Tag: Ira Smith Trustee

Categories
Brandon Blog Post

HST IN ONTARIO: NEED I USE THE HST IN ONTARIO 2020 DEFERRAL

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The Ira Smith Team is totally operational and both Ira and Brandon Smith are here for a telephone consultation, conference calls and virtual meetings.

Keep healthy and safe everybody.

Introduction

The Canada Revenue Agency (CRA) has announced that it will allow businesses to postpone, up until the end of June 2020, any type of HST in Ontario (and other provinces) payments that are owing on or after March 27, 2020, and before June 2020.

This is all part of Canada’s COVID-19 Economic Response Plan. In this Brandon’s Blog, I outline this program and then discuss the issues surrounding taking advantage of this HST in Ontario 2020 coronavirus deferral.

The program

The due date for businesses located in Ontario and the other Canadian provinces to file their returns is the same. Those that are able to, must file their information return on-time reporting their net tax for the reporting period. Identifying the difficult circumstances many businesses find themselves in, the CRA has also said that it will not penalize a filer where a return is filed late provided that it is filed by June 30th.

If your business only has to file annually, any HST instalment payments due on or after March 27, 2020, and prior to June 2020 can be deferred until the end of June 2020. Again, there will not be any penalty or interest charged as long as the required amount is paid by the end of June 2020.

HST returns that are filed electronically will be processed as usual unless they require a CRA representative to become involved to get additional information or documents. In the case where a CRA human needs to get involved, those returns will not be processed until everything returns to normal. If you file your HST return by paper, they will not be processed until things return to normal.

If you are entitled to an HST refund, as long as you filed electronically, the refund will be processed normally and paid. This assumes that you do not owe any other amount to CRA that they could offset your refund against.

“Death, taxes and childbirth! There’s never any convenient time for any of them.”
― Margaret Mitchell, Gone with the Wind

An Ontario business using the HST in Ontario 2020 coronavirus deferral

It is certainly understandable that many businesses will take advantage of this deferral opportunity. The COVID-19 situation is unbearable for many companies. Businesses are either closed down or in most cases, earning fewer sales revenue. Cash needs to be preserved, and there may be more pressing needs for the cash than to pay the HST liability that is payable at this time.

However, there are five issues that I have identified that entrepreneurs and businesses, in general, need to consider. I am not saying to take advantage of the deferral or not. I am just pointing out issues to be wary of.

So the five issues I see are:

Cash flow in June 2020 – Right now it does not look like the current situation is going to change dramatically between now and June 2020. So, on June 30, 2020, your business may be in the same or worse shape than it is now from a cash perspective. If CRA does not extend the deadline, you are no better off. The ball was just kicked down the road for a few months.

When the “all clear” is sounded – Assuming CRA does not require payment until the “all clear” is sounded, your business will need whatever cash it can get its hands on to get up and running again. These costs could be significant. Staff needs to be brought back on and marketing will have to be ramped up.

There may very well be a lag between the time you incur and pay for those up front starting up again expenses and when the cash from your sales come in. Will CRA take these real business needs into account and give more lag time? Or, given all the money the government has to spend in fighting the COVID 19 epidemic, will CRA start demanding payments immediately after the “all clear” is sounded to try to improve the government coffers as quickly as possible?

Will your HST issues be doubled? – If you are not an annual filer, then in July 2020, there will be one or more periods for which HST could be owing. Will your business have the cash to spare to make up the payment for two or more HST periods all at once if CRA demands it? This could spell cash flow trouble for businesses also.

Director liability – Directors are always liable for unremitted HST in Ontario and other provinces. If your company takes advantage of the deferral, then the Director’s liability begins to compound. There is no way of getting around it, but it is an issue to consider.

Trust claim – A business that collects HST, holds the amounts collected from its customers in trust for CRA. Any unremitted amounts owing to CRA for each reporting period is a deemed trust claim against all of the assets of the company.

“You don’t pay taxes-they take taxes.”
― Chris Rock

Businesses are not supposed to make use of the deemed trust amount in their cash flow. On a practical level, all businesses do. If net HST is not paid, the CRA can garnish bank accounts, accounts receivable and any other income. Although they have not yet done it, they could also confiscate other assets.

If you have a deemed trust debt owing to the CRA, the business’s property is actually the property of CRA until the debt is paid off. A business, when it operates normally, is always making sales and collecting the tax on them. In between filing periods, even if the tax is all paid up with the previous filing, there is always a stub period between filings. So, technically, this debt works as revolving debt. So CRA always has that charge over a registrant’s property.

So once everything returns to the new normal, what will happen during the lag that is needed for businesses to use cash resources to get back up and running. Will CRA collectors continue to give a grace period, or will they start hammering your business right away using its normal collection procedures to collect the outstanding debt? Only time will tell.

“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
― Winston S. Churchill

Summary

These are the issues facing entrepreneurs and their companies and businesses concerning the HST in Ontario deferment. Should you take advantage of the deferral being offered by CRA? Only you can answer that question for yourself and your business. I just wanted to highlight all of the issues that you should consider. It isn’t a simple yes or no answer.

The Ira Smith Team family hopes you and your family are staying safe, healthy and well-balanced. Our hearts go out to every person who has been affected either through inconvenience or personal family tragedy.

We are all part of our community and we have to all cooperate to help stop the spread of this infection. Social distancing and self-quarantining are sacrifices that are not optional. Families are physically separated from one another. I hope this information is helpful to you.

Ira Smith Trustee & Receiver Inc. has always employed clean and safe habits in our professional practice and continues to do so.

If anyone needs our assistance, rest assured that Ira or Brandon can still help you. Telephone consultations and/or virtual meetings are available for anyone wanting to discuss their personal or corporate situation.

“The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.”

― Mark Twain

Are you now worried about how you are going to survive? Are you worried about how long your company will be able to pay employees who are not working and meet all of its other obligations? Those worries are normal.

The Ira Smith Team understands these fears. More notably, we know the requirements of the business owner or the person who has too much individual debt. Because you are dealing with these stressful financial issues, you are anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

“…but in this world nothing can be said to be certain, except death and taxes.”
― Benjamin Franklin

The Ira Smith Team is totally operational and both Ira and Brandon Smith are here for a telephone consultation, conference calls and virtual meetings.

Keep healthy and safe everybody.

hst in ontario
hst in ontario
Categories
Brandon Blog Post

CANADIAN TRANSPORTATION AGENCY APPROVES CEASE OPERATIONS TO CASH REFUNDS

canadian transportation agency

If you would prefer to listen to the audio version of this Brandon’s Blog, please scroll to the bottom of this page and click on the podcast.

Introduction

As a result of the unprecedented situation caused by the COVID-19 pandemic, global airlines have either suspended operations entirely or are flying a shadow of their former schedule. Travellers are clamouring to get their money back. People who cannot work due to the coronavirus pandemic, need their money back to buy groceries or make their next rent or mortgage payment. While the Canadian government is working at warp speed to try to make things financially better for Canadians in the face of this virus crisis, it has also given the Canadian Transportation Agency the approval to give the airlines the clear for takeoff to ground your cash refund.

In this Brandon’s Blog, I describe how the government has given the airlines the green light to red light your refund and provide some useful suggestions.

The contract of carriage

Practically every country shut its borders to outsiders. On March 13, 2020, the Government of Canada provided a blanket travel advisory against all non-essential travel outside of Canada. Airlines, in action to the travel limitation, have cancelled trips. The friendly skies are a lot quieter these days.

When you purchase a flight you become a party to the airline’s contract of carriage. It is full of the usual legalese that you don’t read and just click accept as fast as you can. You do this because you really want to buy the ticket and you are afraid of losing that special reduced fare. It is a contract that sets out obligations between the airline and you and what happens in various events such as delay, cancellation by the airline and cancellation by the passenger.

The initial response of the airlines to COVID-19

Early on, the COVID 19 virus was just something that happened in China. It wasn’t something close to home. As the COVID-19 situation unfolded, the airlines implemented a number of policy changes to try to instill consumer confidence in members of the public who were thinking of voluntarily choosing not to fly. Most waived change penalties and allowed customers to seek credit for a future flight.

Most airlines became generous and allowed credit for even the most restrictive tickets, ones that normally become worthless when the passenger cancels. But what if the passengers didn’t proactively cancel and are left holding tickets for flights that aren’t operating because of the airlines, for one reason or another, cancelled on the passenger? Canadians are wondering now what happens to their money, at a time where they are already worried about an uncertain economic landscape.

Then the Canadian Transportation Agency changed everything

It is generally accepted under most contracts of carriage that when an airline cancels your flight they need to rebook you or provide a refund back to the original payment. COVID-19 has put all airlines in a liquidity crisis and they, like everyone else, need to conserve their cash. So, they do not want to give refund payment for all the cancelled flights. Especially with little to no revenue coming in right now.

Then the Canadian Transportation Agency came out with some important announcements. They were framed as public service announcements in keeping their staff and the general public safe from the coronavirus.

