News Archives - Page 25 of 28

85% of Canadians say they ‘need to save more money’

In a recent poll intended to research how Canadians save; the results indicate that the majority of people are still not putting away sufficient amounts of money into savings. A full 79% of people surveyed, who were aged 35 to 54, said they do not save enough and are concerned about retirement. CIBC, who performed the study, suggests that Canadians begin looking at paying themselves first, before spending. The survey indicated that most people do the opposite and save what is left after they spend.

Nicholson suggests a “give to yourself first” strategy by which a set sum of money is automatically deducted from a paycheque and put directly into a savings account.

“Paying yourself first is an easy and effective savings strategy

Tax changes in 2018 include hike in carbon price, cut to small-business rate

The tax changes in 2018 include a hike in carbon price and a cut to the federal small business tax rate. As of January 1st, Albertans will be paying more in carbon tax from $20 per tonne of emitted carbon dioxide to $30 per tonne. For individuals who qualify, they can expect a 50 percent increase in rebate cheques. Businesses do not qualify under the rebate program, but a positive for businesses is a decrease in the federal small business tax. For the first $500,000 active business income, the rate will drop from the current level of 10.5 percent to 10 percent.

Small-business advocates lament ‘appalling’ lack of detail ahead of Jan. 1

The federal government’s tax reform changes for small-business owners are causing concern in part due to vague details surrounding the changes. Dan Kelley, president of the CFIB, believes the change is being rushed and should at least be delayed a year. The Finance Minister Bill Morneau introduced the changes as a series of alterations designed to reduce tax avoidance by making specific tax planning practices more difficult. As a result of the critical feedback, the finance minister has revised his original proposal to appease detractors. Now, small-business owners are concerned because information regarding what is being changed isn’t clear, and the major concern is that businesses currently do not know what needs to be done to comply with the new laws.

We have 750 billion reasons to have ‘the talk’ about inheritance with our children

Canadians can expect a $750 billion windfall from inheritance over the next decade, but it’s also expected to create a lot of family tension. This is why it’s important for older Canadians to talk about their inheritance with their children. Putting plans in place and communicating those plans can help avoid fights between their children when it comes to inheritance. This is especially true for blended families, with each laying claim to the money. Thankfully, there is a way to prevent this kind of thing from happening and sometimes involving a neutral third party can help.

CRA squeezes voluntary disclosures amid tax-evasion crackdown

The Canada Revenue Agency (CRA) is squeezing voluntary disclosures while they are currently undergoing a tax evasion crackdown. The CRA is no longer going to allow Canadians to benefit from financial relief when they disclose income left off of tax returns that involve money from sophisticated tax-avoidance strategies or offshore dealings. Starting in March, the federal agency will restrict incentives previously offered for disclosure of unreported income.

U.S. tax reform could have repercussions for business owners in Canada

The United States tax reform could have some major repercussions for people that own businesses in Canada. Key elements of this proposal include a corporate tax rate reduction, capital expensing and more. While political barriers still exist for this proposal, the proposed overhaul of the US tax system appears to do a lot of good for Canadian business that conducts business in the United States. However, Americans living in Canada who own Canadian corporations, fear that it could lead to massive tax bill.

Canadians now spend more on taxes than on food, clothing and shelter combined, study finds

Canadians now pay almost half of their hard-earned income in taxes, which contrasts with a third for the average family in 1961. Recently, the Fraser Institute calculated that in 2015 an average Canadian family paid $34,154 (or 42.4 percent) of their total $80,593 cash income in taxes. For housing, food and clothing, the average family spent 37.6 percent of their total cash income. The objective of this study is to plot the average family’s experience each year in order to understand the changes Canadians are experiencing throughout the years.

Personal Investor: Wise millennials choose TFSAs over RRSPs

According to Statistics Canada, 42 percent of millennial investors prefer TFSAs (tax-free savings accounts) over RRSPs (registered retirement savings plans). This means this group, aged 25-34, are willing to give up the instant gratification of a tax refund that comes with the RRSP in favour of gains that are never taxed in a TFSA. A TFSA is particularly beneficial for lower income earners. By not contributing to their RRSP now when they are in a lower tax bracket, young wage earners can carry forward their allowable contribution space to a year when they are in a higher tax bracket. This ensures their tax savings are higher.

Now is the time to consider tax-loss selling to offset capital gains, tax experts say

Now is the time to consider tax loss selling to offset your capital gains. By selling those stocks that haven’t worked out, you can apply the loss to your capital gains. Losses can be applied to gains made in the year you incurred the loss in addition to carrying all or the remainder of your loss forward to future years, or backward for up to three years. This means losses this year can still be used to offset a gain as far back as 2014.

How to make the most of your charitable giving come tax time

Here are some ways to make the most out of your charitable giving come tax time. Charitable donations receive tax credits at both the federal and provincial levels. On the federal side, the first $200 of annual charitable donations receives a 15 percent credit and then 29 percent for cumulative donations above $200. Donors who have income subject to the 33 percent top federal rate (for income over $202,800) and who donate more than $200 annually benefit from a 33 per cent tax credit on such donations. You may also want to consider “tax-gain donating,” which is to use capital gains you’ve realized this year (and up to 3 previous years) and donating the winning stocks or mutual funds “in-kind” to charity. That way, you get the donation tax receipt, pay no tax on the capital gain to date and increase your adjusted cost base of the security repurchased back up to fair market value, reducing your ultimate tax bill on a future sale. Remember that this month is also the last chance for “first-time donors” to take advantage of the temporary First-Time Donor’s Super Credit, which provides an additional 25 per cent non-refundable tax credit on up to $1,000 of donations.