news brief Archives - Page 7 of 17

Canadian companies failed to pay billions of taxes owed, new CRA report reveals

Newly released data from the Canada Revenue Agency shows corporate business failed to pay about ten billion dollars of the 2014 taxes they owed. Experts are referring to this as the tax gap, which is the difference between taxes that were due and taxes that actually were paid to the CRA. To put this problem into perspective, nearly thirty percent of all corporate taxes owed were not paid. Thirty cents of every tax dollar was not received, and thus not available to Canadians.

“Canadian corporations failed to pay between $9.4 billion and $11.4 billion in taxes in 2014, according to the first comprehensive analysis of the country’s corporate tax gap.”

TFSAs have been a disappointment in getting Canadians to save more – The Globe and Mail

Canadians saving money for retirement can choose from two tax-free investment account options: a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA). Recently, a study found that TFSAs may not be helping Canadians meet their savings goals. One issue is that Canadians seem to be taking money from retirement savings accounts to fund TFSAs. Since TFSAs are more flexible accounts, they more easily allow for withdrawals for current spending needs like a home down payment or renovation project. While no one is arguing against tax-free saving accounts, the type of account Canadians choose may – or may not – really increase their savings for critical retirement years.

“Everyone loves tax-free savings accounts – this is not in dispute. But how good are TFSAs for the country? A study recently published in the Canadian Tax Journal raises some doubts.”

Retirees worldwide may run out of money 10 years before they die, report shows

The big fear for many when it comes to retirement – namely running out of money to sustain you when you’re no longer working – is predicted to be true for an increasing number of retirees. New economic research conducted across the world, from Asia to Europe, North America to Australia, shows funds in retirement savings accounts are not rising fast enough to cover even basic increases in life expectancy. For some, this means even if they’ve invested and fiscally planned properly, their own longevity will push them into living past how long their retirement savings will last.

“Unless more is done, older people will either need to get by on less or postpone retirement.”

Everything you need to know about the government’s new stock option taxation rules

Proposed rules seek to limit the preferential tax treatment enjoyed by employees receiving stock options. Currently, while these options are essentially income, they are treated like capital gains. In Canada, the capital gains tax is lower than the income tax of most high-income earners. The proposed rules seek to set a cap on the amount than can be deducted. The deduction remains, in part because they are used by start-ups who want to pay employees in lieu of cash. The government does not want to discourage such risk taking. At the same time, they want to limit the use of such instruments as a way for mature companies and already wealthy individuals to avoid income taxes.

“The government says it will be guided by two key objectives: that the employee stock option tax regime becomes fairer and more equitable and that startups and emerging Canadian businesses that are creating jobs can continue to grow and expand.”

Liberals’ mortgage help for first-time buyers lands Sept. 2

The Liberals’ mortgage help program is intended to help first-time home buyers in Canada. The new program will launch at the end of summer, on Labor Day. It will help pay up to 5 percent of a mortgage for an existing home for any mortgage up $480,000 – provided the buyers are purchasing their first home and earning less than $120,000 annually. There is a provision for paying for ten percent of any new home construction under the same program. The money will need to be repaid when the home is sold or after 25 years of living in the home.

“The government’s plan will see it pick up five per cent of a mortgage on existing homes for households that earn under $120,000 a year, on a mortgage of no more than $480,000.”

Big or small fish, anyone is bait for a CRA tax review – BNNBloomberg.ca

Taxpayers dread the possibility of getting a letter from the CRA announcing an audit or review of their return. Even more frustratingly for many, is that it is difficult to predict, who might be selected for such scrutiny. It seems to come down to a judgement call for each return, with those that are particularly sizable, or perhaps just being odd in some way, being more commonly picked for the review process. Tips to the CRA can also trigger an audit, so be careful who you talk to about your returns.

“There’s no way to prevent a review or audit. It’s more a function of how your tax return looks and the size. So if you’re driving a Maserati and you’re reporting $75,000 on your return, that won’t jive.”

The CRA’s new field guide on battling identity theft can help you protect yourself

Identify theft isn’t as simple as stolen credit cards anymore. In the Information Age, having your identity stolen can lead to false bank accounts, brand new lines of credit being opened in your name, or even fraudulent tax refunds being created and submitted that leave you on the hook with the Canada Revenue Agency. Fortunately, the CRA is aware of the issue, and has published some guidelines to help Canadians protect themselves from fiscal peril. Staying on top of your online and personal details, will help ensure you don’t get left holding the bill.

“The truth is, identity theft is more common today than ever. The taxman recognizes the problem, and so the Canada Revenue Agency (CRA) has published a guide on how to protect yourself.”

Personal Investor: Why owning a home is a great retirement investment – BNNBloomberg.ca

Recently, Canada Mortgage and Housing Corporation President and CEO told Canadians they should stop using homeownership as a vehicle for savings, warning about the risks of return on their investment. However, for most Canadians, home ownership should still be a part of their retirement savings. One reason is that property values generally appreciate over time and are at the very least a good way to store value. Plus, gains in a principal residence are never taxed. People can use their home as collateral to gain financing. Finally, a home saves people from paying rent or can generate rental income.

“The most prudent retirement savings plan includes homeownership as part of an investment portfolio.”

Personal Investor: Why fixed income has become less safe – BNNBloomberg.ca

Savers may want to rethink how they view the fixed income portion of their portfolios after the Bank of Canada issues a warning. Some corporate debt may carry an additional risk as a result of the business carrying higher debt levels. The Bank of Canada mentioned companies in the commodities sector who are borrowing heavily due to low resource prices. The extra debt comes with a greater risk that investors should be aware of when choosing their portfolio mix and investments.

“Investors who think their fixed income holdings are the safe part of their portfolios might want to think again.”

Bank of Canada lowers qualifying rate used in mortgage stress tests – BNNBloomberg.ca

For the first time in three years, the Bank of Canada has lowered the qualifying rate. This is the rate used in the mortgage stress test to determine if someone qualifies for an insured and also for uninsured mortgages. The move is meant to act as a stimulus for the housing market, since it increases demand by creating more qualified homeowners. Home sales have been week in Canada for the last year, so the Bank of Canada could be looking to boost the marketplace.

“The Bank of Canada has lowered the rate used by mortgage stress tests to determine whether would-be homeowners can qualify, marking the first drop in three years.”