Canadian Tax Planner

Canadian Tax Planner - Business or Employment Use of One’s Personal Residences (January 2018)

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As technology improves, and employment preferences trend to more flexible arrangements, employers may be faced with an increased work force operating from home. In addition, the number of individuals that are self-employed, a group more likely to have home offices, are also increasing.    

In this edition of Canadian Tax Planner, we will explore the tax implications of working from home, be it as an employee or self-employed business owner. This could include the more typical home office arrangements, but may also extend to others such as workshops or laboratories. Further, we will discuss the possibilities for deducting expenses, and/or receiving allowances and rental payments for the business or employment use of one’s personal premises. Finally, we will discuss other tax issues related to working from home, exclusively, or in combination with other work locations.  

In particular, issues will be discussed as follows:

PART 1: Self-Employed (Business) Use

PART 2: Employment Use

PART 3: Remuneration/Reimbursement for Home Office Use

PART 4: Other Issues

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WARNING: This information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortuous, or any other form of liability for its contents or for any consequences arising from its use. Photocopying, replication or any other reproduction of the information contained within the newsletter, for any reason, other than a single page for reference only is strictly prohibited. Copyrighted © Video Tax News Inc. 2017. Date of Issue – November 2017. This periodical is published six times per year in January, March, May, July, September and November.

Canadian Financial Planner - Bitcoin and Other Cryptocurrencies (November 2017)

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At the end of September 2017, one Bitcoin was valued at over CAD$5,000, having increased from less than $800 a year earlier, with the market capitalization of Bitcoin rising to over $80 billion. Although the price continues to be highly volatile, its meteoric rise from a few cents to a few thousand dollars over the course of less than a decade continues to draw a lot of attention. 

Bitcoin is a digital currency that uses cryptography (computerized encoding/ decoding) for security and is the most well-known of a number of cryptocurrencies. Bitcoin and other cryptocurrencies are unlike traditional currencies in that they are dissociated  from governments and central banks. Instead, cryptocurrencies are administered and controlled through a blockchain  network; a secure online ledger that keeps a record of the transactions. The blockchain is a distributed ledger, which effectively means that everyone is working off the same set of books, as opposed to keeping their own ledger to record transactions. 

While Bitcoin and other cryptocurrencies are not replacing traditional forms of currency, their use is now increasingly widespread. Some major retailers are even starting to accept Bitcoin, including Microsoft, Expedia and Overstock.com, to name few. As the world of digital currencies continues to grow, it is becoming more important to understand how they work and their potential benefits and pitfalls.

In this edition of the Canadian Financial Planner we will examine how cryptocurrencies work, how they can be used in practice and the benefits and drawbacks of using them. Finally, we will highlight possible strategies to help avoid some of the security risks of using a digital currency.

Specifically, we will discuss:

  • PART 1: What Is a Cryptocurrency and How Does It Work?
     
  • PART 2: How Cryptocurrencies Can Be Used in Practice
     
  • PART 3: Benefits and Drawbacks of Cryptocurrencies
     
  • PART 4: Scams and Fraud – How to Mitigate the Security Risks

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WARNING: This information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortuous, or any other form of liability for its contents or for any consequences arising from its use. Photocopying, replication or any other reproduction of the information contained within the newsletter, for any reason, other than a single page for reference only is strictly prohibited. Copyrighted © Video Tax News Inc. 2017. Date of Issue – November 2017. This periodical is published six times per year in January, March, May, July, September and November.

Canadian Tax Planner - Registered Retirement Savings Plans (RRSPs) (November 2017)

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The proportion of Canadian taxpayers contributing to an RRSP has been steadily declining in recent years. For the 2015 tax year, 22.9% of Canadians reported having contributed to an RRSP, down from 29.1% in the year 2000. In addition, there has been a marked decline in the proportion of private-sector workers covered by a defined benefit pension plan, responsible in part for an overall drop in pension coverage. Although, at least part of the decline in the proportion of Canadians contributing to an RRSP is explained by the introduction of the TFSA as an alternative tax-sheltered savings vehicle.

A recent retirement survey conducted by HSBC, a large international bank, showed that nearly half of working-age Canadians are not saving for retirement. Further, according to the survey, twice as many Canadians are planning to help fund their retirement through downsizing or selling their home than the global average.  

It also appears that the average Canadian is more indebted than ever before. At the end of 2016, the ratio of household debt to disposable income rose to 167.25%, from around 100% in the year 2000. In other words, on average, Canadians owe $1.67 for every $1 of disposable income they earn. 

