January 2005 Archives

CRA Tax Tips

Did you know that Canada Revenue Agency provides Tax Tips on its web site? For instance, this month they released advice on claiming your medical expenses.

"You can claim, as a non-refundable tax credit, medical expenses for yourself, your spouse or common-law partner, and your children born in 1987 or later. For 2004, the total expenses have to be more than 3% of your net income, or $1,813, whichever is less."

For more information on CRA Tax Tips, visit:
http://www.cra-arc.gc.ca/newsroom/taxtips/menu-e.html

Canadian SMEs want new multi-year tax plan

"Canada's small business community strongly supports the implementation of a new multi-year tax relief strategy, and favours reducing personal income taxes in order to stimulate economic growth" states a release on the Canadian Federation of Independent Business (CFIB) web site.

In a report released by the CFIB based on a survey of small businesses three-quarters of business owners want to see a new multi-year tax cut plan implemented by the federal government as a means to lower the tax burden and increase certainty in business planning.

With respect to how the federal surplus should be spent, small business survey respondents opted for spending 82 cents of every surplus dollar to either debt reduction (49 cents) or tax relief (33 cents) and only 18 cents to new program spending.

More information about this report is available on the CFIB web site at: http://www.cfib.ca/mcentre/mwire/releases/nat012605_e.asp.

Is it or isn't it over for the NHL season?

Several media reports have indicated that yesterday's NHL talks between the league and the NHL Players' Association included a proposal from the league combining aspects of each side's core sticking points and those aspects that each side has vehemently rejected from the other: the league's hard cap vs the player's luxury tax.

In the proposal a luxury tax would kick in when a team's payroll reaches about $32-million (U.S.). The hard salary cap comes in around $45-million (U.S.).

While the likelihood of seeing NHL hockey this season remains almost nil, the good news is that we'll soon reach the point of no return for this season putting an end to the endless debate, is it or isn't it over for this season?

Links:
NHL.com
NHL Players' Association

CTF 2004/05 Pre-Budget Submission

The Canadian Taxpayers Federation has issued its 2004/05 pre-budget submission to the Commons Finance committee. It is available at:

http://www.taxpayer.com/pdf/2005-06_Federal_Pre-Budget_Submission.pdf

CTF Calls for Nominations for Waste Awards

Tuesday, January 25, 2005
Ensuring the Very Worst in Government Spending is Recognized by Taxpayers: CTF Calls for Nominations for Waste Awards

Ottawa: The Canadian Taxpayers Federation (CTF) is seeking nominations in advance of the 7th Annual Teddies Waste Awards from the public, members of the media and government officials.

In the spirit of the annual entertainment awards season, the CTF instituted the Teddies in 1999 to “honour” a public office holder, civil servant or government that most exemplifies government waste, over-spending, excessive regulation, lack of accountability, or any combination of the four. A Teddy may be awarded on the basis of past accomplishments or on the basis of a proposed initiative.

Appropriately, the Teddy statue is a beautifully adorned golden sow. Teddies are awarded in the following categories: Federal, provincial/municipal, and lifetime achievement.

To nominate a Teddy, any Canadian can visit the CTF’s webpage (www.taxpayer.com) and make a submission to the Teddies committee. The identity of those making a nomination will remain strictly confidential.

The Teddies are named after Ted Weatherill, a former senior public servant, who was terminated in 1999 for “expenses incurred by him … incompatible with his position as Chairman of the Canada Labour Relations Board,” according to the Office of the Minister of Labour.

Top nominees, and award winners, will be released through a national news release following the black tie award ceremony on Parliament Hill in February.

Information on last year’s ceremony can be found at: http://www.taxpayer.com/main/news.php?news_id=287

John Williamson
Federal Director
Canadian Taxpayers Federation
www.taxpayer.com

High Time for Another 5-year Tax Cut Plan

January 20, 2005
A big yawn is the reaction most Liberal MPs will give a recent economic report highlighting how the prosperity of Canadians has barely improved over the past 15 years. A study by the Toronto Dominion Bank found that between 1989 and 2004 Canada’s per capita gross domestic product (which measures the nation’s economic output) grew by 25.5 per cent; whereas the after-tax income per Canadian worker increased by an abysmal 3.6 per cent. The reason for this lopsided increase: Ever higher taxes, government policies that have not improved the economic well-being of citizens, and costly programs that waste tax dollars.

But what might wake government MPs up from their slumber is the report’s co-author, TD’s chief economist Don Drummond, who until now has been supportive of Liberal budgets in general, and Paul Martin in particular.