In reality, it is to help Canada’s airline industry. I am not saying that protecting Canada’s airlines is unnecessary or wrong, it isn’t. It just works against Canadians who need to be counting every penny. The announcements are:

  1. Exempting the airlines from having to pay additional compensation to anyone whose flight was either delayed or cancelled.
  2. Paused the dispute resolution mechanism between airlines and passengers until June 30, 2020. While passengers can continue to submit complaints, nothing is going to be done with them. The June 30 date is also subject to extension, depending on circumstances at that time.
  3. Canadian regulations concerning the conduct of our airlines were created in anticipation of relatively localized and temporary flight interruptions. None contemplated the kind of global mass flight terminations that have taken place over recent weeks as a result of the pandemic. It is necessary to consider just how to strike a reasonable and also sensible balance between airlines and their passengers in these remarkable and also unprecedented situations. They went on to say that in general, a suitable method in the existing context could be for airlines to provide affected travellers with coupons or credits for future travel, as long as the vouchers or credits do not expire in an unreasonably short period of time (24 months would certainly be considered practical most of the times).

So there you have it. In one fell swoop, the Canadian government, through the Canadian Transportation Agency, sanctioned the airlines to not have to pay compensation or give people back their cash when the airline cancelled flights because of the travel bans.

What the airlines are doing

The airlines’ stance is that they are offering affected passengers a credit equal to the value paid, for use on future travel, for up to 24 months. I was one of the affected travellers. In response to an email, I received advising my flights were cancelled, my airline was insistent that I had to state, either in writing or on a recording, that I was cancelling my flight before I could receive the credit.

Hold on – I am not cancelling; the airline already cancelled my flight and my contract entitles me to a refund. The airlines are referring to the statement issued by the Canadian Transportation Agency which, after suspending hearing passenger disputes, seeks fairness amongst parties because they see the COVID-19 pandemic as a force majeure. Something outside of anyone’s control. Their guidance seeks to balance things by directing airlines to provide credit, not a refund.

So what can affected passengers do?

Customers who bought their tickets from the airline and paid by credit card may wish to attempt to initiate a chargeback. Credit card issuers are pushing back and a 3-way fight will ensue as they act as a mediator between passengers and airlines. I believe in most cases the offer of credit will be viewed as a reasonable compromise by the card issuers, in light of the Canadian Transportation Agency CTA guidance. Otherwise, they will have to either take the credit or see if they can book the same trip far enough out to guess when the “all clear” will be sounded and when they think they could get time off work to travel again.

Now, some people may think that since they bought insurance for their trip, they can claim against the policy. Wrong! If you have trip interruption insurance, that only covers you if you have already gone on at least the first leg of your journey, and are away from home. It covers your additional expenses if you need to return home sooner or later than planned and compensates you for non-refundable portions of unused, pre-paid travel arrangements.

Similarly, trip cancellation coverage also won’t help you. That coverage is in case you need to cancel your trip at the pre-departure stage. It can repay 100% of your trip price if you require to cancel your trip for a reason that is covered by the insurance.

What is so bad about credit for future travel?

So what’s so bad about a credit? When everything returns to normal, whenever that may happen, people will want to travel again and will have credit. Unfortunately, that doesn’t help anyone who really needs the money now that they paid for a vacation they can’t take anyway.

Worse, a credit, as opposed to a future confirmed reservation, is not payment for a defined service. Rather, it is your prepaid deposit and the airline’s ordinary unsecured debt to you. What if the airlines need to seek bankruptcy protection as a result of the financial stress being placed on them? What if like Air Canada bankruptcy protection, which it has already done twice before, they need to restructure under the Companies’ Creditors Arrangement Act (Canada) (CCAA). That unsecured debt could easily be compromised to the point where it either partially or totally vanishes. At least a future reservation cannot be eliminated (we hope!).

On March 27, 2020, a class-action lawsuit was filed in the Federal Court in Vancouver, B.C. It is on behalf of all Canadians who paid for flights not taken, cancelled and not refunded. The class is seeking a refund of the payment in its original form. So, if you paid by credit card, you get the cash put back on your card. If you paid in cash, you get back the cash. It will be interesting to see how that litigation eventually shakes out.

Summary

The Ira Smith Team family hopes you and your family members are remaining safe, healthy and balanced. Our hearts go out to every person who has been negatively affected either by mere inconvenience or misfortune. We salute Canada’s front line health care, police, fire emergency and safety workers.

All Canadians need to do their part to stop the spread of this infection. Social distancing and self-quarantining are sacrifices that are not optional. Unfortunately, families are separated from each other.

Ira Smith Trustee & Receiver Inc. has always employed clean and safe techniques in our professional practice. We continue to do so. We are not allowing any visitors to our office. If anyone needs our assistance, Ira or Brandon are available to help you. Telephone consultations and/or virtual meetings are available for anyone wanting to discuss their personal or corporate situation.

Are you now worried about how you are going to survive? Are you worried about how long your company will be able to pay employees who are not working and meet all of its other obligations? Those worries are normal. The executives at Canada’s airlines are also worried about the survival of their respective companies. Airlines may have to file for bankruptcy protection in order to do restructuring and turnaround.

The Ira Smith Team understands these fears. More notably, we know the requirements of the business owner or the person who has too much individual debt. Because you are dealing with these stressful financial issues, you are anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

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Categories
Brandon Blog Post

CANADA EMERGENCY RESPONSE BENEFIT: THE COVID-19 WORKERS BENEFIT

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The Ira Smith Team is fully operational and both Ira and Brandon Smith are available for telephone consultations, conference calls, and virtual meetings. Stay healthy everyone.

Canada Emergency Response Benefit introduction

Last week I wrote COVID 19 RESOURCES CHECKLIST FOR CANADIANS UNABLE TO WORK. In that Brandon’s Blog, I described the Government of Canada’s proposed help for Canadians needing financial backing to employed and self-employed people who have been impacted by the COVID-19 pandemic. I wrote the blog late on a Wednesday night. That was the night Parliament had an emergency sitting to create the legislation. The information I provided was based on the Government’s own website. When I woke up in the morning, the name of the legislation changed to the Canada Emergency Response Benefit.

So the purpose of this blog is to describe the proposed support and how this COVID 19 resources package magically appeared.

Back to the future leads us to the Canada Emergency Response Benefit CERB

When I went to bed on March 25, the Government had stated that it was going to get legislation passed to provide support to Canadians. The opposition parties indicated that they would cooperate to pass such legislation. Mixed in with the proposed wording, were wide-sweeping powers for Finance Minister Bill Morneau. If that was passed, it would have given him unprecedented spending powers not requiring Parliamentary approval. Needless to say, no Finance Minister in Canada’s history ever had such powers.

The opposition parties claimed that they were never told that would be part of the package. Especially as it had nothing to do with getting money into the people’s hands. So, they opposed that aspect of the proposed legislation. Discussions and negotiations went on all night.

The Liberal government of Prime Minister Justin Trudeau initially told everyone that they wanted to help Canadians by creating the:

  • Emergency Care Benefit
  • Emergency Support Benefit
  • EI Sickness Benefits modifications

The purpose of each “E”

The stated purpose of each “E” was as follows:

Emergency Care Benefit – Prime Minister Trudeau specified that the Emergency Care Benefit (ECB) is for those employees, who do not get Employment Insurance (EI) and do not have accessibility to paid sick leave. The brand-new ECB was to include assistance for both traditional employees and the self-employed. In the self-employed category, freelancers, professionals, consultants, part-time workers and also gig economy workers would be included. They would be given earnings protection if they are in self-isolation or in quarantine or looking after a relative in that scenario.

The ECB would provide up to $900 bi-weekly for Canadian workers that meet the criteria. The regular 1 week EI waiting time would also be forgoed.

Emergency Support Benefit – A new Emergency Support Benefit (ESB) was to be created for workers that lose their jobs and do not qualify for EI. This was mainly for the self-employed. The requirements to qualify for the ESB were not available when the Liberals wanted to pass the legislation. They obviously were scrambling. This is not a criticism, it was just the reality.

The ESB strategy was to provide 14 weeks of support as a revenue replacement device. The ESB, part of the overall COVID-19 resources plan was also being presented for those that cannot immediately apply for EI because they had coronavirus and were either self-quarantined or in hospital.

EI Sickness Benefits modifications – The Federal government had stated they would be proposing the following amendments to EI sickness benefits:

  • The one-week waiting duration for EI sickness benefits will be waived for new applicants who are quarantined so they can get the benefit for that first week of their insurance claim.
  • There will be a top priority for processing EI applications for Canadians under quarantine.
  • People getting EI sickness benefits as a result of quarantine will not have to show a medical certificate to be approved.

These proposed amendments would apply for those who have coronavirus or have entered into self-isolation, or for those that are looking after those in self-quarantine. The brand-new support, now called the Canada Emergency Response Benefit, was to help those Canadians who would otherwise not be approved for EI.

The Canada Emergency Response Benefit

When I woke up, I discovered that all the names had changed. Prime Minister Justin Trudeau announced the new Canada Emergency Response Benefit or CERB, was for those people losing income as a result of COVID-19. He claimed the aid will be in individuals’ pockets within 10 days of their applications. He said that the Canada Emergency Response Benefit will supply as a taxable benefit, $2,000 per month for those whose work has actually been affected or lost due to the COVID-19 pandemic. If you are still working, but not receiving your salary or wages due to this crisis, the Canada Emergency Response Benefit is there for you too.

