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Prepare in Advance for Next Year’s Tax Filing

Phew! Tax season is over!  You have hopefully just filed your 2017 personal income tax returns.  Was it a satisfying experience for you?  Do you feel a sense of accomplishment or dismay?  For many, the April 30th deadline seems to arrive way too soon.  If this is the case with you, starting the process much earlier would seem to be the answer.

The process should include proper record keeping, taking advantage of the tax saving methods available to you, and, perhaps, finally getting a professional to complete and file your return on your behalf.  The problem with handing your taxes alone is that often people don’t know what they don’t know.  This results in paying more in taxes than was necessary.  The cost of a professional completing your taxes potentially could be offset by the savings that might be gained.

Even if you earned little to no income, filing your return is a good idea and could prove to be advantageous.  This is because there are a number of federal and provincial government programs that you might be eligible for if your declared income is below a certain threshold.  You can refer to the Government of Canada website for the child and family benefits that might be available to you. Read more

Six Important Reasons to have a Will

It has been said that a Will is the last message you will leave your family.  Having a Will can provide clear direction as to what your wishes are and who will get what.  Die without a Will (known as dying intestate) and chaos will likely be the result.  Having a Will allows you to provide for certainty instead of chaos.

Most of the reasons to have a Will have to do with what happens if you don’t have one and that often will depend on what province you reside in.  Each provincial government has its own Wills and Estate legislation which also provides for the rules regarding intestacy.  The following are some of the reasons to have a Will and what could result without one.

  1. Informs your family how and when your property is to be distributed

Your Will affords you the opportunity to give clear instructions as to whom will receive your wealth.  It also allows you to make bequests of certain items such as family heirlooms which you may wish to leave to a specific individual. For those who wish to leave funds to a charity, the Will allows you to do this.  Without a Will, this opportunity may be lost. The bottom line is that you make the call.  Dying without a Will means that the provincial government will make the determinationon how your estate is to be distributed depending on the intestacy laws. Read more

Update on Taxation Changes Affecting Private Corporations

Owners of private corporations should be concerned about proposed tax changes being explored by the Department of Finance.  In the Federal Budget of March 2017, Finance expressed their concern that private corporations were being used by high income Canadians to obtain tax advantages that were not available to other Canadian tax payers.  That concern led to the release of a consultation paper along with draft legislation last July.  Finance asked for input from interested parties and stakeholders during a consultation period that ended in October 2017.

What happens now is anyone’s guess and most likely, we will probably have to wait until the Spring to find out. There were three specific tax planning strategies employed by private corporations that the department was most concerned with: Read more

The Importance of Critical Illness Insurance in Retirement Planning

There are a number of obstacles that could potentially de-rail a comfortable retirement. These include marriage breakdown, a stock market crash, and being sued. Another huge obstacle would be the diagnosis of a life threatening critical illness affecting you or your spouse. While it might be difficult to insulate yourself against some of the threats to retirement security, Critical Illness insurance goes a long way to mitigate the financial disaster that could result from a change in health as we approach retirement.

Considering that the wealth of many Canadians is comprised of the equity in their homes and the balance of their retirement plans, having to access funds to combat a dreaded illness could put their retirement objectives in jeopardy. Imagine that you are just a few years into or approaching retirement and you or your spouse suffers a stroke. The prognosis is for a long recovery and the cost associated with recovery and care is projected to be substantial. Statistics show that 62,000 Canadians suffer a stroke each year* with over 80% surviving* many of whom would require ongoing care. Since 80% of all strokes happen to Canadians over 60 those unlucky enough could definitely see their retirement funding jeopardized. Read more

Insurance Audit for the Business Owner

Many business owners understand the important role that life insurance plays in effective corporate planning.  Whether it is the funding of a shareholders’ agreement, life insuring corporate debt, or protecting against loss from the death of a key employee, life insurance is of great value in underpinning the financial success of a corporation.

Just as life insurance needs for families change over time the same is also true for requirements of a business.  If it has been some time since you last reviewed your corporate needs then it is probably time for a corporate insurance audit. This is especially true if the company has grown in value since the time the insurance was first implemented.  The scope of the audit and the insurance related issues include the following: Read more

Private Corporations in the Cross Hairs

If you are the owner of a private corporation you should be concerned about the commentary that is coming from the Department of Finance.  In the Federal Budget of March 2017, Finance expressed their concern that private corporations were being used by high income Canadians to obtain tax advantages that were not available to other Canadian tax payers.  That concern has led to the release on July 18th 2017, of a consultation paper along with draft legislation.  Finance is currently asking for input from interested parties and stakeholders and has stated that the consultation period will end on October 2, 2017.  At this point, whatever happens after that date is anyone’s guess, but speculation is high that changes will be introduced to close what the Department perceives as abusive practices relating to private corporations.

Specifically, there are three specific tax planning strategies employed by private corporations that the department is most concerned with:

Sprinkling income using a private corporation

Income tax paid on income from a private corporation can be greatly reduced by causing that income to be received in the form of dividends by individuals who would pay tax at a much lower rate or not at all.  These dividends are usually paid to adult children or other family members who are shareholders of the private corporation or to a family trust.  By “sprinkling” the income in this manner the amount of income tax paid can be greatly reduced. Read more

Featured Articles

18
Apr

Protect Yourself Against Identity Theft

There are some simple steps you can take to reduce or minimize the risk of becoming a victim of identity theft.

Practice Safe Internet Use

Delete spam emails that ask for personal information, and keep your anti-virus and anti-spyware software up-to-date. Shop online only with secure web pages (check the bottom of your browser for an image of a lock or look for “https” in the address bar). Never send credit card numbers, social security numbers and other personal information via email.

Destroy Private Records

Read more »

18
Feb

Why have a will when you have beneficiaries?

You give up some control when you just have beneficiaries and no will

by Ed Olkovich for MoneySense magazine

Q: I am married. I have RRIF and LIRA and my spouse has RRSPs. We have joint cashable accounts too. We have appointed each other as beneficiaries for every account. I am told this arrangement takes longer to settle on death if there is no will. Why do I still need a will?

—Krish

Click to read the answer to this question on the MoneySense website.

5
Jan

Budgeting

If you’ve made a resolution to be more disciplined with your spending, or you’ve overspent over the holidays, a budget is a good way to get back on track.  Here’s a good article from Practical Money Skills that you might find helpful.


A budget is a plan, an outline of your future income and expenditures that you can use as a guideline for spending and saving.

Only 47 % percent of Canadians use a budget to plan their spending. But Canadians are feeling more in debt than ever with 90% saying they have more debt today than five years ago. A budget can help you pay your bills on time, cover unexpected emergencies, and reach your financial goals — now and in the future. Most of the information you need is already at your fingertips. Read more »