Tag: tax planning

5 SURPRISING THINGS YOU CAN DO WITH YOUR CANADIAN TAX REFUND (THAT AREN’T SHOPPING)

Post author By Brandon Smith
Post date April 3, 2023

What is a Canadian tax refund?

In April, Canadians must pay their income tax liability for the prior year and when most Canadians file their income tax returns. Getting a Canadian tax refund can be an amazing experience for numerous Canadians. It’s like obtaining an unexpected reward from the federal government. The idea of having extra money to spend can be thrilling as well as inspiring, and it can offer a sense of relief and security for those that might be battling financially.

Even just the knowledge that you will be getting a tax refund is exciting, as taxpayers excitedly wait for the confirmation of how much money they will be getting back. Everyone uses this time to think about how they are going to spend their refund. Overall, the enjoyment of receiving a tax refund is a favourable experience.

But what is a Canadian tax refund? Following the filing of their annual income tax return to the Canadian government, a taxpayer may receive a sum of money known as a tax refund. This refund represents the variance between the total amount of taxes paid by the taxpayer throughout the year and those they actually owe, based on their income and tax deductions/tax credits. In the event that a taxpayer has paid more taxes than they are required to, they will be issued a refund for the surplus amount.

While many people find it appealing to go on a shopping spree or book a holiday with that extra cash, there are really a lot more surprising and also functional things to use for your Canadian tax refund. In this Brandon’s Blog, I will explore 5 things you may not have thought about that you can do with your reimbursement that will certainly not only profit you financially but also assist you to accomplish your long-term objectives.

From investing in your retirement to repaying some financial debt, these alternatives might not be as interesting or exciting as a brand-new wardrobe or a journey to an exotic location, but they can have a substantial effect on your financial well-being. So, before you hit the shopping centre or book your next trip, take a minute to take into consideration these alternate suprising ways to use your tax refund. You may be amazed at just how much more satisfying it is to put that money towards something that will benefit you financially in the future. Let’s jump in!

5 surprising things you can do with your Canadian tax refund

It’s that time of year yet again – tax time. While it can be a difficult time for many, there’s always the possibility of a silver lining: the opportunity for a tax refund. According to the Canadian federal government, the average Canadian tax refund was $2,086 in 2022. There are at least 5 surprising things you can do with your Canadian tax refund that isn’t shopping.

So if you’re questioning what to do with your Canadian tax refund this year, keep reading – you could be surprised by the choices available to you. Here are the 5 ways that will help with your financial planning and money management:

1. Utilizing your Canadian tax refund to plan for your retirement is a wise decision.

Here are some practical ways to achieve this:

Establish an RRSP: It is recommended to open an RRSP account with a reputable financial institution or insurance company as a means of building your retirement savings. You can contribute up to 18% of your previous year’s earned income, up to the 2023 limit of $30,780. This approach enables you to save more for your future while minimizing your tax liability today. As a result, every dollar of your Canadian tax refund will have a meaningful impact on your retirement fund.
Make a contribution to your existing RRSP: Use your Canadian tax refund to make a contribution to your existing RRSP account. The payment is tax-deductible, which will lower your taxable income and therefore your 2023 tax obligation.
Select your financial investments: Choose exactly how you wish to invest the money within your RRSP. You can select from a potpourri of financial investment options, all depending on your risk tolerance and how far away from retirement you are. This is an important element of financial planning.
Monitor and also readjust your portfolio: Frequently review your investment portfolio to make sure that it is aligned with your long-term goals. Make changes if essential to make certain that you’re on track to accomplish your retirement goals.

Investing in your retirement is a wonderful way to guarantee that you have adequate cash to support your lifestyle after you quit working. By using your Canadian tax refund to make payments to your RRSP, it is both good financial and tax planning because you’re capitalizing on a tax-efficient method to save for your future.

2. Donate to a charity or a cause you care about

Contributing all or a part of your Canadian tax refund to a charity that you believe in is a fantastic way to produce a positive impact on the world. Follow these sensible actions to make a distinction:

Select a charity: Donate to a charity that resonates with your values and beliefs. You can choose one or more charities that contribute either to your local area or anywhere around the world.
Make a contribution: Use your Canadian tax refund to make a donation to your chosen charity. The majority of charities accept contributions via online platforms, and many permit automatic month-to-month contributions.
Think about a matching gift: Examine if your company provides a donation program to specific charities that match the amount of money you donate to. See if any of those charities appeal to you.

