Tag: Federal government

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HOLIDAY SPENDING IN CANADA: 5 HOLIDAY SPENDING TIPS TO STOP HOLIDAY DEBT

holiday spending in canada

We are trying something new. At the bottom of this holiday spending in Canada tips blog is an audiogram of this Brandon’s blog. If you would prefer to listen to it, and not read it, scroll down to the bottom and press on the play button. Let us know what you think by sending us a message in the Question box below.

Holiday spending in Canada: Introduction

Black Friday and Cyber Monday are over. You may feel you have a tendency to go overboard on your holiday spending and that will put you in a bad place going into 2019. So we have put together our holiday spending in Canada list to try to help with your budgeting for the holidays. Hopefully, by following our tips, you won’t enter the new year with even more debt. You will have avoided the most common holiday spending mistakes.

Holiday spending in Canada: Budgeting for the holidays

So, the first hint already is when I said budgeting for the holidays. It is so important that you actually think out your holiday budget before you start spending. I believe there are three main categories to your Christmas holiday budget: (i) gifts; (ii) food and beverage in your home when hosting; and (iii) tree and decorations.

To start setting your holiday budget, you need to set three separate mini-budgets; one for each group. For gifts, the first thing is to list out everyone you feel you want to buy a gift for. Then figure out who on the list you need to buy a gift for. You may not be able to afford your “wants”, but only your “needs”. The other categories will be easier to set.

Now, look at your monthly income and expenses and any savings you may have allocated for holiday spending to understand how much you can afford to spend in total without going into holiday debt. Just figure out the total amount you can safely spend. With that total, you should then estimate the spend on the food and beverage and tree and decorations categories. What you have left over in total will be your gifts budget. Nothing is set in stone. If you feel you need to adjust the allocations among the three categories, go right ahead. Eventually, you will be left with your gift total budget.

Now spread the total gift budget among the people. Your individual amounts have to add up to a number not greater than the total you already set up as your total gift spending amount. So you should now have actually three different worksheets, adding up to the total amount of money you can safely spend. With the budgeting worksheets finished, it is now time to go shopping!

Holiday spending in Canada: A new kind of shopping

You will now be able to do a new kind of shopping. In the past, you may have just gone to the mall or local stores and then just wander around until something that reminds me of the person that you are shopping for pops up.

The new shopping method will have you shopping for each group already knowing how much you can spend. Do not overspend!!

Holiday spending in Canada: Here are our 5-holiday spending tips

  1. Purchase with purpose – You have already determined how much you can safely spend on each person. Find the right gift that meets your spending goal. You don’t have to think about cost any more, because you will stick to your individual gift limits. You can now concentrate only on appropriateness within your budget limits. Although the Farberware cookware may be wonderful, you can only buy gifts that fit within your budget.
  2. Only buy with cash – You will be tempted to buy with your credit cards. Using plastic will cause you to overspend because you won’t feel the purchase. To really feel the purchase, only use cash. When you feel it, you don’t overspend. You will also avoid the nasty surprise in January because you won’t receive an out of control credit card statement that you won’t be able to repay. You will not only feel great in December but in January too.
  3. Think of a family gift to save money – If you feel you won’t be able to afford individual gifts, think of members of the same family and look for a family gift. A gift card for the family to go see a movie or a family pass for admission to an upcoming event or tourist site may prove cheaper than the total of the individual gifts. Don’t forget to check out that option. Or perhaps one item for the house that you know all family members will enjoy. There are many possibilities for a group gift.
  4. Give of yourself, not just your money – Don’t think that the only gift that counts is one that costs money. You have many skills and talents. Perhaps one or more would make a great gift. If you can’t think of anything unique you can provide that would make a great gift, how about your time. Think to babysit for nieces or nephews, taking out for an afternoon an ageing relative who can’t get out much but has appointments or errands to get to or doing someone’s grocery shopping (with their money). These can all count as valuable gifts that won’t cost you anything or much at all. Your time and theirs are much more valuable than any gift you would purchase in a store.
  5. Think outside of the decoration box – If you don’t already have a box of ornaments from years past to use, think creatively. The ornaments purchased at a Dollar Store will look just as nice on your tree as ones purchased at a more expensive store. Or, use your own creativity to make your own decorations. If you aren’t sure where to start, I am sure that there are many videos online to show you how to make great looking decorations that don’t cost too much for materials. Your labour, of course, is free.

