the smallest of all G-7 countries. However, looking forward into the short term, our GDP growth is expected to be moderate. Private sector economists expect a growth rate of 1.8 per cent in the third quarter of 2010 followed by an increase to approximately 2.5 per cent over the next three quarters. Interest rate projections have also been decreased since the March budget. Three-month treasury bill rates are now expected to be lower by an average of about 50 basis points between 2010 and 2014 while 10-year government bond rates are expected to be lower by an average of about 75 basis points. Further the unemployment rate for 2010 is forecasted to remain at 8.0 per cent, which is down only .5% since budget time. These economic trendlines and their impact on tax, investment, and retirement plannng will be discussed in depth at the Distinguished Advisor Workshops throughout Canada in November and at the Distinguished Advisor Conference in Orlando. In particular delegates will learn how these projections affect year end planning and a longer term strategic approach to family wealth management, respectively, at these events.

Golden Girl Finance Inc. and The Knowledge Bureau are pleased to announce their strategic educational partnership. Through this partnership, Golden Girl Finance hopes to inspire more women towards pro-active management of their personal and family wealth, as well as incite interest and excitement towards careers in finance. As Laura J. McDonald, co-founder of Golden Girl Finance along with Susan L. Misner, cites: Through our partnership with The Knowledge Bureau, we hope women will want to get more engaged in personal finance and careers in finance, surrounding themselves with their own circle of financially savvy friends!î Susan L. Misner echoes this enthusiasm: "Weíre very excited about working with The Knowledge Bureau and its innovative leader, Evelyn Jacks, one of Canadaís most recognized tax experts. The Knowledge Bureau offers opportunities for women to switch careers, maintain flexible hours that benefit their family, and light a real path in the financial services industry.î "We recognized that Golden Girl Finance was connecting with women and truly engaging them,î said Evelyn Jacks, founder and president of the Knowledge Bureau. "We are pleased to partner with such an exceptional opportunity to reach smart, savvy, influential women.î About The Knowledge Bureau The Knowledge Bureau is a national educational institute providing certificate training and professional development at a post-secondary level to advisors in the tax and financial services industries, as well as educational news and information services to their clients. http://www.knowledgebureau.com/ About Golden Girl Finance Golden Girl Finance was born out of a deep desire to inspire, motivate, engage and support women into taking control of their financial lives and futures. To connect women, to mentor them, and certainly to never underestimate them. And to make it all fun and, dare we say, fashionable. Absolute style backed by absolute quality and top notch content and expertise. Giving women the sweet on the street. http://www.goldengirlfinance.ca/

On October 5, the The Department of Finance announced the interest rates payable on Canada Savings Bond (CSB) Series 126 and Canada Premium Bond (CPB) Series 76, which are on sale now until November 1, 2010. These bonds have a 10-year maturity.  For the CSBs, only the rate for the first year has been set: 0.65%.  For the CPBs, rates or the first three years are set at 1.1%, 1.4% and 1.7% respectively. With Statistics Canada's latest inflation rate (August) sitting at 1.7%, plus the fact that interest earned on these bonds is taxable, it is unlikely that investments in either CSB or CPB will even protect investors from inflation much less increase the value of the investments. Educational Resources:   Learn more about the taxation of interest income and claiming of carrying charges in EverGreen Explanatory Notes from The Knowledge Bureau.