3. Pay off high-interest debt

Using your Canadian tax refund to pay off high-interest debt is a clever way to improve your financial situation. Below are some actions you can take:

Determine what your high-interest debt is: Take a look at your debts and find those with the greatest rate of interest. These are commonly credit cards, personal loans, or payday advances.
Establish the total up to pay off: Calculate just how much of your Canadian tax refund you can afford to use to repay the high-interest financial debt. It’s of course best to be able to pay off the entire debt, but if you can’t, pay down as much as you can of the high-interest rate debt.
Make the repayment: Use your tax refund to repay in full or pay down the highest-interest rate debt first. Make certain to comply with any payment conditions set by your lender or financial institution.
Prevent accumulating brand-new financial debt: Once you’ve settled the high-interest financial obligation, stay clear of building up new high-interest rate financial debt by budgeting your expenses and restricting your use of credit cards. You don’t want to start increasing high-interest-rate debt again after you have paid it off.

Settling high-interest debt is a clever financial action since it can conserve your money in the future by reducing the amount of interest you’ll pay. It can also help improve your credit rating, which can help you in the future when you need to apply for a home or car loan. By using your Canadian tax refund to settle high-interest debt, you can take a step in the direction of financial stability and ultimately freedom from debt.

4. Take a course or learn a new skill

Utilizing your Canadian tax refund to take a program or discover a brand-new skill can be a fantastic financial investment in yourself as well as your future. Here are some steps you can take:

Select a training course or skill: Determine a course or skill you wish to learn that can benefit you in your work or personal development. This can be an accreditation program, a language course, or a skills workshop.
Study choices: Look for reliable establishments that supply the program or skill you intend to learn. You can additionally look for online options or free courses offered on the internet.
Determine the cost: Establish the overall price of the program or skill, including any kind of materials or books you might need to acquire.
Pay for it with your tax refund: Use your Canadian tax refund to pay for the course or skills training. This way you don’t have to pay any money to invest in your personal growth.
Devote yourself to learning: Once you have actually enlisted in the training course or skills workshop, dedicate yourself to completing it. Set aside time each week to attend class, do homework and study. Stay encouraged by setting objectives and tracking your progression.

Using your Canadian tax refund to further your education and learning can help your personal development and your career, or just find a brand-new interest. By using your Canadian tax refund to take a course or discover a brand-new skill, you’re making a wise financial investment in your future.

5. Start or add to your emergency fund

Using your Canadian tax refund to begin or contribute to your emergency fund can be a clever way to plan for unforeseen expenses. Here are some steps you can take:

Establish just how much to save: In previous Brandon’s Blogs, I have recommended that everyone have an emergency fund of 3 to six months’ worth of household expenses in their reserve. Calculate how much you must save based on your monthly household expenses.
Open a separate account: Open up a separate savings account for your emergency reserve. Treat this account as untouchable, except in the case of a real emergency. This will make it less complicated to track any emergency expenses you must pay from this account. You must honestly treat this account as being “in case of emergency break glass” and not use it as a nice place to get some money from whenever you feel like it.
Set up automated transfers: Set up automated transfers from your everyday bank account to your emergency fund interest-bearing account. This will allow you to maintain the discipline of saving monthly from your income and avoid forgetting to contribute to your fund.
Use your Canadian tax refund: Use your tax refund to make a round-figure payment to your emergency reserve. This can assist you in reaching your savings objective faster.
Stay clear of utilizing the cash for non-emergencies: Resist the lure to utilize your reserve for non-emergency expenses. Keep the cash in the account until you need it for unexpected emergency expenses like additional medical costs, a major auto repair bill, or in case of job loss.

Beginning or contributing to your emergency fund can provide additional financial security when faced with unforeseen expenses. Use your Canadian tax refund to jumpstart your financial savings. You are taking positive action to reach financial stability and freedom.

Canadian tax refund conclusion

In conclusion, your Canadian tax refund presents an opportunity to do more than just indulge in shopping sprees. By exploring alternative uses for your refund, you can not only make the most out of your money but also achieve various personal and financial goals. Whether it’s investing in your future, contributing to a cause you care about, or simply treating yourself to an experience, the possibilities are endless. So, before you hit the stores or add to your cart, take a moment to consider these surprising options and think outside the box. Your tax refund could be the key to unlocking new opportunities and experiences that will enrich your life for years to come.

I hope you enjoyed this Canadian tax refund Brandon’s Blog. Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns are obviously on your mind. Coming out of the pandemic, we are also now worried about the economic effects of inflation and a potential recession.

The Ira Smith Team understands these concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably 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 have helped many entrepreneurs and their insolvent companies who thought that consulting with a trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

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.

The Ira Smith Trustee & Receiver Inc. team understands 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.

