Rising insolvency readings in Canada raise red flags — sort of – BNNBloomberg.ca
The number of insolvencies filed in the first September of 2019 has dramatically increased despite a healthy economy. With unemployment as well as interest rates dropping, there is some concern about the rise in numbers of Canadian households that are not able to pay off their debts. Experts however, have pointed out that this rise in insolvency numbers may not be so worrisome as population growth and the decrease in share of insolvencies per 1 billion dollars of household income.
“Normally there’s a story you can tell, like there’s some underlying weakness that shows up with a bit of a lag in personal bankruptcies and insolvencies.It’s just hard to see that now. It’s perplexing.”
Read more: https://www.bnnbloomberg.ca/rising-insolvency-readings-raise-red-flags-in-canada-sort-of-1.1349506
CRA: If You Make This TFSA Mistake, the IRS Will Tax You, Too!
If you have a TFSA and contribute dividend incomes to the account from any investments that originate in the U.S., be prepared to owe taxes to the IRS. The U.S., among other countries, are allowed to tax foreign dividends. US investors can expect to pay fifteen percent of their dividends to the IRS. Some account holders find that the capital gains after the fifteen percent is taken is still worth the investment. However, if you have the contribution room, it’s best to keep your U.S.-based dividend stocks in your RRSP where the foreign withholding tax is exempt.
“If you make this mistake, you could find yourself paying up to 15% a month on dividends, even in your “tax-free” account.”
Read more: https://www.fool.ca/2019/11/19/cra-if-you-make-this-tfsa-mistake-the-irs-will-tax-you-too/
Federal poll finds few Canadians believe wealthy and corporations pay fair share of taxes
A recent poll in Canada revealed that a majority of those polled feel that the wealthy and large corporations should be taxed more to support the poor. Most individuals polled said that everyone should pay their fair share. They also agreed that tax evasion causes a worse situation for those who are in fact honest. However, some people felt that a little bit of cheating on tax reporting was all right. Most respondents felt that taxes have improved since they were polled in 2011.
“When asked if it was acceptable to not declare income received under the table on tax returns, more than three-quarters of respondents said they disagreed, and 78 per cent disagreed that tax cheating is not a real crime.”
Surge in number of Canadians who can’t pay their debts has economists worried — and scratching their heads
Nearly 2,000 Canadian consumers filed for insolvency in September, a 19 percent increase from a year ago. This represents a potentially worrying development for the nation’s household debt landscape. Economics professor Stephen Gordon calls the data “perplexing” given the favorable economic landscape. Indeed, other data related to household debt – such as mortgage arrears – is more positive. Others have pointed out that the number insolvency filings is low as a proportion of the entire Canadian workforce (0.06%). Nonetheless, if next month’s insolvency data shows a worsening trend, that could be a troubling sign.
“While the increases are coming from low levels, the trend is a worrying development that suggests cracks are starting to appear in Canada’s household debt landscape.”
Better Business Bureau gives tips on recognizing CRA scam
It’s a recurring con that reappears every tax season with a different spin. Getting notified by the CRA that you have taxes owed can be scary, and it can get a lot scarier when it’s a scammer threatening you with demands to pay immediately or face an arrest or even jail time. These scammers usually call to demand money or try to get your personal information by saying you have a tax refund coming. There are ways to tell if a scammer is targeting you. These include threatening language, asking for credit card details as well as personal information. If you have been scammed, or think you have, immediately contact Service Canada at 1-800-206-7218.
“The CRA tax scam call is one of the most frequent scams we hear about at BBB (Better Business Bureau),” says BBB president and CEO Peter Moorhouse. “Although international law agencies have intervened, and even shut some of these call centres down, the scam is still very prevalent, especially with tax season approaching.”
Canadians are passing up billions of dollars in pension plan contributions from their employers – The Globe and Mail
It is hard to believe that many employees either do not contribute at all or do not contribute the maximum amount allowed to their pension plan. A recent study determined that 3 to 4 billion dollars a year are passed up in Canada because employees were not part participating in their employer match programs for retirement savings. The study estimates that only 60% of employees participate in retirement plans and of those that do participate 20-25% do not make the maximum contribution. One of the reasons for non-participation is the complex and confusing amount of paperwork involved in voluntary participation. A recent trend toward auto enrollment is increasing participation in some company plans. You can accumulate lots of money over time simply by taking advantage of the full benefit of your pension plan.
“Personal finance so often veers into tips for saving a tiny bit of money here and there in hopes of accumulating into something significant over time. Getting full value from your company’s pension plan is a way to accumulate lots of money over time.“
Are tax-free workplace pension plans an idea whose time has come?
When tax-free savings accounts accounts were created, Canadians gained incentives to save more money for their retirement. Over the years, pension plans have become smaller or even non-existent at some businesses, but a tax-free option could improve those numbers. Tax free pension plans could take some burden off the government social assistance programs, while making it easier for employers to provide these plans. Pensions that are not taxed as income could also improve business environments as employees have an incentive to work and save.
“Better options are needed to support employers’ efforts to offer pension plans that help their entire workforce — benefitting not only workers, but also employers’ business objectives. For example, financially secure employees are better positioned to meet their retirement goals and retire on time, which supports employers’ succession planning needs.”
With taxes, you’re guilty until proven innocent
The presumption of innocence, a cornerstone of Liberal Democracy, is essentially flipped in Canada when it comes to one matter: taxes. Here one is guilty until proven innocent. There is some justification for this. Taxpayers tell the Canada Revenue Agency how much they owe, not vice versa. The taxpayer is presumed to have all the relevant information. The problem is that this is not always the case. There have been cases where taxpayers have had money stolen from them, and the Canadian Revenue Service presented them with a bill. In such cases, the reversal of presumption of innocence is not justified.
“The idea is that the burden of proving innocence is on the taxpayer because the taxpayer – and not the Canada Revenue Agency – has the information required to properly determine his or her tax liability. Except that this isn’t always the case.“
Personal Investor: When investing turns into wealth management – BNNBloomberg.ca
As we age, changes in our investment portfolio, like our split between equity and fixed income, will likely shift. Younger people will typically allocate more to equities. As we approach retirement, depending on our circumstances, our portfolio will shift to safer, lower yield investments without as much risk. Asset allocation is best discussed with your financial advisor to ensure there is the right mix to achieve your retirement goals. Keep in mind that there is such a thing as being too safe as well.
“The most obvious shift from investing to risk management is reflected in how assets are split between equities and fixed income.”
Read more: https://www.bnnbloomberg.ca/personal-investor-when-investing-turns-into-wealth-management-1.1173447
Are your charity dollars going to the right people in the right place at the right time?
Regardless of how much you’re giving, it’s important to be informed bout the charity to ensure that it is having an impact. While we want to give, it’s always a risk that a charity might not be nearly as charitable as we hoped, or it claimed. To know your time and money is truly going to a good cause, it’s important for the charity to have been investigated, and then monitored, to ensure what they say is what they do. Philanthropy consultants do just this; analyze and monitor charities before providing information about the charity’s operations.
“With 85,000 registered charities in Canada all asking for money, a philanthropic advisor’s goal is to give donors information that would result in good giving decisions.”