Yet given how government spending has risen since the budget was balanced in 1998 and that Mr. Martin is unwilling to act fiscally responsible as prime minister, Mr. Drummond’s advocacy for a lighter tax burden and smarter spending is not surprising. He worked at the Finance Department when Ottawa was trying to spend less and eliminate the deficit.

Ottawa once again has a spending problem. When the last budget was tabled in March 2004, Finance Minister Ralph Goodale said program spending would increase by 3.1 per cent this year. Yet when the books were updated in November – only eight months later – Mr. Goodale revealed spending will, in fact, grow by 6.5 per cent – more than a two-fold increase.

The prime minister and finance minister tell Canadians tax relief is not a priority, and continue to hang their government’s hat on a five-year tax reduction program that was launched in the February 2000 budget – when Jean Chrétien was in charge. But just how big was that tax cut?

When then-Finance Minister Martin announced the tax relief package in 2000, he and government MPs distorted the true size of the plan as a $100-billion tax cut. But in fact, $20.7-billion of this amount included the ending of bracket creep, which did not lower taxes but indexed tax brackets with inflation.

In addition, a $28-billion hike in Canadian Pension Plan premiums was not included. So while personal income taxes decreased they were partially offset by increasing CPP taxes over the same period. Finally, almost $6-billion in Canada Child Tax Benefit payments were incorrectly identified as tax relief, instead of being properly classified as government expenditure. The real five-year tax cut, fully implemented at the end of 2004, amounts to $46-billion. While this is an impressive figure and welcome news to taxpayers, it is a far cry from the $100-billion as advertised by the government.

Only a foolhardy politician would say the job of ensuring tax rates remain competitive or improving living standards of Canadians is done. But this is what Messrs. Martin and Goodale are saying when tax reform is an ongoing process, much like fixing health care or improving the readiness of Canada’s Armed Forces.

The time for a new round of tax cuts – phase 2, if you like – has arrived and Ottawa’s $9-billion surplus makes it easy to do. Indeed, a principle of taxation is that the tax code should generate revenues necessary to cover the cost of essential government programs and services, no more, no less. The high level of over-taxation has the federal government swimming in cash. Indeed, the surplus exists because Ottawa continues to over-tax Canadians and will do so again this year, next year and in the years ahead.

Broadly-based tax relief would leave more money in the pockets of taxpayers and improve the fortunes of families. It should be a budget priority for the government. If Mr. Martin and his colleagues decide to spend the entire surplus, Canadians will know the Liberals are asleep at the economic switch.

John Williamson
Federal Director
Canadian Taxpayers Federation
www.taxpayer.com

RRSP Checklist

Financial Planning: Your RRSP Checklist

The following is a handy last-minute checklist of things to remember during RRSP season.

Find Out How Much Contribution Room You Have
One quick way to find out is to look at your Notice of Assessment received from the Canada Revenue Agency last year. Pay particular attention to any RRSP contribution room you may have from previous years. Obviously, you'll want to tackle unused contribution room now if you can; with an estimated $176-billion in unused contribution room outstanding, I expect many of us have unused contribution room.

Explore Your Contribution Options
There are many different ways to structure your contribution. When making your contribution this year, think about how you're making it. Whatever you decide, the trick is to think about how you'll be making your contribution ahead of time so as not to make it an undue strain on your February finances.

Take Advantage of Foreign Content
Every RRSP investor should review the foreign content in his or her RRSP portfolio. If you haven't yet brought your foreign content up to the maximum limit, you may want to consider an increase. Other considerations include incorporating the 100 percent RRSP eligible foreign mutual funds into your RRSP, which allow investors to go beyond the foreign content restriction imposed by Canada Revenue Agency (CRA). If you are unfamiliar with these funds, I would be happy to speak to you about these opportunities for your registered plans.

Don't "Park" Your Money
Speaking of last-minute contributions, waiting until late February to contribute can often mean waiting even longer to decide where to put that contribution. While late is better than never, once you've made the deadline, don't let your money sit around. If you don't have a specific investment in mind when you contribute, don't worry – there are plenty of short-term investments available. But, make a commitment to find a place for your money as soon as you can. In real life, there is no such thing as “Free Parking”. The growth you stand to lose by keeping your contribution in cash can be quite significant.

Think About Withdrawals
If you're nearing retirement, you'll want to think about how to time your RRSP withdrawals. For those turning 69 this year, you need to choose a maturity option for your RRSP before December 31. In most cases this will be a RRIF. For those planning on withdrawing money before age 69, think about when to withdraw it. RRSP withdrawals must be included on the current year's taxable income. When you take money out can make a big difference to the overall tax you pay.