With this backdrop, many Canadians may not be saving enough to adequately provide for themselves in their old age. On the plus side, Registered Retirement Savings Plans (RRSPs) offer Canadians a tax advantaged means of saving for their retirement; providing individuals with a considerable degree of choice and flexibility over investment options and even special provisions for early withdrawal under the Home Buyers Plan and the Lifelong Learning Plan.

While investing in an RRSP is not the ideal solution for some, for many it presents an attractive choice for those hoping to ensure that they are financially secure in their retirement. In this edition of the Canadian Tax Planner we will discuss how RRSPs work, what happens when funds are withdrawn, as well as the types of investments that are permitted in an RRSP and the options available to a plan holder when their RRSP matures. 

More specifically, we will discuss:

PART 1: How an RRSP Works

PART 2: Withdrawing Funds From an RRSP

PART 3: What Investments Are Permitted in an RRSP?

PART 4: What Happens When an RRSP Matures?

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WARNING: This information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortuous, or any other form of liability for its contents or for any consequences arising from its use. Photocopying, replication or any other reproduction of the information contained within the newsletter, for any reason, other than a single page for reference only is strictly prohibited. Copyrighted © Video Tax News Inc. 2017. Date of Issue – November 2017. This periodical is published six times per year in January, March, May, July, September and November.

Canadian Tax Planner - Is It Really Tax-Free Income? (September 2017)

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There is the common adage that nothing in life is free.  Well, does that extend to tax? Is nothing in life tax-free? The simple, and well-received answer is no. There is a surprising variety of income and benefits an individual can receive that are not subject to tax in Canada.  

In some cases, there are specific rules in the Income Tax Act which exempts income from certain sources. In other cases, amounts received simply may not fall within the provisions of the Act, and are therefore not subject to tax.  Regardless of how one cuts it, understanding when one can avoid a large tax bill, legally and legitimately, can be very valuable. 

In this issue of Canadian Tax Planner, we will discuss some of the more well-known, and a few not so well-known sources of income that can be received tax-free by an individual. 

More specifically, we will discuss:

  • PART 1: Good Luck – Lottery, Prizes, Gifts and Windfalls
     
  • PART 2: Employment Related Payments and Benefits
     
  • PART 3: Insurance and Other Types of Compensation Payments
     
  • PART 4: Government, Familial and Other Payments

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WARNING: This information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortuous, or any other form of liability for its contents or for any consequences arising from its use. Photocopying, replication or any other reproduction of the information contained within the newsletter, for any reason, other than a single page for reference only is strictly prohibited. Copyrighted © Video Tax News Inc. 2017. Date of Issue – September 2017. This periodical is published six times per year in January, March, May, July, September and November.

Canadian Financial Planner - Deciding How Much Life Insurance to Purchase (September 2017)

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A recent report by the Canadian Life and Health Insurance Association revealed that approximately 22 million Canadians have an active life insurance policy of one form or another.  When compared to the population of adult Canadians, it can be seen that a significant proportion have some type of coverage. Nevertheless, for many individuals, the level of coverage may be based upon an out-of-date assessment of their requirements or a predetermined amount of coverage they have in place through an employer, without much further consideration given to whether the level of coverage is appropriate. 

For many individuals, family circumstances are constantly changing. As such, the amount and type of coverage may need to be regularly reviewed to determine whether or not it remains sufficient. For those of us that have dependants, life insurance may be an important consideration to help mitigate any financial distress suffered by family members already having to contend with the death of a loved one.

In this edition of the Canadian Financial Planner, we shall review the types of life insurance policies available through insurers and at what stage in life an individual should consider obtaining and subsequently reviewing their coverage. We will also discuss how to determine the level of coverage needed, as well as some important considerations for how the proceeds might be administered in the event of a claim.

Specifically, we will discuss:

  • PART 1: Types of Life Insurance
     
  • PART 2: Stages of Life – When to Consider Life Insurance
     
  • PART 3: Determining the Amount of Coverage Needed
     
  • PART 4: Deciding How to Administer Insurance Proceeds

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WARNING: This information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortuous, or any other form of liability for its contents or for any consequences arising from its use. Photocopying, replication or any other reproduction of the information contained within the newsletter, for any reason, other than a single page for reference only is strictly prohibited. Copyrighted © Video Tax News Inc. 2017. Date of Issue – September 2017. This periodical is published six times per year in January, March, May, July, September and November.