Canadian Tax Rules for 2010
By Cassandra_BHM | April 30, 2010
Each year millions of Canadians scramble to get their tax papers in order. Each year, many of these same Canadians are scrambling to find out what new tax rules have been introduced as well as what old tax rules have been changed. Many of these changes stem from the federal budget being brought down at the beginning of 2009. These major tax changes can easily affect how much personal tax you will pay and for most people, it pays to know the changes. Here are some of the key changes:
The introduction of the tax-free savings account was unveiled in the 2008 federal budget but one was not able to set it up until 2009. Millions of Canadians have set up their TFSA, making this account widely popular. If you did not contribute last year, you can still do so by adding up to $10,000 this year, which is the equivalent of the $5,000 allowance from 2009 combined with the $5,000 allowance for 2010.
The first time homebuyers tax credit is another measure from the 2009 federal budget. If you purchased your first home after January 27 2009, you may be entitled to the first-time homebuyers credit. You can find this claim on line 369 of Schedule 1.
Another 2009 budget adjustment was a boost in the RRSP homebuyers plan. If you are looking to purchase a house, the maximum amount you can withdraw from your RRSP tax-free was increased to $25,000 from the old $20,000 limit.
The new home renovation tax credit has been the most talked about addition from the 2009 federal budget. Canada Revenue Agency counts that more than 3.5 million Canadians inquired about the new program last year alone. The home renovation tax credit is applicable if you spent between $1,000 and $10,000 on qualifying home renovations from January 27, 2009 to February 1, 2010. This new program makes it possible to claim up to $1,350 in credits.
A few other tax rule alterations for the 2009 season are changes to the loyalty rewards program. CRA has removed the tax rule for employees who charge work related expenses to their personal credit cards to earn frequent flyer points. Overtime meals and allowances worth up to $17 will now be considered tax-free, with a few conditions. As well, the Registered disability savings plan was created in 2008 but put into play in 2009 that was designed to help parents provide financial security for people with disabilities.
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Fraudulent Tax Preparers and the Penalties
By Cassandra_BHM | April 29, 2010
A recent IRS release about fraudulent tax preparers should have Canadians being weary as well. Since 2009, 19 Canadian tax preparers have been assessed nearly $1.7 million in third-party penalties with audits of 15 additional tax preparers still under way. These tax preparers have been identified by the Canada Revenue Agency as a group that is a more likely risk of tax non-compliance, which means they overstate credits and deductions, understate earnings and often charge more for their services or attempt to skim additional money from clients. If caught, not only does the tax preparer receive harsh penalties, so do their clients, usually in the form of fraud and interest penalties if there is money owing for the taxation year.
In the conviction section of the CRA’s website, the legal department states: “When individuals are convicted of tax evasion they must still repay the full amount of taxes owing, any amounts fraudulently obtained, plus interest and any civil penalties that may be assessed by the CRA. If convicted, the court may fine them up to 200% of the federal tax evaded or false refunds claimed and sentence them to a jail term of up to two years.
Schemes involving false or inflated charitable donation receipts and tax preparer fraud are both being investigated as part of Project Trident, a CRA-wide enforcement project that helps protect the tax base by prosecuting key players in fraudulent tax schemes and reassessing related tax returns. Project Trident targets three types of fraud: identity theft, charities related fraud, and tax preparer fraud.”
For more information on CRA’s Project Trident, visit www.cra.gc.ca/projecttrident.
Canada Revenue Agency warns that if you are going to use a tax preparer, to be careful in who you chose as well as accepting any tax breaks or proposals to reduce your taxes that may seem to good to be true. There are many fraudulent tax preparers looking for easy target clients. This is a handful of the more recent convictions against fraudulent tax preparers.
On March 10 2010, Allain Maltais of Lachine, Quebec plead guilty to multiple charges of tax evasion including 100 counts of tax evasion under the Income Tax Act for claiming or obtaining $286,255 in false income tax refunds. He originally faced 159 counts. France Desjardins was convicted in January on 13 counts for her part in the Maltais scheme and was sentenced to 3 months in jail and fined close to $36,000. Francine Laforest also plead guilty to tax evasion for her part. Rosaire Michaud has been charged with 171 counts of tax evasion under the Income Tax Act and 145 counts under the Tax Rebate Discounting Act for claiming or obtaining $491,905 in false income tax refunds.