He also stated that the Canada Emergency Response Benefit can be applied for through a secure government website beginning in very early April. The Federal government has yet to clear up whether the brand-new Canada Emergency Response Benefit can be accessed by people without immigration status or with perilous immigration standing.

The intent of the CERB is to encompass the proposed ECB, ESB, and the modifications for EI Sickness Benefits right into a single Canada Emergency Response Benefit program for those impacted by the coronavirus pandemic.

The Canada Emergency Response Benefit will be readily available to Canadians that:

  • reside in Canada, who are at least 15 years old;
  • have stopped working as a result of COVID-19 or are qualified for EI regular or sickness benefits;
  • had an income of at least $5,000 in 2019 or in the 12 months before the day of their application; and
  • that are or expect to be without employment or self-employment revenue for a minimum of 14 consecutive days in the first four-week duration.

The government website says that applications can begin on April 6.

canada emergency response benefit
canada emergency response benefit

Support to Businesses – the Canada Emergency Wage Subsidy

You have no doubt heard press reports and Prime Minister Trudeau, Finance Minister Bill Morneau, and other government officials talking about the wage subsidy program for support to Canadian businesses. Originally, they were talking about a 10% subsidy. To obtain the subsidy, businesses would be allowed to take a credit against the amount of income tax deducted from employees and remit the balance in the normal course.

That program changed quickly too. The government announced that rather than a 10% wage subsidy, it would increase to a 75% payroll allowance. Late last week, Prime Minister Trudeau said details would be released very soon. As recently as in his 11 AM press conference on Wednesday of this week, the PM said that Bill Morneau would hold a press conference later that same day to announce how the program will work.

As of this moment, all the government website says is:

“Providing small business with wage subsidies

We announced an up to 75 percent wage subsidy for qualifying businesses, for up to 3 months, retroactive to March 15, 2020. This will help businesses to keep and return workers to the payroll.

More details on eligibility criteria will start with the impact of COVID-19 on sales, and will be shared before the end of the month.”

Our Finance Minister is now scrambling trying to figure out how it is all going to work. Although we are taxed heavily in Canada, there is not enough income tax deducted from each paycheque to cover a 75% subsidy!

Right now what is being floated is that the program is for businesses that can show that business revenue has decreased by at least 30%. This maximum benefit is up to $847 per week. The program will be in place for the 12-week period beginning March 15. Businesses will need to show the decline from the same months in 2019.

My current understanding is that the program is available for any Canadian business that can show that they have a 30 percent decline in revenue to be eligible for the federal government’s 75 percent wage support. There is also being proposed a 6 week wait time.

I must caution that this is just my understanding. It is only a proposal. The Liberal government did not include this kind of wage subsidy language in last week’s legislation that passed. They now have to recall Parliament in order to get this legislation passed. No doubt things will change before this is put into legislation.

That condition could be a killer for many companies and businesses. It does not take into account seasonality changes, 1-year-old startups or just differences in revenue patterns this year from the previous one. As soon as the government releases details of the program, I will write Brandon’s Blog about it.

“There’s no harm in hoping for the best as long as you’re prepared for the worst.”
Different Seasons, Stephen King

Canada Emergency Response Benefit summary

I hope you have found this Canada Emergency Response Benefit Brandon’s Blog informative and useful. The Ira Smith Team family hopes you and your family are staying safe, healthy and well-balanced. Our hearts go out to every person who has been affected either through inconvenience or personal family tragedy.

We are all part of our community and we have to all cooperate to help stop the spread of this infection. Social distancing and self-quarantining are sacrifices that are not optional. Families are physically separated from one another. I hope this information is helpful to you.

Ira Smith Trustee & Receiver Inc. has always employed clean and safe habits in our professional practice and continues to do so.

If anyone needs our assistance and is unable to go out, either through self-quarantine measures or just general precautions, rest assured that Ira or Brandon can still help you. Telephone consultations and/or virtual meetings are available for anyone wanting to discuss their personal or corporate situation.

Are you now worried about how you are going to survive? Are you worried about how long your company will be able to pay employees who are not working and meet all of its other obligations? Those worries are normal.

The Ira Smith Team understands these fears. More notably, we know the requirements of the business owner or the person who has too much individual debt. Because you are dealing with these stressful financial issues, you are anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

“Man can live about forty days without food, about three days without water, about eight minutes without air…but only for one second without hope.”
Hal Lindsey

The Ira Smith Team is totally operational and both Ira and Brandon Smith are here for a telephone consultation, conference calls and virtual meetings.

Keep healthy and safe everybody.

canada emergency response benefit
canada emergency response benefit
Categories
Brandon Blog Post

PERSONAL FINANCE TIPS FOR BEGINNERS: 4 TIPS TO PREVENT A MONEY PANDEMIC

personal finance tips for beginners

If you would prefer to listen to the audio version of these personal finance tips for beginners Brandon’s Blog, please scroll to the bottom of the page and listen to the podcast.

The Ira Smith Team is totally operational and both Ira and Brandon Smith are here for a telephone consultation, conference calls and virtual meetings.

Keep healthy and safe everybody.

Introduction

We are all treading in uncharted waters. Prudent personal finance tips for beginners require all of us to reexamine our income and expenses. Especially in a coronavirus time of self-quarantine and social distancing.

The purpose of this Brandon’s Blog is to provide 4 super useful tips to prevent you from having a money pandemic.

Tip 1 – Understand your cash flow

So many people are laid off because the company they worked for was forced to shut down. Others are not working because they must be in self-quarantine. The world economies are sputtering and they themselves are on life support. So, naturally, personal income and spending have been drastically transformed.

Establishing a family budget, tracking your actual vs. budget and adjusting as we must in real-time, was always a prudent personal finance tips for beginners. Even when there was no Covid-19 pandemic, it was a basic way to understand your family’s finances. Now, in order to weather this situation foisted upon all of us, we need to find possibilities for adjustment in order to survive this temporary, yet devastating coronavirus crisis.

Creating a family budget is not rocket science. It is as simple as looking over your bank account(s) for the last few months before our world changed and list all items of income and then total that list. Similarly, look at all expenses, whether paid for by cheque, credit card, debit card, automatic debit or cash withdrawals. List all those expenses and total them.

Then subtract the total expenses from total income and hopefully, the result is either zero or a positive number. If the number is negative, it means that you were spending more than you took in. You were relying on credit to achieve that result and were not able to fully repay the monthly amount you borrowed the following month. Maybe what you owe on your credit card only went up each month as you were only able to make the minimum monthly payment.

“Money is a terrible master but an excellent servant.”
—P.T. Barnum, founder, Barnum & Bailey Circus, showman and businessman

Tip 2 – Follow your budget plan and adjust your spending behaviour during the crisis

Now with no or little income because of the new situation, you find yourself in, you must take a hard look at all of your expenses. Ironically, by staying home, it may be easier now for you to cut down on your expenses and for managing family finances.

Now is the time to cut out anything that is not essential. For sure right now you are not spending money on your nightlife, sports, transportation and vacations. The only spending you should be doing now is on basics. Groceries, rent or mortgage, utilities and perhaps education. If you are lucky enough to have enough income to pay for these fundamental costs and have money left over, that is a good thing.

You are not walking into clothing, shoe or electronics stores and shopping. You have to guard against using your spare time for shopping online. Rather, invest in yourself. There are many free online resources where you can learn something new, work on your indoor hobby you love but never have enough time for or improve your existing skills. YouTube is an obvious place to go for education.

If you find that your income is not sufficient to pay for your necessary expenses, you must get out ahead of it. Stories are now coming out about people contacting their landlord to ask for understanding and compassion if the people are late in paying their rent in April. It may be an ongoing situation during this crisis until you can get back to work. The Ontario Landlord and Tenant Board have advised that it is suspending the issuance of eviction orders and all hearings associated with expulsion applications unless the matter relates to an immediate problem such as an illegal act or major safety issue.

The Ira Smith Team is totally operational and both Ira and Brandon Smith are here for a telephone consultation, conference calls and virtual meetings. Keep healthy and safe everybody.

“A formal education will make you a living; self-education will make you a fortune.”
– Jim Rohn

Tip 3 – Take full advantage of the current situation

If you are enjoying your normal or close to normal family monthly income, this can be a terrific possibility for you to enhance your emergency fund savings. With so much of our spending linked to get-togethers and events, relocate what you usually would have spent in those groups into a savings account.

You never know the length of time a hard period can last, or what surprises are around the corner. So, prepare for the most awful situation while we all wish for the very best. When the all-clear is sounded, you may be able to use all or some of the new emergency fund to pay down some debt.

If you are one of the many forced to survive to handle the unexpected loss of earnings when the government informs you to stay at home can be ravaging. If you’re facing lost or decreased earnings, first go through the cost-saving measures I described above.

As I previously stated in the case of renters, It is necessary to contact your creditors immediately. They recognize how the virus is affecting people and will likely cooperate with you. The sooner you connect with them, the more willing they could be to work with you.

The federal government is already asking lenders to be tolerant. The Canadian government has also announced its COVID-19 Economic Response Plan to help small and medium businesses and Canadian workers. You may very well be eligible for either the new Canada Emergency Response Benefit and improved access to Employment Insurance sickness benefits.