Have a Plan for Your Refund
When your refund comes in May or June, incorporate it into your financial plan. That may mean contributing to your RRSP, subject to your overall limit, but it doesn't have to. Refunds are great for paying down credit card debt, lump-sum mortgage payments, making other investments, or accomplishing some other financial goal.

Get Some Help!
The most important tip I can give. Your RRSP is one of the fundamental pillars of your overall financial plan; as such, it deserves professional attention. Your Investment Advisor is someone you should trust, and preferably one skilled in constructing retirement plans. Consult with him or her when making your contribution. When it comes to retirement a little professional help can go a long way.

For a complimentary copy of our Retirement Savings Guide, contact my office.

Daniel Saikaley, CA CFP EPC
Investment Advisor
CIBC Wood Gundy
E-mail: daniel.saikaley@cibc.ca.
Visit my website at www.danielsaikaley.com.

Welcome to the TAXES.CA Blog

On behalf of TAXES.CA, I would like to welcome you to the TAXES.CA web site and our Canadian tax blog.

TAXES.CA is an online service that strives to provide an additional source of taxation and financial planning information -- information of relevance to Canadians, information which you may not be able to get elsewhere, don't know exists on other sites, or have a hard time finding on the Internet.

Blogging as the New Journalism

For those not familiar with web logs and the blogging phenomenon, quite simply a "blog" acts as an online journal, home to a collection of thoughts, topics, commentary, articles, or simply links to other resources. The new journalism, blogs often serve the same purpose as more traditional media sources: inform, educate, influence, and entertain the masses, in addition to serving as a form of watchdog on a specific topic.

I don't think anyone will [mis]interpret us as a think tank or opinion magazine yet blogs are often the meeting ground of technology and public policy. This technology allows us to react quickly through less expensive means in a less formal environment on a variety of issues.

As this site develops, we will strive to provide new information and commentary on a variety of tax and tax-related topics. We will borrow the brainpower of industry experts (and those just willing to say what they think) to enhance the site with relatively small staff and infrastructure. We will seek the active involvement of industry professionals and constructive feedback from users like you. We will link to existing web-based resources while developing new content and services that meet the needs of our users and the restrictions of our budget.

What is TAXES.CA?

TAXES.CA is a Canadian online service dedicated to providing resources on Canadian taxation and financial planning information. The site currently contains three main components: a web log ("blog") of articles and commentary on Canadian tax issues; a directory service for listing and promoting industry professionals; and general taxation information, resources, and links.

Why TAXES.CA?

In our country, next to hockey perhaps, the subject of taxes is one the most actively discussed and contentious of topics. We feel there is a need for an additional online resource to supplement (or provide diversity from) the resources on government web sites and those of the tax advocacy groups. We also see the need for more Canadian content on the Internet -- information by Canadians and for Canadians. Easy-to-remember Canadian domain addresses like TAXES.CA should be used as a channel to provide or link to this Canadian information, representing a variety of sources, opinions, and perspectives. We feel there is an opportunity to provide to Canadians a central, simple, easy-to-use resource for locating Canadian taxation and tax-related information.

Thanks to you

As online developers we provide the technical infrastructure and expertise to deliver the TAXES.CA online service. We will be relying on others to contribute content, expertise, and generally improve the quality of this site. We appreciate and thank the contribution of all who enrich our site. We especially thank you, the user, for visiting TAXES.CA. We hope you find the site informative, interesting, useful, and occasionally even a bit entertaining -- or dare we predict, even a bit controversial. We welcome your input and encourage you to provide your feedback.

David Jakob
President, TAXES.CA

Software Reviews: TaxPrep

Have you used the TaxPrep software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: SimTax

Have you used the SimTax software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: TaxTron

Have you used the TaxTron software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: GenuTax

Have you used the GenuTax software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: TaxWiz

Have you used the TaxWiz software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: Ufile

Have you used the Ufile software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: Dr Tax (DT Max)

Have you used the Dr Tax (DT Max) software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: TaxCel

Have you used the TaxCel software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: TaxByte

Have you used the TaxByte software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: T1Filer

Have you used the T1Filer software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: MyTax

Have you used the MyTax software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: GriffTax

Have you used the GriffTax software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: CuteTax

Have you used the CuteTax software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: CresTax

Have you used the CresTax software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: CoolTax

Have you used the CoolTax software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: QuickTax

Have you used the QuickTax software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.

Software Reviews: CanTax

Have you used the CanTax software before to do your taxes? If so, we're interested in hearing from you. Was it easy to use? Did you have problems? Or was it easy and straight-forward?

Use the "Comments" link and form to provide your review of this software.