If you are using a tax preparer this season and would like to check them out, a more detailed list by province can be found by clicking on CRA’s website at: http://www.cra-arc.gc.ca/nwsrm/cnvctns/menu-eng.htmlt.
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Avoiding Common Tax Mistakes
By Cassandra_BHM | April 28, 2010
With the April 30 tax deadline mere days away, it is time to file if you have not already done so. Filing in a hurry often leads to sloppy paperwork and unclaimed receipts that could earn you a refund. With the deadline so close, most people won’t take the time to go in search of those medical receipts or the ones for their kids’ lessons. They will simply just file what they have handy.
With so many credit and tax deductions available, it can be difficult to know what to claim and unfortunately, it is up to us to figure it out as the Canada Revenue Agency is not going to point them out for us. In order to take advantage of what Canadians are able to claim, here is a list of suggestions that should help with filing and earn you back some cash.
If you find old receipts or expenses from things such as medical bills, you can complete a T-1 adjustment form and include the slip on your previous returns. These expenses cannot just be added to the following years tax returns. You can go back up to ten years to correct errors, but these adjustments have to be filed on paper and can take a month or two to get processed. Charitable donation receipts can be combined for up to five years.
If you feel that you have overpaid into your CPP and Employment Insurance during this last tax year then you will need to include Forms 2204 (CPP) and Form PD24 (EI) in order to make this claim and get the credit. If you are using tax software, it will do this automatically.
If you are a business owner, you can split your income with family members as long as that family member works for the company. To claim this eligible pension, Form 1032 must be completed and submitted with your tax return. If you are collecting CPP payments, you can split this income as well under certain circumstances, but you will have to apply to Service Canada for detailed information.
The Canada Revenue Agency will correct any mistakes they find on your return, however, they won’t necessarily point out any credits or deductions you miss so it’s important to make certain you take advantage of all the claims you’re allowed. It pays to start preparing your tax return early to give yourself enough time to find the receipts you need to get the most back from your return.
Even though you may receive a refund, you still need to keep receipts in the event you are asked to provide documents. If you do not get a refund this year and are in need of some extra cash to make your tax payment, a private bad credit loan may be helpful. Some lenders provide no obligation, on-line applications 24-hours a day.
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A Breakdown of Personal Debt
By Cassandra_BHM | April 27, 2010
Most of us owe something; credit cards, mortgages, loans from friends or families. It’s not a secret that this personal debt is holding us back from obtaining financial freedom, but where exactly does this debt come from? A recent study shows a breakdown of what type of debt people owe and how much it totals.
According to the Community Financial Services Association, we have a staggering $40 billion in outstanding payday advances. Even though payday lending is very controversial, it is a widely used survival tool for many cash-strapped consumers. Payday loans are small, unsecured short-term advances that are usually between $100 and $500. Normally these types of loans are due to be paid back in full within 14 days. Due to their short term of nature, these loans can cause major financial trouble for people who are unable to pay them back in full within the maturity time.
According to the Federal Reserve, American consumers have borrowed $313.8 billion in auto loans as of February 2009. The average financed amount was $26,268. Taxes came in as an enormous debt for many people. According to the IRS, there is currently $345 billion in unpaid individual personal income tax debt.
According to the US Department of Education, federal student loans, which account for 77% of all education loans, totalled a debt of $556 billion, up 70% from ten years earlier. In 2007 and 2008, the amount of non-federal student loans disbursed by private institutions totalled $17.6 billion, up 592% from the 1997 - 1998 years total of $2.54 billion.
Revolving consumer credit totalled $953 billion, the largest component of this type of debt comes from credit cards, which is estimated to comprise of 98% of revolving consumer credit debt. Not surprising, residential mortgage debt made up the largest amount of consumer debt with an outstanding $14.64 trillion as of the end of 2008, up $4 trillion from 2004. This has been a major contributing factor to the US credit crisis as falling home values have added pressure to borrowers. Small business loans make up an additional $68 billion in outstanding debt as well as $114 billion in farm loans and $577.8 billon in home equity loans.