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Winston S. Churchill

Tip 4 – When the all-clear is sounded: post-coronavirus recovery

After this crisis has passed, you might have the temptation to splurge and then go back to your pre-crisis spending. However, doing that will certainly stop you from rebuilding your savings. Keep in mind that we can never forecast when an emergency situation can strike us in life. When the situation passes, make the effort to re-assess which non-essential costs you can continue to do without. Nobody’s economic life is ensured and it’s a great rule of thumb that having 3-6 months of your spending in financial savings will help make sure that next time you are better prepared. Please remember and follow these recommendations when the current crisis is over.

This situation is not going to be forever. These are unmatched times. Remain tranquil and recognize that humanity has made it through previous horrors, pandemics and world wars included. As Canadians and human beings, we will hopefully all get through this. To take your mind off of the current world, this is the time to stay positive. Investing in yourself will lift your spirits. Pick up that new language, hobby or skill through free online resources.

Take the time as a business owner to look at how you can bring more of your business online to lower costs in the long run. Learn the new skills necessary to run as much of your business virtually that you can. There will be nothing wrong with running your business that way when this is over. You may just find that you end up with more freedom and time, and possibly money, in a post-Covid-19 world by being more virtual than in person.

“The will to win, the desire to succeed, the urge to reach your full potential these are the keys that will unlock the door to personal excellence.” – Confucius

Summary

The Ira Smith Team family hopes you and your family are staying safe, healthy and well-balanced. Our hearts go out to every person who has been affected either through inconvenience or personal family tragedy.

We are all part of our community and we have to all cooperate to help stop the spread of this infection. Social distancing and self-quarantining are sacrifices that are not optional. Families are physically separated from one another. I hope these personal finance tips for beginners are insightful for you.

Ira Smith Trustee & Receiver Inc. has always employed clean and safe habits in our professional practice and continues to do so.

If anyone needs our assistance and is unable to go out, either through self-quarantine measures or just general precautions, rest assured that Ira or Brandon can still help you. Telephone consultations and/or virtual meetings are available for anyone wanting to discuss their personal or corporate situation.

Are you now worried about how you are going to survive? Are you worried about how long your company will be able to pay employees who are not working and meet all of its other obligations? Those worries are normal.

The Ira Smith Team understands these fears. More notably, we know the requirements of the business owner or the person who has too much individual debt. Because you are dealing with these stressful financial issues, you are anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

“You miss 100% of the shots you don’t take.” – Wayne Gretzky

The Ira Smith Team is totally operational and both Ira and Brandon Smith are here for a telephone consultation, conference calls and virtual meetings. Keep healthy and safe everybody.

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Categories
Brandon Blog Post

WORKING REMOTELY IN CANADA – RELAX, YOU ARE DOING THE BEST YOU CAN

working remotely in canada

If you would prefer to listen to the audio version of this Brandon’s Blog, please scroll to the bottom of the page and click on the podcast

On March 23, 2020, Premier Doug Ford announced the shutdown of all non-essential services across the province in an effort to slow the spread of COVID-19. The Ira Smith Team will be working online remotely and both Ira and Brandon Smith are available for telephone consultations, conference calls, and virtual meetings.

Introduction

Working remotely in Canada is a hot subject today as the COVID-19 breakout has people preventing most human to human meetups. Every person’s health and wellness must be the number one priority. Functioning from another location for a time appears to be the smartest way to secure everyone’s well-being.

The purpose of this Brandon’s Blog is to explore some of the issues involved with Canadians’ need to work remotely if your job can be done working remotely. I will also look at ideas for keeping the entrepreneurial business alive.

Even those normally working remote jobs from home may have problems now

As a precaution from the COVID-19 pandemic, the majority of businesses have informed their staff that they will be functioning remotely for the next two to three weeks, or possibly longer. For some employees, working remotely is a new thing. During these coronavirus social distancing times, remote work will simply be one more day in an electronic nomad’s life. Nonetheless, even those who are accustomed to working remotely may find it harder to operate nowadays.

There are extra stress and anxiety as well as uncertainty. That’s before you throw in many other aspects like all the youngsters at home and the need for homeschooling because of all the school closings. People that have actually been working from another location for several years have discovered that they actually enjoy entering into the office when the demand for a face to face meeting arises. To the degree that has actually kept remote employees really feeling included with a group and a business community, that opportunity has now been removed.

Working remotely in Canada now has lots of newbies

For some teams and staff members — working from another location is undiscovered waters. Functioning remotely is currently a brand-new experience for many. Remotely working from home will with any luck be an efficient way of regulating the potential spread of COVID-19. Whether working remotely is a routine thing for your group or not, the coronavirus situation recently has actually pushed many companies to adopt it as default.

People might see that functioning from their residence will cause durations of decreased performance, anxiety and a lack of communication. While taking these necessary safety measures to keep you and our community risk-free is a wonderful thing, working remotely is most definitely an adjustment. Your residence may not feel as office-ready as you may like. Anyone working from another location must have accessibility to suitable platforms for completing their job. Workers that working remotely in Canada frequently discover that working from home is different than they expected and that it needs somewhat different abilities and habits.

From an innovation point of view, working from another location can be rather comparable to operating in the office. However, working remotely is not without its flaws. How much each person will take pleasure in working from home will, of course, vary a great deal from one person to another.

The largest advantage of working from home is versatility, however, this can be a drawback too. Working from home can be really tough for those not used to it and not have been their choice. It typically calls for a much greater degree of personal accountability and organization than working in the office. Theoretically, remote jobs can appear truly lonely, however, it doesn’t need to be. Managers need to make certain that they will continue to support their staff with online team meetings.

Among the best aspects of working remotely is that you do not need to wake up at a certain time every morning (unless it’s agreed with the team). On the other hand, staying with your regular timetable, as much as possible, helps to keep both your spirits and your efficiency up. It also helps to get dressed and not stay in your PJ’s all day long, even if you do not have a video conference that day!

Among the challenges of working remotely from home is that we often start to really feel isolated. Another factor that some people dread with the concept of a remote job is that they do not completely trust their ability to properly handle all that time. An effective time management approach is key. While the method that everyone uses might differ, one point particularly helpful for concentration and productivity is to make daily and weekly checklists of tasks that you are aiming to complete.

However working from another location is often seen to have one great drawback – you’re not as visible to your associates and supervisors. If managers set normal on-line group conferences where results are always a requirement to be discussed, it might, in fact, improve the efficiency of staff members, conquer the feeling of isolation and allow projects to push forward. So if you are working remotely, to deal with the stress and anxiety brought on by isolation on top of the pandemic fears, don’t be afraid to use messenger programs to help keep your connections with colleagues.

Maybe working from home will become a thing

The anxiety that people would not work as hard when working remotely will most likely show to be misguided. Instead, I think it will appear that everyone works more! This forced boom in remote jobs may be relatively short-lived, even if the fad behind it is not. Whenever things return to normal, it will certainly be interesting to see if companies want to continue having more employees working from home.

There are numerous advantages to having the alternative of working from home in Canada for a day. It is a bit of a novelty. But how about each day? Will employees ask if they can turn their work into a work from the home job after this crisis is over? For now, the hope is that working from home will avoid any type of spread of the virus as well as assist in social distancing. But what if both employers and employees favour this new arrangement for the long term, albeit for different reasons?

According to BuzzFeed News, some people already are hoping for that moment when working remotely will broadly replace working face to face. Will those employers who never believed in employees or teams working remotely start finding that it can work? Will employees and employers alike start liking the new benefits it brings? Things like work/life balance, employee satisfaction, staff retention, and cost savings?

Working remotely online isn’t for everyone

We are all stressed concerning our family and friends, particularly those most vulnerable. Working remotely in Canada has its own added collection of difficulties and anxieties. Working from another location can be the dream. For some workers though, working remotely is not an option. Every person working in the hospitality business, factory jobs, dental and medical offices, for example, cannot work remotely in Canada.

This help for the unemployed, provided as part of the Federal government of Canada’s COVID-19 Economic Response Plan, will supply up to $27 billion in direct assistance to Canadian workers and companies. Both major programs for those left unemployed and low-income individuals are called the Emergency Care Benefit and the Emergency Support Benefit programs.

What can businesses do to stay alive in these uncertain times?

There has never been a more vital time to connect with your customers, clients or patients than now. As most of us are working from home or otherwise remaining inside because of COVID-19, you are most likely to have not been seeing as many customers, and perhaps even none at all. And that’s what we’re talking about today. The what and how of interacting during this massive business interruption.

Communicating with your clients is most essential, Starting Now! So, what kind of communication makes the most sense? There are 3 crucial messages you need to get out to your customers as soon as possible.

First, provide an update on where you are at with your business. I know I’ve gotten a lot of emails in the last few days doing that. A short statement concerning exactly how COVID-19 has impacted your company and your solution for that. If you can maintain your business, let everyone know the steps you are taking. If you now have modified business hours, tell everyone. That is going to let everyone know the best way you can continue to serve them.

In my case, we are all using a mixture of working remotely and being in the office. When in the office, we are limiting the number of people at one time and are keeping our distance. That allows us to maintain our normal business hours.

Second, let your clients know the steps you are taking to ensure their safety and security throughout this time. Let them know that you are cleansing regularly. Let them understand how you are handling social distancing by doing delivery of an item or giving them online webinars to stay connected.