Brandon Blog Post

ESTATE TRUSTEE DURING LITIGATION: THE GOOD AND PRACTICAL WAY TO SAFEGUARD ASSETS DURING ESTATE LITIGAT1ON

Post author By Brandon Smith
Post date August 9, 2021

estate trustee during litigation We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

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

Estate Trustee During Litigation: What is it?

All of us with business or family assets and/or debts can be subject to litigation or worry about it. Whatever the reason, the reality is that no one can remove themselves from the litigation process…not at the beginning, not at the end, and not even in death. Perhaps it is an employee or partner, a spouse or ex-spouse, your children or grandchildren, or even your parents.

Many times a person’s death creates Estate litigation between family members; either over a Will or because there is no Will! Sometimes it is necessary for the appointment of a neutral, independent court officer to control the Estate assets and deal with Estate issues while the beneficiaries and other potential stakeholders are involved in Estate litigation.

In our sister business, Smith Estate Trustee Ontario, we accept the appointment of Estate Trustee and we can also act as the independent court officer Estate Trustee During Litigation. This Brandon Blog is about why it may be necessary for the court to appoint an Estate Trustee During Litigation and why it may turn out to be a necessity.

The role of an Estate Trustee During Litigation

An Estate Trustee During Litigation is tasked with protecting the Estate while the litigation is ongoing and gathering information and, sometimes, helping to resolve the litigation.

The duties include, in particular:

Calculating the fair market value of the estate’s assets and liabilities.
Keeping its assets safe and secure.
Retaining and, if necessary, tracing anything discovered to be missing.
Keeping separate trust accounts.
Reviewing and handling protective and other expenditures.
Establishing, defending, settling and paying any debts.
The filing of income tax returns and if the situation allows for it, whatever tax planning to reduce income taxes can take place.
Investing estate funds to maximize yields until the Estate Trustee During Litigation is discharged of its obligations and funds.

Because of their experience, resources, objectivity, and integrity are sometimes viewed as the best option. As a matter of common law, responsibilities of the Estate Trustee During Litigation cease upon the termination of the litigation, and they are required to transfer assets without having to be ordered to do so separately.

Appointing an Estate Trustee During Litigation

A court appoints an Estate Trustee During Litigation to handle the deceased estate. Section 28 of the Ontario Estates Act, R.S.O. 1990, c. E.21 provides the statutory authority. The Ontario Superior Court of Justice grants administration in the case of either intestacy (when there is no Will) or pending a valid challenge to the validity of the Will, or some other action involving the Will and the deceased estate.

While the ongoing litigation continues, the Estate Trustee During Litigation has all the powers and rights of a general administrator, except for the right to distribute the residue of the property. Administrators of such estates are subject to the immediate control and direction of the court, and the court may order that the administrator receive reasonable remuneration from the estate of the decedent.

Court Appoints Estate Trustee During Litigation

The court appoints the Estate Trustee During Litigation and can set its remuneration. Therefore, the court must have some guiding principles it follows to determine when it is appropriate to make such an appointment. Well, it does. It comes from a situation I previously wrote about in my July 24, 2019, Brandon Blog DYING WITHOUT A WILL IN ONTARIO: DISTRIBUTION TO HEIRS NOT EASY. In that Brandon Blog, I wrote about Toller James Montague Cranston, deceased.

Toller Cranston was a popular Canadian figure skater and artist. He passed away on January 23, 2015, in Mexico where he lived for some 23 years. He passed away without leaving a Will. His sister, Phillipa Baran, was appointed Estate Trustee of the Estate of Toller Cranston by the Mexican court on September 3, 2015, on the consent of Phillipa and her two brothers, Guy Francis Cranston and Hugh Goldie Cranston. These three siblings were the only beneficiaries. In December 2016, her appointment as Estate Trustee of the Estate of Toller Cranston was confirmed by the Ontario court, also on consent. Phillipa Baran, therefore, had sole authority for Estate administration.

Estate litigation ensued and the court-appointed an Estate Trustee During Litigation. A rift between the three beneficiaries developed. The brothers filed a motion to remove their sister as Estate Trustee. One of the points of contention between the siblings was the manner ins which Phillippa Baran was handling the sale of Estate Assets, namely, the artwork of Toller Cranston. While that Estate litigation was pending, in 2019, the Master in the Estates court appointed an Estate Trustee During Litigation to take charge of trust property remaining in the meantime until the issue could be resolved.

During the litigation involving the Estate of Toller James Montague Cranston, the Master ordered the Estate Trustee During Litigation to act without posting an Administration Bond. The Master also ordered that all assets of the Estate shall be immediately turned over to the Estate Trustee Under Litigation who shall also file a Consent with the court. Phillipa Baran was ordered to fully cooperate in the transfer of the Estate assets and the production of records, including all financial records.

