quadrantadmin, Author at Quadrant

Make robots pay taxes? Documents detail ideas to adapt to changing labour force – iPolitics.ca

Due to technology, the modern workforce is ever changing. Today in the “gig” economy, there is more part-time and short-term contract work, in addition to automation replacing human workers. These changes in the workforce would mean fewer taxes paid into the country’s federal finances. To counteract reduced revenues, the government is considering a proposal to place a tax on technology that is used to replace human workers, as well as other solutions such as a guaranteed minimum income for Canadians and rejigging labour rules to help workers.

“What the Liberals and other governments around the world are trying to respond to is increasing automation, the unbundling of work that can be done online by anyone, anywhere in the world, and more short-term jobs that are the hallmark of the “gig” economy.”

What CPP reforms mean for Canadian seniors

Two years ago, the government expanded the CPP. It was a much-needed restructure to a system that has had no revisions in fifty years. Here are some of the changes. It will give equity to all seniors, but due to the complex tax structure in Canada, the study found 42 percent of the new CPP benefits will be lost by low-income earners and high-income earners face due to higher taxes and losing other benefits. It will, however, increase the percentage of seniors who are able to receive enough money to retire comfortably. Some feel the changes are not enough, but these changes are still an improvement.

What you need to know about the tax consequences of earning and spending loyalty points

In Canada, there can be tax requirements involving bonus points if the points are a result of business travel, or you purchase business items and get reimbursed for them. If you get cash from the points or the points are a form of employee payments, they are subject to tax. How do you know how much is taxable? The taxable benefit is equivalent to the fair market value of the annual rewards. If an employer controls the points, the employee is obligated to report this on his/her T4 slip.

Key Takeaways:

One must be aware of the tax consequences when using travel points.
The CRA has made many changes over the years regarding the use of points as it relates to taxes.
The use of travel points for business and personal may differ with regards to tax consequences.

“But be sure to consider the tax consequences before redeeming those points, especially if you’ve accumulated some of the points through work.”

What investors should know before buying into an IPO

Investing in an IPO can be lucrative, but it’s not without its risks. Any investor looking to put their money into a new company needs to be prepared to read the prospectus and consider some key factors before making a decision. One factor is to assess whether the company has the capacity to keep growing. It’s also important to understand why the company is going public and what the founders are willing to give in return for your investment. Look at the risks, determine if the numbers are reasonable and do your own research.

Selling your home tax-free may be more complex than you think

The Principle Residence Exemption (PRE) has been used as a tax-free way for Canadians to sell their homes, as long as it’s not for business profits. Properties included in this exemption can range from condominiums to house boats. It can even be outside of Canada, but you have to prove that you live there, even part-time, and are not using it as rental income. If you flip houses, even living in them as you’re doing so, you might not qualify for the PRE.

Key Takeaways:

If you buy or sell residences on a regular basis, the principle residence exemption is not available to you.
The property must be a residence that is not primarily owned for earning income.
The property must be inhabited to qualify for the PRE; though there is no exact definition on how long one must live in the residence.

“Canadian residents can often sell a principal residence free of tax, thanks to the principal residence exemption.”

Can you get survivor benefits from an ex-spouse?

A question arises if you split your pension credits with your ex-spouse and then if that person dies, what happens to the credits? For federal employee pensions, the living spouse is entitled to survivor benefits if you were only legally separated, and so in this case, he would receive 50% of her pension. If you are divorced, you won’t see that money unless you were named by that person’s estate as a beneficiary. If the marriage produced children, then they are likely to receive the credits. Regular pensions are subject to similar rules.

Key Takeaways:

Upon a marriage breakdown when you split pension credits with an ex-spouse, those credits and entitlement are literally transferred, and the transfer is generally irrevocable.
Children from a marriage are entitled to 20% of an ex-spouse’s pension benefit until age 25. Kids over 25, receive a supplementary death benefit with certain conditions.
If an ex-spouse passes away with no will, the assets would be distributed based on the intestacy laws of the province.

“Is it possible to apply to be given back lost, but earned, pension entitlements as neither my ex-wife, (nor any surviving spouse/partner) will now be drawing on these benefits?”

Big credit card firms agree to cut fees they charge merchants

Ottawa has reached five-year deals with Visa, MasterCard and American Express to cut fees by about 10 basis points. In 2020, fees that are collected from businesses will be reduced. Some people had hoped that Ottawa would lower the rate a little more, given that this is only a very small step considering what could have been done. The Canadian Federation of Independent Business called the changes positive. When governments regulate rates, banks can always find other fees to increase to compensate for their lost revenue, so there may be some unexpected consequences.

How charitable remainder trusts let you provide for heirs while doing some good

Your financial legacy can be set up to help provide an income for your heirs as well as a donation to a charity at the same time. You can do this by setting up a Charitable Remainder Trust (CRT). Your heir receives an income from the trust and has a “life interest” in the trust. The charity of your choice has a “remainder interest” (or “residual interest”) upon the death of your heir. One of the advantages of setting it up this way is that your estate can receive a donation tax credit on your final tax return when done correctly.

The pros and cons of bootstrapping your company

Bootstrapping, or self-funding your company can be a good idea when starting, but it can have its drawbacks as well. It forces you to work within a budget and be more proactive in your marketing strategies. But, you may not be able to hire consultants, increase risk and you’ll likely grow at a slower pace. Depending on what your business is and how much work you are able to do initially, bootstrapping may or may not work for you.

Avoid tax traps when opening a joint investment account

Depending on the reason for changing an investment account from an individual to a joint account, the change can have unintended implications due to spousal attribution. This won’t happen when opening a new joint account. But if you transfer capital assets to your spouse inside a joint account, then attribution will generally apply, and the income or capital gains will be taxed back to the contributing spouse. If the reason for changing an account type is for estate planning, then a better way to accomplish this may be to add each other onto existing individual accounts as joint with rights of survivorship. Before you make a change, it’s good to know the tax implications that comes with each type of scenario.

Key Takeaways:

Combining accounts or transferring funds may result in spousal attribution, whereby the contributing spouse is taxed.
If your goal is to have the resulting investment income go to your spouse, then consider a spousal loan at the CRA prescribed rate of interest.
A trust may be considered (instead of a spousal loan) if there are significant non-registered assets and there are other family members for whom they want to use or allocate the trust income.

“It’s not uncommon for a point to come where spouses wish to make individual accounts into joint ones, often for estate planning and administration. It’s important to be aware of the implications to ensure it’s what you want and nothing adverse results.”