We are considering starting a new online community to allow people who are feeling anxious over their debt situation or just have questions on how to handle certain situations during this crisis to communicate with us and each other. Webinars may also be part of that. If you have any thoughts on topics you would like to see covered please let us know by email. Your feedback will help us immensely.

And this is the moment to impart self-confidence that you’re taking action. Third, urge them to continue using you and thank them for their support.

In my case, although we have always used proper cleaning methods in our office, they are now enhanced. If you wish to meet with us in person, we can do that. However, don’t expect me to shake your hand. Also, if I give you a pen to sign documents, you can now keep it. Small things, but necessary ones. If you are not going out, then I am happy to meet with you on the phone or even have a virtual meeting.

There are ways you can stay in contact with your customers without meeting face to face.

First of all, use your company website. Add messaging as to how you are continuing your business so your clients can see it.

Second, if you have a normal e-mail marketing channel, or a blog or a newsletter that you use on a regular basis, now is the time to make use of that for your messaging. And let your clients know, you will be making use of that for future updates. In our case, we are using Brandon’s Blog to get the word out that we are open to help everyone either in person or through the use of technology. As a matter of fact, we have had many meetings this week to get ready to begin two new cases. On both of them, we haven’t met anyone in person yet and our meetings were held both from the office and from Ira’s and Brandon’s respective homes.

Third, if you use social media sites, like Facebook, Twitter, YouTube or Instagram, use those to get your message out to your customers and followers. If you are not using any of those networks, it may be a good time to start using some of them for your business now.

Regular messaging is key. Once you start using these methods for normal updates, your clients will get used to hearing from you in this way and will respond.

COVID-19 has added additional difficulties to doing business, yet it doesn’t need to be impossible. Now is the time to communicate promptly and also clear with your clients.

Summary

We are all part of our community and we must all work together to help stop the spread of this virus. Social distancing and self-quarantining are sacrifices that need to be done for sure. Families will not be able to get together face to face. The use of technology to hold virtual family gatherings will have to suffice.

Ira Smith Trustee & Receiver Inc. has always employed clean and safe habits in our professional practice and continues to do so.

If anyone needs our assistance and is unable to go out, either through self-quarantine measures or just general precautions, rest assured that Ira or Brandon can still help you. Telephone consultations and/or virtual meetings are available for anyone wanting to discuss their personal or corporate situation.

Are you now worried about how you are going to survive? Are you worried about how long your company will be able to pay employees who are not working and meet all of its other obligations? Those worries are normal.

The Ira Smith Team understands these fears. More notably, we know the requirements of the business owner or the person who has too much individual debt. Because you are dealing with these stressful financial issues, you are anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

[monkeytools msnip=”https://monkeyplayr.com/playr.php?u=5173&p=22071″]

Categories
Brandon Blog Post

CORONAVIRUS SAFETY AND READINESS TIPS FOR YOU – VIDEO ***

coronavirus safety and readiness tips for you

[monkeytools msnip=”https://monkeyplayr.com/playr.php?u=5173&p=22048″]

I hope the coronavirus information in this video is helpful to you. During these difficult times, everyone is doing their part to limit the spread of this dangerous virus. Ira Smith Trustee & Receiver Inc. has always employed clean and safe habits in our professional practice and continues to do so.

If anyone needs our assistance and is unable to go out, either through self-quarantine measures or just general precautions, rest assured that Ira or Brandon can still help you. Telephone consultations and/or virtual meetings are available for anyone wanting to discuss their personal or corporate situation.

So hopefully these coronavirus safety tips are helpful to you. We are available to be of assistance to you.

Stay healthy my friends.

coronavirus safety and readiness tips for you

 

Coronavirus safety and readiness tips for you

Categories
Brandon Blog Post

TOILET PAPER FRENZY: THE DIRTY TRUTH

toilet paper frenzy

If you would prefer to listen to the audio version of this Brandon’s Blog, please scroll to the bottom of this blog and click on the podcast.

Introduction

Bathroom tissue is not effective protection against getting the coronavirus. Nevertheless, a toilet paper frenzy has taken over the entire world. This Brandon’s Blog discusses this phenomenon to try to bring some understanding to this global panic playing out before our very own eyes.

SPECIAL: CLICK ON THE RED BUTTON TO WATCH OUR NO-COST BONUS VIDEO ON CORONAVIRUS SAFETY TIPS

toilet paper frenzy

 

The global toilet paper frenzy crisis

Throughout the globe information of the potentially extensive COVID-19 coronavirus infection has sent people into supermarkets, pharmacies and big box stores. Panic buying has been rife amidst the worldwide spread of the brand-new coronavirus, with consumers all over the world stockpiling goods like hand sanitizer, canned foods as well as toilet paper.

Coronavirus panic shopping has produced awful behaviour from customers around the world, including physical altercations in numerous stores. Japan was among the first countries to see the coronavirus scare stimulate a number of false reports on social media advising that toilet tissue is anticipated to run out, stimulating a customer rush to stockpile. The New York Post reported that the toilet paper crisis has set off fistfights in supermarket aisles in Australia, where one household unintentionally contributed to the dilemma by purchasing 48 boxes of bathroom paper instead of 48 rolls. Those more than 2,000 rolls are roughly 12 years’ worth!

The BBC reported on a risky toilet paper heist at dawn in Hong Kong. In Japan, Sora News claimed that a store owner decided the only way to shield his toilet paper from desperate toilet paper thieves was to chant conventional curses to shield his inventory.

Consumers in different nations were driven by various factors for buying out toilet paper:

  • In China, people who had no access to surgical masks went for toilet paper due to the assumption that toilet paper can be used to make makeshift masks.
  • In Taiwan, bathroom tissue flew off the racks due to the fact that there were reports that the island’s paper stocks were being dedicated to the making of medical masks. The fear was that it would ultimately impact bathroom tissue products. Authorities later had to refute this as false.
  • In the case of countries like the United States, Canada, and Australia, panic-buying and the need to hold on to as much toilet tissue one can lug is probably driven by the worry of the unknown. It is not created by either any type of facts or any real need for even more toilet paper.
  • Scientists at INSEAD Singapore, where the bathroom tissue products were jeopardized early in the crisis, stated the panic buying there was also driven by an element of retail therapy; except as opposed to spending money on the most recent electronics and also clothing, people bought helpful things as buying those items strengthened their sense of control over the situation.
  • In Ireland, people admitted to The Irish Times that all the panic-buying was admittedly over the top, yet they were doing it anyway.

Amethyst Amelia Kelly, better known as Iggy Azalea, is an Australian born singer-songwriter who moved to the United States in her teens. She said that she will not quit trying to get her Mom to admit panic buying is stupid unless she sees her mother consume all her canned fish and uses all her toilet paper!

Toilet paper is flying off the shelves in Canadian communities

Canadians should not be worried about the supplies of important things as they prepare for the reality of even more extensive cases of COVID-19 coming to Canada. The ongoing coronavirus pandemic has created mass hysteria. People are flooding large merchants like Costco over fears that vital items like bathroom tissue might soon diminish. So far, right here in Canada, our strait-laced impulse for law and order even throughout a pandemic panic has led us to line up in an orderly fashion for hours in stores just for the right to strip shelves of bathroom tissue down to their steel rivets.

Buying out Costco for toilet paper is panic buying for some kind of armageddon. A staff member at Saskatoon’s southeast Costco area store states more toilet paper will be coming in each early morning, but she expects the supply to be gone in the first hour the store is open. Signage at Sudbury’s Costco says 3 brand names of toilet tissue has been sold out.

Panic buying has created opportunities for some unruly behaviour in Canada. There have been reports of ordinary people trying to sell toilet paper online with huge markups. Some unscrupulous people are trying to sell information products to fight against coronavirus that serves no useful purpose. They are just trying to take advantage of people’s fears.

To its credit, the Canadian government has early on announced a stimulus package. Perhaps the uptick in HST on toilet paper sales being beyond any budgeted amount, in some small way, can help to fund the significant additional cost that will be incurred by the government.

Why is everyone stocking up on toilet paper?

Bathroom tissue runs has struck many as peculiar, given that the need for the item is not anticipated to expand as people get used to spending more time in their homes. Panic purchasing has become a dependable attribute of the coronavirus epidemic, just like a fever or dry cough.

Panic purchasing is caused and sustained by anxiety, and a determination to head to lengths to quell those anxieties. A big component of panic purchasing remains as a result of FOMO’s, the fear of missing out taken to a ridiculous degree.

Similar panic purchasing often comes before snowstorms, tropical storms and hurricanes. But the global nature of the coronavirus spread together with access to information, both true and false, today spread globally by social media causes the hysteria today. This is different than ever seen before in previous epidemics, like the SARS outbreak.

The coronavirus pandemic is engendering a type of survivalist psychology, where we may have to live as long as possible in our homes. Therefore, we must all stock up on basics. That definitely includes toilet paper. Besides, if we lack bathroom tissue, what can we change it up with?

For people, who assume a lockdown is imminent, the reality is that they believe that building up their toilet paper stash was entirely worth it. If it provides the feeling that they had actually done everything that they could to protect against the virus, it frees them to think about various other things than coronavirus.

Greater than anything else, there is a need to have a feeling of control over a circumstance whose end result nobody can currently predict. Purchasing toilet tissue could be one way of coming to grips with dealing with an unknown.