Regardless of where your debt comes from, it is always a good idea to keep it under control. Paying off more frivolous debt such as high-interest credit cards should be a priority. If you find yourself with bad credit but are in need of a loan, there are options available to you. Before borrowing, do some research and find a lender with flexible terms that will suit your budget and not exacerbate your debt situation.
Posted in Being Frugal, Reducing Debt
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Family Money Management-Saving Together
By Cassandra_BHM | April 26, 2010
So, you overspent at Christmas, your car insurance is due, and your kids are yammering about summer camp. Does it feel like the only thing you have in your life is bills, bills, bills? Maybe it’s time to bring the kids in on your family’s financial situation.
Although it can be difficult to have to admit to your children-people who depend on and look up to you-that things are a bit tight right now, don’t overlook the possibility that this admission can bring your kids onboard to help the family save, and bring everyone together as a family working on a shared mission and toward an achievable goal.
It can be hard to know when your children are ready to learn about your financial affairs. Very young children have little idea about money. They just know that it costs money to buy stuff, but how much that is or where that money comes from, are often beyond the understanding of a child under eight years of age or so.
Older children, and particularly teenagers, are another matter. They resent, and can sniff out with disarming accuracy, when they are not being told the truth, the whole truth, and nothing but the truth. They will also almost certainly already be aware of tension in the household around money matters, and may have a good idea already that times are tight. Letting them in on family finances tells them you have confidence and trust in their ability to understand and participate in what’s going on. And, they deserve to know the real reason they cannot go to summer camp, or have the things they see their friends have got.
If you allow your children to participate in family financial planning, they may come up with plenty of ideas to surprise you. Their open minds and wild imaginations can often pay off with truly workable ideas-and their energy can be just the right infusion to help you get in gear, too.
They can price compare like crazy when they shop, searching out the best deals on groceries. Younger children can make a game out of clipping and saving weekly value coupons. Older teenagers may be motivated to pick up a part-time job, and earn their own spending money. And you can reward yourselves as a family by taking everyone out on a free expedition-to the park, instead of to the movies, or to the art gallery, instead of to the mall.
Bring your children in on your financial planning when they’re ready for it, at the level they can understand money matters. The returns may really surprise you.
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Financial Freedom for Fewer Canadians
By Cassandra_BHM | April 23, 2010
Due to the recession, freedom 65 may never get here. It seems for most people, even freedom 85 is not as probable as once expected. According to the Royal Bank of Canada, it seems 32% of Canadians have not even begun to save for retirement yet, according to a recent RBC poll. This is compared to 24% in 2008. They also found that only 36% of Canadians have even thought about or have planned for retirement, which is down from 42% the previous year.
It seems the recession has inflicted many financial restrictions on Canadians and their living standards due to a high jobless rate, leaving less money for any type of saving or investment. These factors are also combined with the obvious high debt load the average person has, making investment savings near impossible. Another word of warning has been issued to Canadians about the upcoming increase in interest rates and that personal consumer debt should be carefully monitored. This comes after a year of historically low rates that have seen many Canadians borrow too much, extending loans they will later regret.
The bank agrees that it is difficult for many Canadians to think about savings and retirement when personal finances are in such turmoil. Consumers will need professional advice on retirement strategies, especially in the current economic stage where programs such as health and corporate pensions plans have been cut because companies can no longer afford to extend them to employees.
The RBC poll found the sharpest decline in retirement savings has been from those aged 55 and over as only 53% of that age group is saving, compared to 67% one year ago. It has also found that about 35% of Canadians have contributed to a plan or to an RRSP for the 2009 tax year, the lowest contribution rate since 1996. Fifty-four percent of the population who are not contributing to any type of retirement savings say that they are unable to do so due to current economic conditions.
