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Personal Investor: Turn capital loss into tax gain

Despite making some bad investments, your losses may provide some financial benefit to you. Provided, you have some gains from other investments within the last three years, then you can reduce the amount of money you owe tax on by deducting your losses from them. In this way, you can reduce the capital gains tax you’ll need to pay on your returns. This strategy, known as tax-loss selling and is a common practice often deployed at the end of the year to lower a tax bill. There are, however, some stipulations such as that you can’t repurchase the stock you sold at a loss until after 30 days, and it has to be outside an RRSP or a TSFA.

Prepare Now For These 3 Emergencies You’ll Probably Face

No matter how healthy and hardworking that you are, life can always hit you with sudden emergencies that can throw you off course. Some of these emergencies can be predicted and prepared for. People are living longer and as your parents age you need to be prepared emotionally and financially to care for them. Stress and anxiety can effect all of us and it’s important to seek care before it gets out of control. You also need to be prepared financially for any inheritance you receive, invest wisely and make it last.

Key Takeaways:

Unfortunately, we are all likely to experience a parent who becomes ill and/or passes away, and over the next decade or so will see many people step into caregiver roles.
According to the Centre for Addiction and Mental Health (CAMH), one in five Canadians experience a mental health issue in any given year, making it a leading cause of disability.
With life expectancy being higher than ever before, many Canadians will need to ensure they have enough money to fund their retirement years so they can live the type of full lifestyle they want.

“Life, and death, happens. It struck me that what tied these two experiences together was the lack — and importance — of preparation. This got me thinking about several life events that will be trending over the next several years as baby boomers age, but that impact each of us, and why it’s critical that we’re ready.”

These are the rules of the road when it comes to deducting automobile expenses on your taxes

It’s tax time in Canada, and if you are planning on writing off car expenses, you need to meet certain conditions. To qualify, you need to travel or work remotely, be paying expenses out-of-pocket, and not be receiving a non-taxable vehicle allowance. You’ll also require form T2200 to be signed by your employer. If you meet these four conditions, then you are eligible to receive a deduction for use of your vehicle while you are working.

Rental income is taxable – even for Airbnb

Airbnb recently sent notices to 80,000 Canadian hosts to remind them that sharing their home is considered rental income by Canada Revenue Agency (CRA). This means you’ll need to include money from Airbnb rentals on form T776, which will increase your overall employment income.

While it may be taxed in a high bracket, you can lower the taxable amount by deducting expenses related to the rental. You can claim the full cost of advertising expenses, office costs, professional fees, management fees, salaries or wages, and travel costs. If the property is your principal residence, then you can claim a portion of your mortgage interest, property taxes, insurance, repairs and maintenance, landscaping, utilities, and depreciation on fixed assets like furniture, computers, or even your car. If it isn’t your principal residence, then you can claim depreciation on the property. Remember to keep all your records.

5 Things To Know About Canada Pension Plan Changes

If you’re looking to retire, then you’ll want to know about the changes to the Canada Pension Plan (CPP) and how they will affect your retirement income. Federal Finance Minister Bill Morneau announced a suite of changes after meeting with his provincial counterparts in December 2017. Here are five things Canadians should know regarding the changes.

Key Takeaways:

Time off work for children or disabilities will not reduce retirement benefits for Canadians.
Instead of “drop out” years, benefits will be calculated with a 40-year accrual that will set the income for non-working years.
Survivors benefits will be paid regardless of age, dependent children or disability, and a lump-sum death benefit of $2,500 instead of being calculated based on a deceased’s earnings.
A lump-sum payment upon a person’s death will be set for everyone at $2,500, instead of being calculated based on a deceased’s earnings.
The government says there won’t be an increases in CPP contribution rates, but Canadians will have to wait until the chief actuary assesses the costs and effects of all the measures once the Liberals table the necessary legislative amendments to the CPP.

“The government says the changes won’t require increases in CPP contribution rates.”

B.C. government exempting vacation homes from speculation tax

As a result of backlash from the B.C. property speculation tax, the government is reducing where the tax applies by focusing on primarily urban centres and exempting rural areas where lakeside cabins and vacation homes are common. It was also announced that the rate of tax will change. Starting in 2019, British Columbians with multiple homes, which are kept empty, will pay 0.5 percent tax on the value of their home. Canadians living outside B.C. will pay 1 percent tax, and non-residents will pay 2 percent. The speculation tax was initiated to deal with the issue of housing affordability for British Columbians, and the focus of the tax was to deter those people who are treating the housing market like a stock market.

Tax scammers out in full force this season

Scammers posing as Canadian Revenue Agents have been contacting people, demanding money and threatening legal action in an attempt to get personal information. It’s important to know that the CRA will only each out to you by certified mail, not by phone. If you are suspicious, contact the CRA directly. You should also be skeptical if they are looking for your personal information or request unusual payment methods, such as Bitcoin. If you think you have been a fraud victim, contact the CRA immediately.

Here’s what to do when you take over a parent’s finances

According to Statistics Canada, 17 percent of Canadians are over 65, and 90 percent agree it’s important to discuss finances with their parents. However, over 60 percent hadn’t had a conversation on what would happen in the event of the death of a parent or if they were otherwise unable to handle their finances themselves due to long term illness or incapacitation. The issue is further complicated by the fact that few people are well versed in the finer points of personal finance. This makes estate planning – i.e. having that discussion and making plans before the worst happens – even more important.

Key Takeaways:

The first thing you should do with your parent’s investments is take inventory of what they have in the first place.
Take a close look at your parent’s income and expenses to make sure you know how they are funding their lifestyle and whether it is sustainable.
Ensure that your parent’s tax returns are up to date, as some seniors may be entitled to government benefits and others may owe money on their taxes since neither investment income nor minimum withdrawals from a RRIF are required to have tax withheld at source.

“I think it is important for children to try to talk to their senior parents about money, even if it is short, sweet and high-level.”

CRA scams on the rise as tax season gets underway

Its tax season and the CRA wants people to be aware that the scammers are out there. Scammers posing as CRA officials use aggressive phone calls and emails in an attempt to get your personal information, something the CRA would not do. These scammers often target the elderly because they are easier targets. Scammers often operate from other countries making it hard to stop them. If you are contacted by anyone claiming to be from the he CRA, always double check by contacting the agency directly.

Is your small business properly protected with insurance?

Regardless of what industry your business is in protecting it is vital. There are a number of different types and ways to protect your business to ensure that your business, employees and investment aren’t at risk. Business owners should have some form of insurance and the correct amount for all your assets. Without the right protection and coverage, you’re gambling with your business. A thorough plan should include insurance, safety plans as well as a continuity plans to survive a disaster or sudden loss of key people. This protects your yourself, the business, and your employees.

Key Takeaways:

Premiums will likely cost you less than dealing with something without insurance.
Choose an insurance broker who is knowledgeable about your industry and is aware of all aspects of your business.
Have a business continuity plan in place to ensure that your business continues to run smoothly even in the event of an emergency, and to review this plan on a regular basis.

“Although you can’t always prevent disasters, putting policies, procedures and protections in place will help mitigate the fall out from major events.”