Dr. Dimitrios Tsivrikos, who specializes in consumer and behavioural psychology at the University College London, told CNBC that bathroom tissue has become an icon of mass panic. He also said that since bathroom tissue has a much longer shelf-life than many food products, and is prominently displayed in aisles, we are psychologically drawn to buying it in times of uncertainty.

Dr. Steven Taylor, a Professor and Clinical Psychologist in the Department of Psychiatry at the University of British Columbia, Vancouver, described to CNN when people are informed something unsafe is coming, but all you require to do is clean your hands, the activity doesn’t appear proportionate to the danger. Special risk needs special safety measures. He assumes that is what is taking place. Toilet paper frenzy is this kind of response. Bathroom tissue has actually become a symbol, a symbol of security for some people.

Psychologist Baruch Fischhoff informed CNN on the toilet paper frenzy: Unless people have seen … assurances that everybody will be taken care of, they are left to rate the probability of needing the extra bathroom tissue, faster rather than later. The fact that there are no official guarantees might enhance those chances.

SPECIAL: CLICK ON THE RED BUTTON TO WATCH OUR NO-COST BONUS VIDEO ON CORONAVIRUS SAFETY TIPStoilet paper frenzy

 

Summary

As people stress over the coronavirus crisis, toilet paper is the one thing they don’t intend to be caught without. What is stressing you out? Is your debt load, or your company’s debt load, one of the things you worry about?

The Ira Smith Team is available to help you at any time. We offer sound advice and a solid plan for Starting Over Starting Now so that you’ll be well on your way to a debt-free life in no time.

The Ira Smith Team understands just how to do a debt restructuring. Much more notably, we know the demands of the business owner or the person who has too much debt. Due to the fact that you are managing these stressful financial problems, you are anxious.

It is not your fault you cannot fix this issue on your own. You have just been shown the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief now.

At Ira Smith Trustee & Receiver Inc., we take a look at your whole condition and layout a strategy that is as unique as you are. We take the load off of your shoulders as a part of the debt negotiation approach we will create just for you.

We understand that individuals facing financial troubles require a lifeline. That is why we can establish a restructuring procedure for you as well as end the pain you feel.

Call us now for a no-cost consultation. We will certainly get you or your business back on the road to a well balanced and healthy life and end the pain factors in your life, Starting Over, Starting Now.

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Categories
Brandon Blog Post

CORONAVIRUS RISKS INCLUDE THE CANADIAN ECONOMY

coronavirus risks

If you prefer to listen to an audio version of this Brandon’s Blog, please scroll to the bottom of this page and click on the podcast.

Coronavirus risks introduction

The COVID-19 is spreading out across the world. The unique coronavirus is becoming an international pandemic. COVID-19 is the breathing illness triggered by the novel coronavirus that came from Wuhan, China. The fast-spreading infection has actually killed more than 3,000 people as well as hitting at least 90,000, so far mostly in China. The disease is coming to North America right now in airports and on cruise liners. This Brandon’s Blog is to talk about the coronavirus risks and discuss why Canadians and the Canadian economy is not immune.

Coronavirus explained

Coronavirus is spread out primarily via tiny droplets coughed or sneezed straight from a contaminated individual right into the face of a person close by. The spreading is different than the more infectious air-borne transmission of the virus-like measles, which can stay suspended in enclosed areas and be taken in hours after being exhaled by ill people.

Surgical face masks do not offer a proper seal around the face so while it does secure from respiratory system droplets from a sneeze or a cough, the microbe is still present in airborne droplets that can navigate out of a medical mask. The spread of the illness is proceeding and Canadians are appropriately asking themselves how they can get security against the infection. Children who obtain the infection frequently show light symptoms and some have none. The reported cases of major illness, as well as death up until now, are in adults.

Coronavirus prevention needs a global response

Coronavirus has demanded a global public health reaction. Countries are putting out daily updates on coronavirus dangers. Strains of a brand-new infection are spreading out. We do not yet know how to deal with the brand-new germ, and we won’t know till more information can be found by the experts. An additional vital unknown is exactly how infectious the coronavirus is.

The Globe and Mail report states that the coronavirus is circling around the planet and showing the dangers of the globalization design. The ailment is creating a great deal of anguish around the world. This pathogen is a little bit of a strange illness since it’s not assaulting youngsters. Up until now, at least 95,000 persons have actually acquired the disease, with about 3,300 having passed away from it. The deaths have been up until now mainly in China. But right here is a less-recognized reality. The incubation period of this coronavirus is generally under two weeks, yet certain reports suggest it often can take 3 weeks.

Coronavirus has actually infected greater than 80 countries. After starting in China, this illness is currently spreading out quickly around the world. The introduction of a novel coronavirus has actually clearly demonstrated the coronavirus risks and the need for clear, timely, and verifiable details from reliable sources.

A look at just how prevalent this pandemic is can be shown by various stories like:

  1. The variety of people who have tested positive in New York state for the unique coronavirus has increased to 22 after a substantial boost in screening, Governor Andrew Cuomo has actually said.
  2. Florida authorities reported that two people that tested positive for the brand-new coronavirus have passed away.
  3. South Africa’s news that an instance of coronavirus has been validated in the nation makes it the 3rd sub-Saharan country to report the infection.
  4. The United States has asked Iran to release all Americans from its prisons on clinical furloughs over anxieties the coronavirus might be infesting the country’s prisons.
  5. Paramedics in protective clothing and Israelis putting on masks and medical gloves stand near a dedicated polling station where people under quarantine from the coronavirus can vote in Israel’s nationwide political election, in Tel Aviv.
  6. The results of the coronavirus can be seen in Tokyo.
  7. A second person in England that tested positive for coronavirus has died, the UK’s Chief Medical Officer verified.
  8. California Gov. Gavin Newsom said the cruise liner Grand Princess would continue to be kept offshore until travellers and crew experiencing signs and symptoms that may follow the coronavirus can be tested to figure out whether they have it.
  9. Individuals wait outside the new medical exam department on the grounds of the Charite University Hospital campus Virchow in Berlin, where people seeking help from the coronavirus can be checked.
  10. Iran claimed the coronavirus has caused the death of 124 individuals amid 4,747 validated cases in the Islamic Republic as authorities cautioned they might use force to limit travelling between cities.

Coronavirus information – Canada

Coronavirus in Canada does run the risk of becoming a pandemic if the rate of community spread contracting the virus without entering contact with somebody from an infected region significantly rises. The coronavirus has thus far had health consequences for a fairly small number of Canadians. There are thus far 57 validated cases in Canada, many involving people that have actually recovered. This number changes daily.

Mostly all of the destinations Canadians usually take a trip to are extremely secure. The government of Canada’s advisories currently impacts just a few of the destinations.

Obviously China, along with:

  • Hong Kong
  • Iran
  • Japan
  • North Italy
  • Singapore
  • South Korea

Canadian experts believe age, as well as health background, might play the biggest roles in identifying how the unique coronavirus can affect an individual. Local transmission of the coronavirus in Canada is so far person-to-person spread within areas in Canada.

Covid-19 and the Canadian economy

The Canadian economy will certainly be negatively influenced by this infection, similar to all other world economic climates. International Monetary Fund stated the international financial expectation has actually changed to even a more dire situation. The coronavirus has actually enhanced the risk of a worldwide recession this year, credit rating firm Moodys stated. It looks likely that the coronavirus will do significant economic damage.

The coronavirus will lead global economies into its first contraction in a decade, some economic experts are warning. Coronavirus is currently requiring companies to put on hold manufacturing in and shipments from China as officials attempt to restrict its spread. At the same time, the IMF claimed the spread of the coronavirus has actually erased assumptions of stronger financial growth this year. It will cause the 2020 worldwide economic gains to its slowest pace since the economic crisis in 2008.

With monetary markets uneasy, the United States Fed’s change of mind on decreasing interest rates is totally reasonable. The coronavirus risks have brought about a dramatic downturn in the stock market. It has fanned worries of financial tanking as the Republican president asks Americans for a second term. As it worries the US economy, the Canadian economy follows the same path.

The coronavirus will injure Canada’s economy. The rapid spread of the coronavirus is most likely to send the global economy right into a downturn, according to prominent Canadian economist David Rosenberg. Bank of Canada Governor Stephen Poloz said in his newest speech that coronavirus will certainly interrupt the global economy for at the very least the first half of this year. The half a point decrease of the Bank’s key rate target to 1.25 percent marked the initial cut since the summer of 2015 and brought the rate to its lowest level since early 2018.

On March 5, Prime Minister Justin Trudeau said a pavlovian response to the unique coronavirus will not keep Canadians safe. The federal government is attempting to stop an economic downturn from something they cannot manage; the coronavirus that’s going to affect the whole world’s economy. Financial experts think the Bank of Canada’s decision to reduce the target interest rate shows the coronavirus has revealed a pocket of weakness in the Canadian economy. Markets have actually withstood roller-coaster ups as well as downs for weeks amid unpredictability over how much damage the outbreak of the new coronavirus will do to the global economy.

New data on China suggests the damage coronavirus has actually wrought on the globe’s second-largest economic engine could be even worse and a lot more extended than previously anticipated. My fear is the Canadian reaction will be insufficient to mitigate the negative financial influence the coronavirus is having on worldwide financial markets. The best-case scenario is that the Bank of Canada’s emergency rate cut will prove to be an over-reaction from the policymakers.

