Tuesday, April 19, 2016

2015 Tax Tips

Every April I put out a short list of the changes to the Tax Rules and here is this year's list. Check the bottom of the article for links to additional resources and information.
CRA goes High Tech
MyCRA is a mobile app from the Canada Revenue Agency. Using this app, you can view your notice of assessment, tax return status, benefit and credit information, and RRSP and TFSA contribution room.
If you self-file using the software packages available, you may have noticed that this year, you can download your T4, T4A, T3, T5 and RRSP slips (by signing into your CRA MyAccount) and you no longer need to enter the information manually. Don't forget to double-check the CRA's data before you file.
Tax Brackets and Tax Rates
Check the table below to see if you are impacted by the changes to the tax brackets and to the rates. Note - these are Federal rates only,
Personal income tax brackets
2015 income
2015 federal tax rate
2016 federal tax rate
2016 income
more than $138,586
more than $200,000
TFSA limit change
The limit for 2016 is a return to $5,500, down from 2015's limit of $10,000. If you have been eligible for the TFSA since its inception and never contributed, your total contribution room is $46,500. Don't forget that you cannot replace money taken out until the following calendar year (unless you still have contribution room).
Child tax credit and UCCB 
The child tax credit, worth an average of $337 per child, is gone and parents must pay tax on the Universal Child Care Benefit (UCCB) they started receiving last summer. The UCCB amounts are $160 a month for every child under age six and $60 a month for children aged six to 17 since last July. If you had a spouse or common-law partner in 2015, the partner with the lower income claims the UCCB as income on line 117.
On July 1, 2016 this will change again, when the new CCB (tax-free and tied to income), replaces the UCCB, the Canada Child Tax Benefit (CCTB) and the National Child Benefit Supplement (NCBS, part of CCTB).
Foreign income verification statement
Over the last several years there have been several revisions to form T1135. These changes have increased the amount of information that people were required to disclose about their foreign property and income.
For 2015, the reporting requirements have been simplified for people who own more than $100,000, but less than $250,000 in foreign holdings, including rental properties, trusts and investments. If you own $100,000 to $250,000, you need to report only the total income from property held and any gain or loss from its disposition.  If you hold more holdings, you must give more detailed descriptions of each type of investment in each country.
Links and Resources
For more information, check out the following links:

Do you need travel insurance?

We all know that medical expenses in the USA are expensive, but they are in other parts of the world as well.  Here is an example of costs in Mexico due to appendicitis. 

14-year-old Male: Abdominal Pain Led to Appendicitis in Mexico

Tomas was in Mexico during spring break. After a few days, he started having severe abdominal pain and saw the hotel doctor. He was diagnosed with appendicitis and sent to the hospital by ambulance. Tomas was in the hospital for two days before he was released with various prescriptions and caught a new flight home.
Hotel doctor fees ......................................$950.50
Ambulance fees ........................................$1,200.00
Hospital fees .............................................$22,530.47
Doctors' fees .............................................$7,165.00
Prescriptions .............................................$47.11
Provincial medical ....................................- $330.16
Amount paid by TuGo (the insurance company)  ......$31,562.92
If you have a group plan, Emergency Medical coverage may be included in your plan.

Sunday, January 10, 2016

New Year’s Financial Resolutions

Every year, I make resolutions about the areas of my life that I would like to improve. The changes often never even get started and rarely make it to December 31.  I’d like to help you be successful if your goals are financial.

In a recent Sun Life Financial survey, 66% of Canadians said their debt level was the same or worse than a year ago.

Step 1 – Make a Goal.

It doesn’t matter if it’s saving 10% of your gross (or net) income, saving $1000 so that next Christmas the expenses do not need to go on your credit card (due to lack of cash flow), paying off your credit card every month, putting aside 3 months income for a rainy day, or saving money for a special vacation.  All that matters is that it’s your goal and that it means something to you.

Step 2 – Determine your Cash Flow

You cannot save even $50 each month, unless you know where that money is going to come from.  So this step involves reviewing your income and expenses.  Most experts suggest that 3 months is a good snapshot.  Note: If you pay for items such as insurance on an annual basis, you need to average those costs and add them to your 90 day expenses. 

Usually, a good start for this review is by looking through your bank and credit card statements.  Remember – all you bank statement says for cash is that you withdrew it, it doesn’t tell you whether you spent that money on giving your children money for school pizza lunches or on $5 Starbuck coffees.

If you would like a spreadsheet to use for this exercise, let me know and I can supply you with one.  Alternatively check out the one available on the Hello Life website. 

Step 3 – Review your Income and Expenses

So now that you know where your money comes from and where you spend it – you need to determine what you can adjust.  Is it exchanging Starbuck coffees for ones you brew at home or buy at Tim Hortons? Is it decreasing your clothing or eating in restaurants budget?  Does it require an entire review of all of your spending habits?

If you need help with this step, contact me. I can either help you or send you to a professional who can.

Step 4 – Implementation / Action

Money that doesn’t “exist” is easy to save.  If your goal is to pay down credit card debt, you can set up an automatic payment from your bank account to the credit card to occur as soon as your paycheck lands in your bank account.  If your goal is savings, I can help you by setting up an account for the savings and arrange the same automatic transfer.

As we all know, nothing actually happens unless you have an action plan.  Let’s work together to implement your financial goals.