2 BONUS TIPS to help with your holiday money management:

HOLIDAY SPENDING TIPS BONUS #1 Save all year for your holiday spending budget – Now that you have your spending budget, start saving for next Christmas in January. Take the total budgeted amount that you spent this year and divide it by 12. Starting in January, set up a separate savings account and deposit into it every month the monthly amount needed that will add up to your total budget by next December. Avoid the temptation to dip into that fund during the year. By the time you get to next Christmas, you will already have all of your holiday spending cash.

HOLIDAY SPENDING TIPS BONUS #2 Do you have reward points you either don’t see using or will soon expire? You have been collecting the points. You obviously thought they would give you something extra you might not otherwise be able to afford. Now you might lose them or even if not, you don’t see yourself able to take advantage of what the points can provide. So, why not buy a proper gift or gifts for those you need to buy for using some points. You will feel good about giving this way because you will be using the points for someone valuable in your life. You will also feel good about not allowing them to either expire or lay dormant. The people you buy the gifts for will hopefully cherish your gift, never knowing that you didn’t have to lay out any cash for them. It is a win-win all the way around.

I wish all of our readers a very Merry Christmas, Happy Chanukah and a healthy, happy and prosperous New Year.

Holiday spending in Canada: What if you already have too much debt?

Licensed Insolvency Trustees (previously called bankruptcy trustees) are the only specialists approved, certified and monitored by the federal government to deal with debt restructuring. As a licensed insolvency trustee, our individualized method will certainly help you learn every one of your bankruptcy alternative options. The choice you choose based upon our suggestions will certainly end the stress, anxiety and discomfort you are really feeling due to your debt troubles.

The Ira Smith Team has years and generations of experience assisting people and companies in a financial problem. Whether it is a consumer proposal debt negotiation strategy, a bigger individual or business restructuring proposal debt negotiation, or as a last resource, bankruptcy, we have the experience.

Our method for every case is to produce an outcome where Starting Over, Starting Now occurs. This begins the moment you come through our front door. You’re just one telephone call from taking the essential actions to return to leading a healthy, well-balanced life. Call us today for your free consultation.

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SMALL BUSINESS CANADA TAX: LIBERALS UNFAIRLY TARGET SMALL BUSINESS TAXES IN CANADA RULES

small business canada taxFull disclosure: Ira Smith Trustee & Receiver Inc. is a licensed insolvency trustee firm in Vaughan (Toronto) Ontario. It is not an income tax advisory firm and does not provide income tax services. The information contained here is merely my opinion on SMALL BUSINESS CANADA TAX issues. This blog must not be relied upon for income tax advice or replace the advice of your income tax professional.

We are trying something new. At the bottom is an audiogram of this Brandon’s blog. If you would prefer to listen to it, and not read it, scroll down to the bottom and press on the play button. Let us know what you think by sending us a message in the Question box below.

Small business Canada tax: Introduction

In December 2017, our Federal Minister of Finance, Bill Morneau, disclosed some new policies he and Prime Minister Justin Trudeau were thinking about. The changes Finance Minister Morneau was touting, were for toughening up the small business Canada tax scheme. It would have affected entrepreneur’s businesses, their taxes, and their households.

The main aspect of small business Canada tax that our federal government wanted to attack was the age-old concept of family business income splitting. Its more modern name that you would have seen a lot in the press is called income sprinkling. The federal government was trying to advance the theory that small business owners whose family members were shareholders in the business, but not necessarily working in the business, were somehow cheating on their taxes.

Small business Canada tax: The Federal Government’s discussion points

The discussion focussed mainly on professionals, such as doctors, lawyers, and accountants who had a professional corporation. The government was trying to advance the argument how unfair it was for a professional earning say $250,000 annually, to “sprinkle” some of the income among family members older than 18 as compared to a salaried employee earning the same total amount in salary. I find it interesting that they used a quarter of a million dollars annually as an example, and not a lesser number. Do you think that was picked on purpose to subtly portray all family business owners as being fat cats?