It is very difficult for people to try and balance out their financial situations especially if they’re already behind and are feeling overwhelmed because of it. The ability to sit and clearly see the current picture becomes blurred, most people simply leave the situation get out of control. Consumers just do not know what to do or how the help themselves get back on track.
Economists are suggesting Canadians seek expert advice. If you suffer from bad credit and are feeling the financial pressure, now is a good time to seek help. Even if you are suffering from bad credit there is help available. Private lending institutions specializing in bad credit loans and title loans could very well be the help you’re looking for.
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When Debt is Swallowing You Up
By admin | April 22, 2010
Here’s the thing. If you feel like you’re dying by debt load, your debt is way out of control. Now that you’re here, though, you don’t have to give up and go down. The trick is to realize that you are in trouble, and get the help and advice you need.
Overwhelmed by mortgage payments
Believe it or not, your bank or mortgage lender would really prefer it if you came to them as soon as you know you are in hot water. It is in everyone’s best interests to resolve debt repayment issues and avoid bad debt, repossessions, or bankruptcies. And, there are ways to resolve your debt and repayment problems. Here are a few things to think about:
If you have missed payments, due to illness, layoff, or other temporary factors, you may be able to apply those missed payments back across the rest of your mortgage. Or, you may be able to re-finance your loan over a longer period of time. Another option might be to make payments on a monthly basis, rather than every week or two weeks, if that’s what you have been doing.
Credit card debt
The same is true for credit card debt. Contact the credit card company and see if you can get the interest rate lowered, or close the card and arrange to pay off the debt over time. This will avoid your debt going into collection, which can really hurt your credit score. Contact credit counselors-you can often get free advice on how to manage your credit load.
What you can do
It’s always best to talk to your bank or credit counselors with your financial information in hand. Don’t try to hide anything. Remember, they can and probably will do a credit check and find out anyway. So work out what you owe on your credit cards, your mortgage back payments, and other credit accounts and bring all those with you. The better prepared you are, the better these professionals can help you.
Moving forward
Keep a budget. Always know what you make, what you owe, and so how much you have to spend. Choose cash where you can. It’s amazing how tight fisted you can suddenly become when you’re handing over real green, and not swiping a little plastic card in a machine. Keep one, or maybe two, credit cards. And keep the balance well below the maximum allotted. And if you find yourself in a monetary tight spot, contact the experts. They’re ready to help.
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When Debt is Swallowing You Up
By Cassandra_BHM | April 22, 2010
Here’s the thing. If you feel like you’re dying by debt load, your debt is way out of control. Now that you’re here, though, you don’t have to give up and go down. The trick is to realize that you are in trouble, and get the help and advice you need.
Overwhelmed by mortgage payments
Believe it or not, your bank or mortgage lender would really prefer it if you came to them as soon as you know you are in hot water. It is in everyone’s best interests to resolve debt repayment issues and avoid bad debt, repossessions, or bankruptcies. And, there are ways to resolve your debt and repayment problems. Here are a few things to think about:
If you have missed payments, due to illness, layoff, or other temporary factors, you may be able to apply those missed payments back across the rest of your mortgage. Or, you may be able to re-finance your loan over a longer period of time. Another option might be to make payments on a monthly basis, rather than every week or two weeks, if that’s what you have been doing.
Credit card debt
The same is true for credit card debt. Contact the credit card company and see if you can get the interest rate lowered, or close the card and arrange to pay off the debt over time. This will avoid your debt going into collection, which can really hurt your credit score. Contact credit counselors-you can often get free advice on how to manage your credit load.
What you can do
It’s always best to talk to your bank or credit counselors with your financial information in hand. Don’t try to hide anything. Remember, they can and probably will do a credit check and find out anyway. So work out what you owe on your credit cards, your mortgage back payments, and other credit accounts and bring all those with you. The better prepared you are, the better these professionals can help you.
Moving forward
Keep a budget. Always know what you make, what you owe, and so how much you have to spend. Choose cash where you can. It’s amazing how tight fisted you can suddenly become when you’re handing over real green, and not swiping a little plastic card in a machine. Keep one, or maybe two, credit cards. And keep the balance well below the maximum allotted. And if you find yourself in a monetary tight spot, contact the experts. They’re ready to help.
