quadrantadmin, Author at Quadrant

Are your charity dollars going to the right people in the right place at the right time?

Regardless of how much you’re giving, it’s important to be informed bout the charity to ensure that it is having an impact. While we want to give, it’s always a risk that a charity might not be nearly as charitable as we hoped, or it claimed. To know your time and money is truly going to a good cause, it’s important for the charity to have been investigated, and then monitored, to ensure what they say is what they do. Philanthropy consultants do just this; analyze and monitor charities before providing information about the charity’s operations.

“With 85,000 registered charities in Canada all asking for money, a philanthropic advisor’s goal is to give donors information that would result in good giving decisions.”

Three tips to help retirees minimize their taxes and maximize their cash flow

When planning for your retirement, not only do you need to know how much to save but how your funds could be taxed. Unfortunately, not a lot of people know how their retirement funds are taxed. If you work part-time or full-time after retiring, there are tax credits you can claim. When you are working, it’s important to utilize the proper investment accounts based on your cash flow at the time. You can also save on taxes by pension splitting income with your spouse (if they are in a lower tax bracket). This will have the added benefit of keep certain government benefits.

“Don’t miss out on opportunities to claim tax credits or implement strategies that might save thousands of tax dollars annually.”

Tax implications of divorce

In a divorce, on top everything else, there’s the way it affects your taxes. Inevitably, assets accumulated during a marriage will be divided, and the guidelines on how they will be divided will often differ across provinces. Beyond the division, there’s also how the taxes attached to certain assets and support matters for children will affect each person’s taxes. An amicable divorce can allow the parties, separating but still willing to work together to some extent, to plan how the final disposition of their assets will be executed to control any taxes that might apply.

Key Takeaways:

Individuals must notify the CRA of their status change (using Form RC65 Marital Status Change) once separated more than 90 consecutive days.
Separation agreements/court orders must be registered with the CRA in cases where spousal support must be paid, because spousal support payments are treated differently than child-support payments for tax purposes.
In shared parenting, if certain conditions are met, typically both parents will share benefits and credits like Canada Child Benefit (CCB), GST/HST credit and eligible dependant credit.

“Assets acquired and debts incurred during a marriage are included in determining family property and distributed equally when the marriage ends.”

Selling real estate? The CRA is watching

If Canadian residents are in the process of selling real estate, they must now take extra care to make sure the sale is properly reported to the Canada Revenue Agency. There are three different categories of real estate including (1) selling a property that has been your primary residence, (2) property that was purchased to make improvements and flip, and (3) property that was purchased to rent. The sale of your primary residence may or may not be subject to capital gains tax. Houses purchased to flip can be fully taxable even if you lived in the property while making improvements if your original intent was to sell it for a profit. The income from rental properties is taxable income, but the sale of rental property for a profit may be subject to a partial capital gains tax.

“Since 2016, all property sales must be reported to the CRA, including that of a principal residence. When you sell property, the transaction must be correctly defined and reported for tax purposes. Failure to do so may result in unwanted audits, potential back taxes, and related interest and penalties.“

How to tell if you’re over-using credit—and get it under control

According to the most recent report from Statistics Canada, the average Canadian currently owes over $23,000 in non-mortgage debt, and that even elders age 65+ owe about $16,000. It appears we have become too comfortable making minimum payments on credit cards and other forms of credit. One way for Canadians to determine if they’re at risk for financial problemsis to go “cold turkey” by putting all your credit cards away & stop using credit for a period of 3 months. After all, you can hide your true financial state for 1 month by using up what’s in the freezer or temporarily adjusting the way you live. But a 3-month stretch is a truer test of your ability to just use cash or a debit card. Perfect your 3-month test by taking into account seasonal expenses like school clothes or car maintenance to determine if you really can cover living expenses without using credit. Adding up expenses and dividing by 12 can enable you to set aside the amount of income you need each month. Remember to allow time to get out of debt, and to take a realistic approach to debt solutions.

“Remember that it took time to get into debt, so it will take time to get out of debt”

What’s the best time to transfer a TFSA between institutions?

Putting money into a TFSA is a great way to save up for retirement. Knowing the regulations that control when and how contributions and withdrawals work will help you avoid any penalties and fees that can apply in certain circumstances. For example, if you change banks, simply taking the money out of the TFSA at your old institution and depositing it with your new could cost you. There are procedures for how to transfer the TFSA funds without penalty, but they must be followed.

Key Takeaways:

TFSA deposits reduce your TFSA room, and withdrawals increase it but the catch is that this doesn’t apply for withdrawals until the subsequent year. If you recontribute early, you may be penalized.
Financial institutions have their own transfer forms to transfer a TFSA from one institution to another, and doing it this way means there are no tax forms to file with the CRA.
You may be able to transfer your investments “in-kind” between institutions, but not all investments are eligible.

“Understanding the ins and outs of Tax Free Savings Account (TFSA) contributions and withdrawals is important to maximize TFSA room, increase tax-free growth, and avoid fees and penalties. “

Running afoul of the CRA on RRSP withdrawals can be a costly mistake

RRSP accounts seem great when you make a deposit and taxes are deducted from your income to match your contribution. The problem is, when you withdraw funds, the amounted is added to your total income for the year and taxed accordingly. In anticipation of taxes owed, financial institutions will often hold onto some of the money withdrawn and send it directly to the CRA. Keep in mind however, that the money withheld may not be enough and you can be fined a hefty amount for lack of payment.

“The truth is, it’s actually quite simple: any funds withdrawn from your RRSP (or its successor, a RRIF) are included in your income.”

French plan to scan social media for tax fraud causes alarm

A new proposal by a French government official will allow the government to scan social media as well as commerce sites such as Ebay. It is so the government can determine if residents are actually living in the country more than they claim at tax time, in addition to what they are buying. If it appears that they are deceitful in reporting residence or income, when compared to the estimates of luxury goods and homes posted on their social media pages, then they could be assessed for more taxes than what they reported.

“France’s data protection watchdog has urged caution over plans to allow authorities to monitor individuals’ social media posts and purchasing activity on websites such as eBay in order to identify those committing tax fraud.”

5 Tips For Limiting The Amount Corporations And Their Shareholders Pay The CRA

Corporations and their shareholders often end up paying more than expected to the CRA because of decisions made in previous years. To minimize taxes paid, there are strategies businesses can apply. It starts with setting up the correct corporate structure and involving the right people early. For example, involving an accountant in larger business decisions at the beginning, means that the business can minimize the tax consequences on purchases, like limiting the capital gains deduction.

Key Takeaways:

Make sure your current corporate structure reflects current tax law, and file proper returns along with keep good records.
Get tax advice before major transactions, and plan for the capital gains deduction.
Have an estate plan, and make sure your executors know to get tax advices as soon as possible.

“Just like any other big transaction, planning, or lack thereof, can have a huge positive, or negative, impact on the potential tax liability.”

How to get the best mortgage rate in Calgary

Currently, supply is larger than demand in the Calgary housing market. This is good news for anyone shopping for a new home because prices have been dropping as a result. Another advantage to purchasing in Calgary is that houses tend to be newly built. But buyers must also understand how this affects the Calgary mortgage market. For instance, since prices are falling, your may not be approved for the amount you applied for. Mortgages are secured by a properties value. Calgary’s vast land has lead to people building new construction homes. But if construction takes a while, one may lose their locked in rate. Buyers should consider a longer rate hold. Being aware of these nuances can save you a lot of money.

“Don’t rush into the first mortgage you’re offered. For all home buyers, probably the number-one tip is to shop around.”