The government’s position was that income that might have been paid to only the manager of the business, could be redirected to other family members by way of dividends. If those family members were in a lower-income tax bracket, then they would pay less tax. The government felt that was unfair.

Small business Canada tax: How income splitting or income sprinkling works

First, in order for this to work for a professional, the laws of the Province you live in has to allow you to have household members that aren’t professionals be shareholders of your professional firm. Second, if your spouse has a high taxable income already, then you will not profit by including him or her as an owner of the business. Lastly, you must decide if you’re going to add your children more than 18 years of age, as shareholders.

Assuming you’ve marked off all those issues, it can make a difference to your family’s overall income tax bill to add your partner and/or your grown-up kids as shareholders of your business. By doing this, you can choose to distribute dividends from the business and take advantage of their lower-income tax bracket.

Paying your partner or kids a salary is not as effective as making them shareholders of the firm and paying dividends. If you pay a salary, it needs to be a sensible one, for work that you can actually prove to the Canada Revenue Agency (CRA). In other words, you cannot simply pay your partner $100,000 for doing bookkeeping for the firm. CRA will certainly allow an affordable wage for that function, but it would have to be justified by comparison to the marketplace for such services.

The advantage of paying dividends to family members is that you do not need to prove it. The other benefit of paying dividends is that your firm recovers some of the business tax you’ve paid on dividends made by the firm’s financial investment portfolio. Refundable Dividend Tax on Hand (RDTOH) is the issue. Our firm does not do tax work. This is a complex topic, I will leave it up to you to research how RDTOH works.

Small business Canada tax: Tax changes effective January 1, 2018

Beginning January 1, 2018, the government changed the rules specifically to target professionals who have incorporated (specifically, doctors, lawyers, and accountants). Professionals who are gaining from reduced tax rates on what would have otherwise been fully taxed earnings at the highest marginal personal income tax rates, if not for their company.

The government is saying that these incorporate professionals aren’t adding their fair share to Canadian society by their decision to have a professional corporation. For that reason, they should not gain from the tax advantages of doing so.

So what are the changes? The Tax on Split Income (TOSI) rules has been amended to cover grown-up shareholders of private firms. Previously, TOSI rules only applied to minor children. The issue now becomes: If you’re a private company owner and pay dividends to adult family member shareholders, when can you do so without invoking the new regulations? Essentially, you need to be able to show much involvement in business.

Small business Canada tax: Clear bright line

The Federal government is putting what they’re calling a “clear bright-line”’ to exclude some relatives from the TOSI rules. The general TOSI exclusions are:

  1. The company owner’s spouse, providing they more than 65 years old.
  2. Children over 18 years old who have made a real labour contribution to the business. CRA is gauging this as an average of 20 hours a week during the year. Alternatively, there is also a test throughout any of the 5 earlier years.

The government has taken direct aim at professional corporations though. These exclusions do not apply where 90% + of the income of the corporation comes from the provision of services. Income from ownership of related businesses that earn income from the provision of services is also included in the calculation.

Inserting a trust into the ownership equation may get around this “excluded shares” provision. You need the advice of your income tax advisor to decide if it would be beneficial to you.

Small business Canada tax: Ottawa punishing small business Canada

When the federal government presented new tax rules, local business claimed they were being unjustly targeted by “punishing” measures. According to Small Business Association Canada, up to fifty percent of the country’s entrepreneurs state they’re feeling negative results.

The federal government also added changes to the passive income rules for private corporations. In the February 2018 Federal Budget, the Liberals added a grind-down mechanism for the small business tax deduction through which every dollar of investment income over $50,000 cuts profits eligible for the small business tax deduction by $5.

This has been especially challenging for organizations that use passive earnings to help in special capital funding. For example, paying for building and construction equipment or to acquire real estate used by the business.ira smith trustee

Small business Canada tax: The greatest tax battle in decades isn’t over

The Canadian Federation of Independent Business (CFIB) has asked the Provinces not to follow the Federal Liberals but to support small business.

