news brief Archives - Page 13 of 17

The TFSA limit is rising to $6,000: Here’s why you should contribute every penny of it

Tax-Free Savings Accounts (TFSAs) are turning 10 this year and experiencing a beneficial overhaul according to financial experts. In 2019, the maximum contribution limit will rise to $6,000 from its current mark of $5,500. TFSAs offer Canadians tax-free growth for life. While you contribute to a TFSA with after-tax dollars, they are a beneficial way to build wealth and protect it from taxation, which may hinder the compound growth. Other beneficial features are that there are no age requirements for contributions; unused contribution room can be carried forward; and one not prohibited from re-contributing after a withdrawal.

“TFSAs have been extremely popular among millions of Canadians, many of whom will welcome the upcoming ability to sock away extra funds in their TFSAs come 2019.”

New tax changes to affect small business, gasoline, CPP

Starting in 2019, Canadians can expect to see higher taxes and government payments at several levels. The Canada Pension Plan, or CPP, will see mandatory contribution rates rise with the new year. Additionally, some passive income being held by small businesses will be subject to higher taxation rates than in previous years. This is meant to encourage reinvestment of such income. Finally, taxes on fossil fuels will rise with some experts predicting Canadians will pay as much as 4 cents per liter of gas more at the pump.

“A whole host of federal tax changes come into effect in the new year. Some will hit your paycheque, others your bills — and if you’re a small business owner, there are a couple of changes coming for which you’ve likely been preparing for months.”

Insolvencies up in Canada in November, Alberta helping lead the way

The number of Canadian businesses and consumers going into insolvency or bankruptcy dramatically rose in November continuing a worrying trend. The province of Alberta saw the largest rise in insolvencies. Overall, the largest increase was in consumer insolvencies, rising 20.9 percent. Canadians now owe $1.78 of debt for every dollar of disposable income according to the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). The increase is being blamed on consumers taking on too much debt which they were later unable to pay. Finance experts are encouraging people to look into possible payment plans rather than ignoring the problem.

“Total insolvencies in Alberta in November 2018 — including actual bankruptcies and proposals — for were up 20.2 per cent from November 2017.”

Higher interest rates pushing more Canadians to seek debt relief as business booms for insolvency trustees

The cases of insolvency in Canada are steadily increasing – even through traditionally slow months. More Canadians are applying for bankruptcy, mainly due to increased borrower interest rates. These insolvencies and higher interest rates are slowing growth in other sectors, including home buying and vehicle sales. Many have turned to payday loans but are digging themselves deeper into debt by borrowing more at these increased rates. Debt that would normally be manageable is compounded by extra interest and is becoming unmanageable for many that have borrowed money.

“Record debt burdens, rising borrowing costs and, in some cases, bigger payday loans are driving many Canadians to seek relief, according to several licensed insolvency trustees who spoke to Bloomberg.”

Here are Canadian consumers’ biggest concerns for 2019

Going into 2019, polled Canadians are concerned about interest rates rising, the value of the dollar, and most of all, the rising cost of goods. This is compounded by the fact that many have taken out loans or used credit cards which increased the amount of debt they owe. Experts are warning Canadians to focus on debt repayment and curb spending going into the new year while making wise investments that will give you peace of mind for retirement.

“People are focusing on the immediate priorities. If you take a long-term approach and you have a financial plan, these turns in the market don’t touch you.”

Canada: Ceasing To Be A Director – Directors’ Liability For Tax – Toronto Tax Lawyer Analysis

Under Canadian law, the directors of a corporation have a number of legal responsibilities and legal liabilities. One of them is how a corporation’s directors are held responsible for the payroll remittance and the withholding tax arrears according to the Canadian Income Tax Act. Through the Canadian Excise Tax Act, the corporation’s directors can be held liable for the GST/HST that a corporation may incur that go unpaid, and then expected to make payment on,any tax liability the corporation doesn’t cover from its own corporate coffers. This is a powerful encouragement the Canadian Revenue Agency can use to ensure corporate taxes are not left in arrears.

“Directors are jointly and severally liable for some of the tax debts of the corporation of which they are a director.”

What to do if your taxes are under CRA review or audit

Tax time can bring stress and anxiety, but it doesn’t have to be something that leaves you cowering in fear of the dreaded tax audit. Canadian Revenue Agency conducts reviews of tax returns according to regulation, and just because an audit or tax review notice has been sent doesn’t necessarily mean trouble is looming for your finances. Anyone contacted by CRA should simply respond to the notice and work through the process in a calm and orderly fashion, however tempting it might be to try to ignore the notification.

“Your income tax file may be selected for review randomly, or for reasons such a discrepancy between the figures you cited and those of a third-party, such as your employer. An unusual change in your activities, such as an increase in medical expenses or child care costs, may also trigger a closer look from the tax collector.”

Mi casa, su casa: Home sharing and the taxman

Home sharing sites, like Airbnb, have become an increasingly popular way of making extra income on your home in this sharing economy. Money earned through renting out your home has not gone unnoticed by CRA, and taxes are owed on any revenue you receive on these short-term rentals. Depending on what services you provide with your rental, it may be taxed as rental income if you only offer basic services or business income if you offer additional services like meals, cleaning or security. Each type of income comes with the ability to make certain deductions, and if it qualifies as business income, then you may also need to charge taxes like GST. If you want to maximize your available deductions and clarify your tax position, consult an accountant who can help you determine which kind of income your rental falls under.

“When you earn money from renting out part of your home, it may qualify as either rental or business income for taxation purposes, which is why it’s important that you know which category your income falls under come tax time.”

Chinese classes, chess programs qualify for child-care deduction, judge rules, provided they really involve child care

Under Canadian tax regulations, certain child-care expenses are deductible from your tax return. While some are obvious, such as the cost of caregivers or schools, others might seem less obvious even though they’re every bit as valid as deductions. A recent case the Canadian Revenue Agency (CRA) brought before a judge has established this deduction extends to educational extracurricular activities a child engages in, and where the primary goal of the camp is to provide care for the child while a parent works. This can include after-school programs, tutors, and out-of-school lessons such as sports or language classes. $8,000 can be claimed annually for children under the age of seven, $5,000 for children seven to 16, and up to $11,000 for children who qualify for the disability tax credit.

“If you’re a parent who pays for child care that enables you to work, you may be entitled to some tax relief when you file your 2018 tax return.”

How to manage your money like an NHL hockey player

Upcoming NHL players are showered with fame and fortune, often leading them to trust the wrong people with their money and declare bankruptcy at the end of their careers. NHL players need to carefully budget their money so that they can enjoy a comfortable retirement, something the average person should do as well. Tips include living within your means and planning for a longer than anticipated retirement. Don’t spend money as you make it and only be generous with others after you have planned for yourself. These and other tips will help you retire like an NHL player.

“Think longer-term, as saving now means more flexibility in the future.”