The coronavirus is now beginning to have a devastating influence on world markets, manufacturing and supply chains. It will eventually impact the labour force. Investors are really hoping that policymakers will take crucial action to limit the pain. If reduced business causes layoffs in Canada and elsewhere, the economy will slow down even faster.

Coronavirus is damaging the international airline and hotel sectors as business and leisure trips are being cancelled. Economists are asking whether lowering interest rates is the correct way to counter the negative economic influence from the coronavirus. The SEC is concerned about what the effect will be on new issuers and investors.

Coronavirus may force the Alberta government to ditch a balanced-budget plan, said Premier Jason Kenney. In the United States, economists are urging the President to right away rescind all of his tariffs and also dedicate to markets and as trading partners that no brand-new tariffs will be applied at least until the economic damage from the coronavirus has passed. Markets will continue to be volatile until the coronavirus is brought under control. Canadians are really concerned that the coronavirus has the potential to erase the value of their retirement funds.

The coronavirus is negatively impacting supply chain systems causing failures to deliver. Companies might get some protection if the force majeure section of supply contracts mentions that an epidemic or disease is an event beyond the parties’ control. The coronavirus may fall within that interpretation. In all instances, company problems will take months to return to business as usual. So even if the coronavirus is contained quickly, it is likely to negatively affect the economy for some time.

Coronavirus has forced travelling constraints, allegations between governments and a collection of misguided xenophobic attacks in many countries. Relying on the degree of human and financial damage this virus brings upon around the world, coronavirus may someday be considered a vital turning point for the whole global economy.

Just a few examples of economic damage that the coronavirus has already brought about are:

  • postponement of the three-day Ultra electronic dance music festival in Miami
  • the release of the next James Bond film delayed from April to November 2020
  • IBM cancelling a major event
  • the NBA announcing it is seriously studying the situation and playing games in empty arenas is a possibility under consideration. The television contract is so lucrative and attracts such a wide audience, allows for empty stadium games to be a serious possibility
  • Cancellation of business and vacation travel

The concern of whether it is appropriate to cancel or alter travel plans due to the spread of the coronavirus is mainly an individual decision that travellers have to make after evaluating all the realities available. No matter, Canadian life and the economic climate will certainly be various for the foreseeable future.

Summary

I hope you have found this coronavirus risks discussion useful. If you have any questions please feel free to contact us at any time.

Do you or your company have excessive debt and looking for debt restructuring? Is your business in trouble because of the effects of coronavirus on the Canadian economy? Would not it be great if you could do a turn-around?

The Ira Smith Team understands how to do a debt restructuring. More notably, we comprehend the requirements of the business owner or the person who has too much individual debt. Because you are dealing with these stressful financial issues, you are anxious.

It is not your fault you can’t fix this problem on your own. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will get you or your business back on the roadway to healthy and balanced worry-free operations and end the pain points in your life, Starting Over, Starting Now.

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Categories
Brandon Blog Post

DO YOU INHERIT DEBT IN CANADA: CRA SAYS YES TO PROPERTY TRANSFERS

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Introduction

When conversations of financial obligations happen, people usually joke around and state they’ll finally be without debt upon their death. Many people who come to me for their no-cost consultation also ask, do you inherit debt in Canada? A recent decision of the Tax Court of Canada inspired me to write this Brandon’s Blog to discuss the issue.

What happens to debt when you die in Canada?

In general, what happens to debt when you die in Canada is that your Executor or Executrix (in Ontario it is called an Estate Trustee) needs to understand all of the deceased’s assets and liabilities. The Estate Trustee needs to make sure that all debts are paid off before making any distribution to the beneficiaries. Unless you have co-signed for or guaranteed someone else’s loan, you are not responsible for your spouse’s or parent’s debts upon their death. There at generally two exceptions.

The first is credit card debt where usually a spouse has a supplementary credit card on the same account. In that case, you need to look at the credit card agreement because the supplementary cardholder might be responsible for the debt. So if there are insufficient assets in the estate to pay off the credit card debt, the supplementary cardholder may have to.

Section 160(1) of the Income Tax Act (Canada)

Section 160(1) of the Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)) (Income Tax Act), and its equivalent, S. 325 of the Excise Tax Act (Canada), can be utilized by the Canada Revenue Agency (CRA) to assess tax obligation liability to those who received a transfer of property from persons with tax obligations at the time of the transfer. This indicates if a person offers you something of value (virtually anything), while they have a tax debt, the CRA can and will certainly pursue you. CRA’s view is that the original tax obligation debtor ought to have sold whatever was transferred, and the funds used to pay off the tax debt.

This section of the Income Tax Act (or Excise Tax Act) especially comes into play during irathe administration of a deceased Estate or in an insolvency filing.

The Court decision, released on February 10, 2020, highlights this issue that death is no excuse when it comes time to pay the taxman!

The Court case facts

The CRA assessed the two daughters of the deceased father $96,640.96 each under section 160(1) of the Income Tax Act in respect of a transfer of property from their father prior to his death. Each daughter has appealed the assessments to the Tax Court of Canada. The two appeals were heard together as the evidence and facts were identical.

The agreed statement of facts was:

  1. The father was the annuitant of a Franklin Templeton Investments life income fund (the Income Fund) and prior to his death, he designated each of his daughters as his irrevocable beneficiaries under the Income Fund.
  2. In his last will and testament, he named his daughters as Estate trustees and beneficiaries of his estate.
  3. The father died on June 8, 2011.
  4. On or about July 26, 2011, $96,640.96 was transferred to each of the daughters.
  5. Each of the daughters received the $96,640.96 distribution on July 26, 2011, in satisfaction of their beneficial interest following the father’s death.
  6. The daughters provided no consideration in regard to the transfer of the $96,640.96.
  7. On July 3, 2015, the Minister of Revenue assessed each of the daughters $96,640.96 on the basis of subsection 160( 1) of the Income Tax Act.
  8. The father had an outstanding tax liability of not less than $96,640.96 with respect to his 2011 taxation year.

Tax liability re property transferred not at arms’ length

Section 160(1) of the Income Tax Act reads as follows:

“Tax liability re property transferred not at arm’s length

160 (1) Where a person has, on or after May 1, 1951, transferred property, either directly or indirectly, by means of a trust or by any other means whatever, to

(a) the person’s spouse or common-law partner or a person who has since become the person’s spouse or common-law partner,

(b) a person who was under 18 years of age, or

(c) a person with whom the person was not dealing at arm’s length,

the following rules apply:

(d) the transferee and transferor are jointly and severally, or solidarily, liable to pay a part of the transferor’s tax under this Part for each taxation year equal to the amount by which the tax for the year is greater than it would have been if it were not for the operation of sections 74.1 to 75.1 of this Act and section 74 of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, in respect of any income from, or gain from the disposition of, the property so transferred or property substituted for it, and

(e) the transferee and transferor are jointly and severally, or solidarily, liable to pay under this Act an amount equal to the lesser of

(i) the amount, if any, by which the fair market value of the property at the time it was transferred exceeds the fair market value at that time of the consideration given for the property, and

(ii) the total of all amounts each of which is an amount that the transferor is liable to pay under this Act (including, for greater certainty, an amount that the transferor is liable to pay under this section, regardless of whether the Minister has made an assessment under subsection (2) for that amount) in or in respect of the taxation year in which the property was transferred or any preceding taxation year,

but nothing in this subsection limits the liability of the transferor under any other provision of this Act or of the transferee for the interest that the transferee is liable to pay under this Act on an assessment in respect of the amount that the transferee is liable to pay because of this subsection.”

When identifying the applicability of section 160, you need to also consider the interpretation of arm’s length in subsection 251(1) and the interpretation of related persons in subsection 251( 2 ). Subsection 251(1) defines related persons not dealing with each other at arm’s length.

It likewise considers a taxpayer and certain trusts not to deal at arm’s length. Finally, it offers that, in any other case, it is an inquiry of fact whether individuals not related to each other are, at a certain time, dealing with each other at arm’s length.

Paragraph 251(2)(a) of the Income Tax Act provides that, for the objectives of the Income Tax Act, related persons or persons related to each other are individuals linked by blood relation, marital relationship, common-law or adoption. Paragraph 251(6)(a) specifies that, for the purposes of the Income Tax Act, individuals are connected by blood relationship if one is the child or various other offspring of the other or one is the sibling of the other.

The Federal Court of Appeal

The Federal Court of Appeal had already determined that the following 4 standards must be used when taking into consideration subsection 160(1):

  1. The transferor needs to be liable to pay tax at the time of transfer;
  2. There need to be a transfer of property, either straight or indirectly, through a trust or any other method;
  3. The transferee must either be:
  • The transferor’s spouse or common-law relationship at the time of transfer or a person who has since come to be the person’s spouse or common-law partner;
  • A person who was under 18 years of age at the time of transfer; or
  • An individual with whom the transferor was not dealing at arm’s length.

4. The fair market value of the property transferred needs to be greater than the true value of the consideration given by the transferee.

The position of the parties

CRA’s position was that this was a transfer of property from the father to the daughters prior to his death at a time when he had an outstanding income tax liability.