For small businesses, the greatest tax battle in decades isn’t over. Private corporations who use responsible budgeting techniques and save up their profits and invest them to earn income, to be prepared for a rainy day, are being attacked. They may be saving to smooth out cash flow problems, or they might have a big upcoming purchase. Now they are being attacked through the income tax system for earning investment income in excess of $50K annually. It is clear that CRA will be looking closely at professional corporations’ income tax returns. I would not be surprised to see more CRA audits performed. The Federal government is looking to extract more income tax revenue from private corporations.

The rules are increasingly complex. Entrepreneurs will be spending more time dealing with more punitive income tax rules and income tax audits. All of this is designed by Ottawa for private corporations to pay more income tax. It ignores the investments small business makes. Creating jobs and making capital investments allows small business to contribute in many ways to the Canadian economy. This is aside from paying income tax.

Small business Canada tax: Does your company have too much debt?

Is your company under attack because of tax obligations or for other reasons. Is your company in need of restructuring to get debt relief?

The Ira Smith Team has decades and generations of experience people and companies in financial trouble. If your company is in need of a corporate restructuring proposal debt settlement plan, we have the experience to end your stress and pain and return you and your company to a healthy productive pain-free condition.

Our approach for each case is to develop a solution where Starting Over, Starting Now happens. This starts the moment you meet with us. You’re simply one call away from taking the necessary actions to return to leading a healthy and well-balanced problem-free life. Call us today for your free appointment.

Full disclosure: Ira Smith Trustee & Receiver Inc. is a licensed insolvency trustee firm in Vaughan (Toronto) Ontario. It is not an income tax advisory firm and does not provide income tax services. The information contained here is merely my opinion. This blog should not be relied upon for income tax advice or replace the advice of your income tax professional.

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Brandon Blog Post

ONTARIO PENSION PLAN: DOUG FORD GUARANTEES ONTARIO PENSION PLAN RELIEF FOR ALGOMA STEELWORKERS

ontario pension plan

We are trying something new. At the bottom is an audiogram of this Ontario pension plan Brandon’s blog. If you would prefer to listen to it, and not read it, scroll down to the bottom and press on the play button. Let us know what you think by sending us a message in the Question box below.

Ontario pension plan: Algoma Steel

Ontario’s Premier Doug Ford is promising his help for Ontario steelworkers as well as their Ontario pension plan following the United States’ federal government’s 25 percent tariff on Canadian steel.

In news recently to Algoma Steel Inc. staff members in Sault Ste. Marie, Ont., Ford claimed the provincial government would assist in passing revisions under the Ontario Pension Benefits Act, R.S.O. 1990, c. P.8, along with insurance coverage from the Pension Benefits Guarantee Fund, subject to particular conditions.

Premier Ford didn’t provide any additional information on what specifically the help might be. However, he stated that negotiations are happening and extra info about just how Ontario is sustaining Algoma will certainly be introduced as quickly as possible.

Ontario pension plan: United Steelworkers

At the same time, the United Steelworkers union is prompting the federal government to enact regulations that would safeguard pension plans as well as benefits in situations of company bankruptcy, reorganization or liquidation. Union participants will be meeting legislators to check regulations focused on changing the Companies’ Creditors Arrangement Act (R.S.C., 1985, c. C-36) (CCAA) and the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA).

Ontario pension plan: Proposed federal legislation to date

We previously described the efforts of Scott Duvall, MP for Hamilton MountainA, , MP for Manicouagan and Senator Art Eggleton:

Ontario pension plan: Canadian Association of Retired Persons

The Canadian Association of Retired Persons (CARP) is calling out the federal government, claiming it’s unreasonable that Sears Canada could pay out millions of dollars in shareholder dividends, a large part of which went to the US. At the same time, the pension plans of Sears Holding Corp.’s American staff members will be safeguarded by the U.S.’s Pension Benefit Guaranty Corp. while Canadian workers will certainly see benefits cuts.

“It’s time for the government to take decisive action to protect Canadian pensioners,” said Wanda Morris, chief advocacy and engagement officer at the CARP, in a press release.