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Couples Banking: Are you Part of the One-Third?
By Cassandra_BHM | April 20, 2010
According to an RBC poll, it seems one-in-three Canadian couples between the ages of 18 and 35 keep at least one separate bank account. Only 10% of the surveyed couples say they keep all their accounts joint and more than half of the couples surveyed say they are keeping some of their funds divided to maintain a sense of financial independence. Meanwhile 31% of couples say they keep separate accounts because they have different financial needs than their partner.
Even though their accounts may be separate, these couples are committed to building their financial futures together. House buying and having children were some of the things couples planned to do within the next five years. Two-thirds of couples said that planning for financial stability was a priority.
Discussing financial plans is definitely a key to making the long-term financial relationship work. It’s all about communication and defining your personal objectives. A couple needs to agree on the same financial priorities. This will help with home buying, traveling or starting a family.
It’s important to decide on key issues. A couple needs to discuss who’s in charge of the bank accounts and paying the bills. Who pays for what expenses? What spending means to you. What are your personal financial goals?
Simplify, simplify, simplify. Review your account records, plans and investments. Regardless if you have single or joint accounts, keeping track of daily spending is a helpful guide when it comes to finding out where all the money goes. This may prove to be a little tedious, but it’s worth the effort, even if you chose to do it for only one month.
It’s very important to discuss your spending habits as well as your saving habits. It may prove impossible to reach your financial goals if one of you is a spender and the other one is a saver. Knowing your past mistakes, like defaulting on a loan or not paying outstanding debts, will help you both to learn where you currently are and what your money attitude is.
If you are thinking of your financial future and are wondering how you can manage unpaid loans or boost a bad credit rating, there are many financial institutions that can help. For those with bad credit, talking to a car title lender about a private loan may be just what you need. Many offer a variety of private loans through their no obligation, 24-hour, on line applications.
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Breaking Free of Credit Card Debt
By Cassandra_BHM | April 19, 2010
If the endless cycle of paying down your credit card debt a teensy-weensy bit every month, and then adding on a new ginormous debt next month is beginning to wear you down, it’s time to take steps today to break free and really handle your credit card debt once and for all.
Managing credit well is a matter of education and practice. Unfortunately, nobody teaches us how to use our credit wisely, and once we get up to our necks in bad debt, we’ve also fallen into all kinds of bad habits that are really hard to break. But not impossible. Take just a few smart steps to handle your credit debt, and put a few good practices into place, and your debt will go down, stay down, and eventually disappear altogether, and you’ll feel a whole lot better about yourself and your life.
The best advice if credit card mismanagement is a plague in your life is to cut up your cards. But sometimes cutting those cards up doesn’t mean charges aren’t still accruing each month because of automatic payments that you may have put on the card. So, you also need to figure out how many automatic payments come off your credit card every month. How many magazines or itunes? Internet payments? Cell phone contracts? Other ongoing monthly purchases?
These payments can quickly add up to hundreds of dollars each month if you’re not paying attention-and the problem is, it’s too easy to ignore automatic credit card charges. If you can, cancel all of them. If you cannot, get them transferred off your credit card and into your chequing account. If you can’t do that, at least get all those payments on to one credit card that you can track each month.
Knowing what your payments are is a key factor in reducing debt. If you feel like you have bills coming at you from every direction at all times of the month, you can consolidate these with one loan. It might be better-even if it costs you a bit more-to have one bill to pay each month. That’s because if you pay off all those other debts that you’ve let slide for too many months, spot-paid every few months, or have outright defaulted on, your credit immediately improves. And it might be worth a few extra dollars to get your credit back on track, and you back in control of your life.
A car title loan can help you do this. It’s a loan you take out against your car, if it’s less than eight years old and you own it. It’s especially good because it’s a loan that can also help you rebuild your credit; first, by paying off all those other bad debts, and second, by showing a good loan on your credit score.
Consider a car title loan. It’s easy to apply online. And it may teach you what no one else has-how to use credit wisely
Posted in Car-Title Loans, Credit Cards, Reducing Debt
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