The daughters stated that they accept that three of the four criteria set out by the Federal Court of Appeal have been satisfied. Particularly, the Appellants agree that their father indirectly transferred the property to each of them, that he owed income tax relating to the tax year in which the transfer took place or a previous tax year and that no consideration was paid by the daughters.

Accordingly, both CRA and the daughters agreed that the only issue before the Court to determine is whether the father and his daughters were dealing with each other at arms’ length.

The daughters’ position was that at the time of the actual cash transfer their father was dead. He did not exist, and for that reason, he was not a related individual within the meaning of Subsection 251(6), and therefore was not in blood relation with them.

CRA’s position was simple. First, the time of the transfer was not when the investment firm paid the cash to the daughters. Rather, it was when the father designated them as irrevocable beneficiaries. Second, the father and his daughters were related not by contract, but by blood. So, even death cannot take away that relationship.

The Court’s decision

The Court agreed totally with CRA’s position, upheld the assessments against each of the daughters and dismissed the appeals. They were found to have received the transfer of the property for no consideration at a time when the father owed income tax of a greater amount. The daughters were each liable to pay the amount of $96,640.96 to CRA. So in this case, if the daughters were asked do you inherit debt in Canada, they would have to answer a resounding YES.

Insolvent and alive

I also come across this issue when providing a no-cost consultation to an insolvent person wanting to know their options. Whenever they disclose that they have an income tax debt, I ask about transfers between the person and his or her spouse or children. I do this to see if there are may section 160(1) transfer of property issues.

If there are, an insolvency filing will merely highlight the transfer issue to CRA. When they get notice of the consumer proposal or the bankruptcy, they start their deep-dive investigation into the affairs of the bankrupt. As a licensed insolvency trustee (formerly called a bankruptcy trustee), I also have to advise the creditors of any issues like a transfer between related parties for no or little consideration. Once CRA determines a transfer took place between blood relations for little or no value being given or paid, they will assess the spouse or child under section 160(1) of the Income Tax Act. The outcome will be the same as in this Court case.

Do you inherit debt in Canada summary

So alive or dead, transfers of property between blood relatives for little or no value is always troublesome when it comes to income tax debt outstanding at the time, insolvency and death. I hope you enjoyed this do you inherit debt in Canada Brandon’s Blog and that you have a better understanding that it is possible.

I am finding that I am getting involved more often in deceased estate matters. My involvement is in advising people who are the Estate Trustee of an insolvent estate. I also have acted as the licensed insolvency trustee of a bankrupt deceased estate.

That work has now naturally led to obtaining assignments where my skill set as a licensed insolvency trustee comes in handy in a deceased estate. Two examples are having acted as the Estate Asset Manager in selling off assets in an estate and as acting as an Estate Trustee where there is no bankruptcy involved.

Because of that work, Ira Smith Trustee & Receiver Inc. has opened up a new business division called Smith Estate Trustee Ontario. In that business, as Estate Trustee, we offer options for the complicated estate concerns. We end the discomfort and irritations the stakeholders are experiencing. We use the experience and integrity that we have built up over the years, with compassion, to help the parties navigate the messy estate issues. We strive for a win for all beneficiaries, adding value by reaching the settlements and distributions they were unable to accomplish by themselves.

We provide a full range of services to provide solutions for the complex Estate issues to end the pain and frustration the stakeholders are experiencing. We apply our expertise and creative thinking to take care of all details to end your pain and achieve the goals of the beneficiaries and other stakeholders. Contact Smith Estate Trustee Ontario today for your free consultation.do you inherit debt in canada

Categories
Brandon Blog Post

DIVORCE DEBT: NOT ALL EQUALIZATION ISSUES OR RULES ARE EQUAL IN BANKRUPTCY

divorce debt
divorce debt

If you would prefer to listen to an audio version of this divorce debt Brandon’s Blog, please scroll to the bottom of this page and click on the podcast.

Divorce debt and bankruptcy introduction

The topic of divorce debt and bankruptcy is always a tricky topic. There are 6 indisputable facts when it comes to this topic:

  1. The primary reason for marital failure and also separation is financial issues. Divorce.com
  2. Research shows that one out of every seven people who made an insolvency filing in Canada detailed separation, marital breakdown and/or divorce debt as a contributing variable to their economic troubles.
  3. One-third of all people facing bankruptcy issues are likewise experiencing a family breakdown and divorce.
  4. Bankruptcy won’t end all separation responsibilities. e. g. It does not end spousal support or child support.
  5. Personal bankruptcy of one of the spouses, where certain divorce debts are joint, the bankruptcy, notwithstanding the divorce, will negatively affect the non-bankrupt spouse.

With really only one exception, bankruptcy law in Canada has been purposely designed not to interfere with the administration of provincial family law proceedings.

The only exception to this in Ontario is that an equalization payment is an unsecured divorce debt from one spouse to the other. If the spouse who has to make the equalization payment goes bankrupt during or after the divorce proceedings, then that debt is a debt caught by the bankruptcy. The spouse entitled to receive the equalization payment will have a provable claim in the bankruptcy for at least that amount. This does not apply to support payments.

The purpose of this Brandon’s Blog is to review a recent Ontario court decision released on February 19, 2020, that determines the answer to the question: can a licensed insolvency trustee (formerly called a bankruptcy trustee) (Trustee) begin an equalization claim against the non-bankrupt spouse under the Ontario Family Law Act, R.S.O. 1990, c. F.3 (“FLA”).

Divorce debt: The facts

The facts of the case were not in dispute. They are:

  1. The husband and wife purchased a house in Toronto where they resided.
  2. The matrimonial home was bought solely in the wife’s name.
  3. The spouses separated in February 2015.
  4. He left the marital residence in October 2015 and has never returned.
  5. There is no disagreement that there the issues facing the husband and wife are irreconcilable, that the separation will be permanent and that the parties wish a divorce.
  6. Neither the husband nor the wife had commenced an application for an equalization of the net family property prior to the husband filing an assignment in bankruptcy. It was not a divorce debt claim that he made. The husband remains an undischarged bankrupt. His sworn statement of affairs shows liabilities totalling $282,700.
  7. The wife deposed that she paid the deposit and all other amounts to buy the marital residence. She also stated that in addition, she paid the mortgage, taxes, and all other expenses associated with the home.
  8. The separation and divorce proceedings began due to his gambling addiction and his financial infidelity and other forms of infidelity.
  9. Her affidavit sets out that there was never any intention that the husband would have any interest in the matrimonial house.

If the trustee is successful in asserting an equalization claim then she and her kids aged 12 and 15 would be forced to leave the home as it would have to be put up for sale in order to raise the necessary funds to pay the equalization claim.

divorce debt
divorce debt

Equalization in Ontario, divorce debt and bankruptcy

Trustees have various rights under the Bankruptcy and Insolvency Act (Canada) (BIA). One of those rights is to have the benefit of laws dealing with property in the BIA. There is no dispute that the marital home falls under the definition of property. There is also no dispute that if the husband had begun an equalization claim of divorce debt before his bankruptcy, the Trustee would have the right to continue that claim.

Under the FLA, where spouses are separated without any possibility of reconciliation, the FLA qualifies the partner with the lesser of the spouses’ two net family property to one-half of the difference between them. If the trustee is permitted to make a case for equalization and is successful, then his share of the marital residence assets (based on any applicable reductions or offsets) would be included as an asset in his bankruptcy estate.

There is no disagreement that equalization claim is a divorce debt chose in action that a Trustee inherits upon the bankruptcy of the spouse who started that action. The question is, can a Trustee, standing in the shoes of the bankrupt spouse who has not yet started that action, start it?

There are many cases dealing with valid scenarios in which an equalization claim had already been started. The applicant Trustee’s position is that the Trustee has the capability to begin a claim for equalization of the net family property where neither partner has made such a case. The Trustee is relying on the fact that an equalization claim is a chose in action which the Trustee inherits.

The Judge’s decision

The Judge disagreed with the Trustee’s position. The court held that while the decision to continue with the divorce debt equalization claim made by the spouse can be left to a stranger to the marriage, the decision itself to make the claim cannot. So the Trustee can continue the decision of the spouse to make a formerly begun equalization claim however the choice to make the claim may not be made by anyone other than the spouse. That decision continues to be personal as between the spouses.

The Judge dismissed the Trustee’s motion and ordered the Trustee to pay $20,000 in costs to the wife immediately.

divorce debt
divorce debt

Summary

I am not aware of that question ever having been asked and decided by the Court before. So for now, in Ontario, that is the answer to that kind of divorce debt question. Do you have too much debt because of marital breakdown or for some other reason? Does your company have excessive debt and in need of debt restructuring? Would it not be great if you could do a turn-around?

The Ira Smith team is available to help you at any time. We offer sound advice and a solid plan for Starting Over Starting Now so that you’ll be well on your way to a debt-free life in no time. For more information on a no-cost basis please call us.

The Ira Smith Team understands how to do a debt restructuring. More notably, we comprehend the requirements of the business owner or the person who has too much individual debt. Because you are dealing with these stressful financial issues, you are anxious.

It is not your fault you can’t fix this problem on your own. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will get you or your business back on the roadway to healthy and balanced worry-free operations and end the pain points in your life, Starting Over, Starting Now.

Call a Trustee Now!