Ontario pension plan: Private member’s Bill C-405

On October 17, 2018, Bill C-405 was presented by Conservative Erin O’Toole, MP for Durham. It is called “An Act to amend the Pension Benefits Standards Act, 1985 and the Companies’ Creditors Arrangement Act”.

The proposal is to change the Pension Benefits Standards Act, 1985 (R.S.C., 1985, c. 32 (2nd Supp.)), setting out what ought to take place if a business is under liquidation with the CCAA or Part III of the BIA.

His proposed changes lay out what should happen if a company is under liquidation through the CCAA or BIA. It proposes to allow, pending the permission of participants and beneficiaries, to transform the framework of the plan and/or move the pension’s assets to one more plans.

Granted this would probably be a necessary part of any global overhaul of pension plans. However, it is important to realize that it doesn’t do anything to safeguard the pensions or give the plan members and beneficiaries greater priority.

Ontario pension plan: Has a life event thrown you a curveball

Life has a way of throwing curve balls sometimes to good people. In the event of:

  • Illness;
  • addiction;
  • divorce;
  • family death; or
  • job loss

unbearable financial pressures can occur.

The Ira Smith Team has generations and decades of experience in dealing with people or their companies fighting the pain, stress and suffering that comes with financial problems and too much debt.

Our method for each person is to develop an outcome where Starting Over, Starting Now occurs. This begins the minute you come through our door. You’re just one call far from taking the essential actions to return to leading a healthy and balanced life, moving forward pain-free.

Call us today for your cost-free consultation.

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CANADA BANKING INFO COLLECTION: YOUR EXPECTATIONS VS REALITY ACCORDING TO JUSTIN TRUDEAU

Canada banking info collection: Introduction

On October 29, 2018, the Hon. Candice Bergen (Portage– Lisgar, CPC), stood in Parliament during Question Period. She talked to troubling reports this previous weekend that Statistics Canada was taking part in Canada banking info collection without the consent of the people whose info was being asked for.

Statistics Canada notified financial institutions, charge card businesses as well as credit reporting companies that it anticipates them to turn over individual financial information of a minimum of half a million Canadians without their consent or authorization. Financial institutions will not be able to tell their customers about the government demand for their financial transactions.

The noticeable issue is, that with the lengthy history of federal government personal privacy violations, Canadians are appropriately stressed over both the collection as well as the security of their individual economic deals. Ms. Bergen needed to know why the Liberals are accumulating the individual information of Canada without telling them.

Canada banking info collection: PM Justin Trudeau reacts

Our PM reacted by stating that the federal government is ensuring that the individual information of Canadians is secured. Stats Canada will certainly make use of the anonymized information for analytical functions only. No details will be revealed.

He stated that he understands (which is a way of repeating rumours or hearsay, or worse, that he truly does not understand whatsoever) that Statistics Canada is proactively involved with the Privacy Commissioner’s office, to make sure Canadians’ financial details stays safeguarded and private. High-grade and prompt information is important to guaranteeing that federal government programs stay pertinent as well as efficient for Canadians.

Canada banking info collection: Ms. Bergen had not been pleased, and neither ought to we

Ms. Bergen responded that the Liberal federal government strategies to get access to the individual details of Canadians without their knowing about it or permission. This consists of details like payments, internet purchases, charge card purchases, cash withdrawals and e-transfers between members of a family.

She wants to know if the Prime Minister will do the right thing. Will he guarantee Canadians that this invasion into their lives will be stopped?

Canada banking info collection: PM Justin Trudeau reacts by attempting to fault the Conservatives

Our PM reacted by stating that Canadians appropriately expect that federal government agencies like Statistics Canada will collaborate with the Privacy Commissioner. He said that Stats Canada will make certain that Canadians’ exclusive lives are shielded. Good words up until we hear that CRA obtained accessibility to the info, or even worse, cyberpunks!

Then for the good part. PM Trudeau said to the House of Commons and all Canadians that it was the Conservative federal government that selected to end the long-form census as a method of protecting an individuals’ exclusive info. So our PM is saying that in some way our private financial transactions is a straight substitute for basic analytical demographics? I don’t think so.