Philipa Baran appeals the appointment of the Estate Trustee During Litigation

Philippa Baran sought to set aside the Master’s decision and order appointing an Estate Trustee During Litigation. Her appeal was heard by the Divisional Court. According to the court, the Ontario Superior Court of Justice has statutory authority to appoint an Estate Trustee During Litigation.

On this appeal, the Divisional Court Judge felt the appeal boiled down to two points. Specifically, whether the decision of the Master should be set aside and whether the order issued exceeded the Master’s jurisdiction.

The Divisional Court determined that the Master did not err in either law or fact based on its review of the relevant statutory provisions and jurisprudence. The Judge found nothing wrong with the Master’s Order.

To be fair to Ms. Baran, the Judge noted that there is evidence that she has worked very hard to manage the estate’s assets and debts since Toller Cranston died. It has been a challenging task. It appears, however, that the parties have reached a deadlock.

The Judge also thought Ms. Baran’s handling of the remaining artwork, including either selling the art over her brothers’ objections or planning future rights to the artwork without consulting Guy Cranston or Goldie Cranston, was unreasonable and contrary to her obligations as Estate Trustee.

Ms. Baran was, in the court’s view, in a conflict of interest in this litigation. Ms. Baran’s appeal was therefore dismissed, the appointment of the Estate Trustee During Litigation stands and Ms. Baran must temporarily return her Certificate of Appointment to the court.

Estate Trustee During Litigation: A Primer for Accountants and Lawyers

In addition, the Divisional Court noted some of the factors that will be considered by the court in determining whether or not it should exercise its discretion to appoint an Estate Trustee During Litigation. Accounting firms, lawyers, and anyone advising in the Estates area should be aware of these factors.

In terms of the court’s jurisdiction to appoint an Estate Trustee During Litigation, the following points were confirmed:

When necessary, the court can draw upon its inherent jurisdiction to protect parties and ensure justice in the proceeding by supervising the management of estates and controlling its own processes.
It is in the court’s inherent jurisdiction to appoint an officer to preserve and protect the assets of an Estate that may be at risk during litigation.
A level playing field must be ensured and the assets of the estate protected from the tactics used by litigating parties. No one should be able to use their control over the Estate to benefit themselves or to hurt the other beneficiaries.
It is crucial to administer an Estate’s assets to the maximum advantage of its beneficiaries. When an Estate Trustee faces an adversarial position towards his/her co-trustees or beneficiary, it is prudent to replace that trustee temporarily;’simple prudence demands it.
A court should only refuse the appointment of an Estate Trustee During Litigation in the clearest of cases since it is not an extraordinary measure. In most conflicts between the trustee and beneficiaries, the court will favour the appointment, unless it is not one of those very challenging Estates thereby making the estate administration straightforward.

According to the Divisional Court:

Whether an Estate Trustee During Litigation should be appointed is a discretionary decision. In determining whether the discretion to appoint an Estate Trustee During Litigation should be exercised, the following factors should be considered:

An Estate Trustee may be a witness in litigation.
Conflicts of interest are possible.
Conflict of interests between the Estate Trustee and/or beneficiaries.
There is hostility between the Estate Trustee and/or beneficiaries.
There is a lack of communication between the parties.
There is evidence that some parties were excluded from settlement discussions.

Estate Trustee During Litigation summary

I hope you have found this Estate Trustee During Litigation Brandon Blog informative. The death of a loved one is probably the most traumatic life event you will encounter. It is doubly so if your loved one dies intestate and family members tie up the Estate with costly litigation.

Are you a stakeholder in Estate litigation where the appointment of an independent, neutral court officer can at least unlock the jamming up of assets so that the assets can be preserved and their value maximized for the beneficiaries? If so, Smith Estate Trustee Ontario can help you. Contact us so that we can provide a no-cost consultation to see how we can help you and the other beneficiaries.

Do you have way too much financial debt? Prior to you getting to the phase where you can’t make ends meet reach out to me. I am a licensed insolvency trustee (previously called a bankruptcy trustee). In fact, if you understand that you can’t pay your financial debts heading into or in your retired life, contact us.

We understand the pain and stress excessive financial debt can trigger. We can aid you to get rid of that discomfort as well as address your financial problems by offering prompt action and the ideal plan.

Call Ira Smith Trustee & Receiver Inc. today. Make an appointment with one of the Ira Smith Team for a free, no-obligation consultation and you can be on your way to enjoying a carefree retirement Starting Over, Starting Now. Give us a call today so that we can help you get back to stress and pain-free life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.