PM Justin Trudeau after that doubled down by stating that the Conservatives’ assaults on information and privacy continue.

Canada banking info collection: Mr. Alain Rayes (Richmond– Arthabaska, CPC)

Mr. Alain Rayes also participated. He repeated that Canadians expect the federal government to secure their private details, yet the Liberals wish to gain access to private information on 500,000 Canadians without their approval. They intend to consider loan repayments, ATM withdrawals, credit card transactions, financial institution money transfers and social insurance numbers.

Exactly how can the Prime Minister warrant these activities, which are plainly an offence of Canadians’ personal privacy?

Canada banking info collection: Blah, blah, blah.

Prime Minister Trudeau responded with more of the same. He said again the government will constantly make sure (a warranty?) that the individual information of Canadians is safeguarded. He said that Stats Canada will make use of the anonymized information only for analytical goals. No details will be revealed (does analytical purposes only include analysis by Canada Revenue Agency?).

He repeated that Statistics Canada is proactively involved with the Privacy Commissioner’s workplace on this task and is dealing with it to make certain Canadians’ info continues to be secured and private.

My personal view is that the primary federal government program that would certainly most take advantage of understanding my private financial information is the income tax collection system in Canada!

Canada banking info collection: The law

The Personal Information Protection and Electronic Documents Act (S.C. 2000, c. 5) (PIPEDA), Canada’s federal private sector privacy legislation, was specifically amended on the issue of privacy. Schedule I of Section 5 of PIPEDA states that:

“4.3 Principle 3 – Consent
The knowledge and consent of the individual are required for the collection, use, or disclosure of personal information, except where inappropriate.” (emphasis added).

What is one of the exceptions?

4.3 Principle 3 – Consent
“Note: In certain circumstances personal information can be collected, used, or disclosed without the knowledge and consent of the individual. For example, legal, medical, or security reasons may make it impossible or impractical to seek consent. When information is being collected for the detection and prevention of fraud or for law enforcement, seeking the consent of the individual might defeat the purpose of collecting the information.”

So, looking at the exceptions, this only bolsters my hunch. I am convinced this is not only to evaluate the viability and effectiveness of existing social programs. Rather, it will be used to evaluate and amend the effectiveness of tax investigation programs. This will provide direct new information to the Canada Revenue Agency to bolster current and start new investigations. That is why the information is being collected without Canadians’ consent to invade their privacy.

Canada banking info collection: May I have this dance?

Justin Trudeau just kept dancing and blaming Conservatives. This new invasion of privacy really doesn’t have anything to do directly with insolvency. However, if I am correct in my guess, and the information is going to be used by CRA, then it may well.

People may very well have engaged in tax evasion. I, of course, do not condone it. Criminal charges aside, Canadians who evade taxes and get caught will now have a huge income tax bill to pay. Many won’t be able to.

There will be many high tax debtors who will not be able to afford a voluntary payment with CRA. Such a voluntary payment plan will need you to pay your original income tax debt. You will not get any reduction in all penalties and interest. So you will be paying in full to Her Majesty. For those who will not be able to afford such a voluntary payment plan, bankruptcy is definitely not your first option. You would have to look at a debt settlement restructuring proposal as a first choice. Bankruptcy should be your last option.

Canada banking info collection: What about you?

If you have received legal advice that you don’t really have a case, or you can’t afford to fight it out in Court or pay the income tax debt that renders you insolvent, then you need the help of a professional trustee.

The Ira Smith Team has years of experience of negotiating with CRA on behalf of tax debtors. If you are an individual person and owe CRA and your other creditors, other than for any loans secured by your home, less than $250,000, you can enter into a consumer proposal debt settlement plan. If you owe more or are a corporation, we can still negotiate with CRA and restructure you with a restructuring proposal debt settlement plan.

Our approach for each file is to create an end result where Starting Over, Starting Now takes place. This starts the minute you are at our door. You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life, recover your money and move on to the next investment opportunity.

In conclusion, call us today for your free consultation.canada banking info collection ira smith trustee

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