Canada Needs a Financial Plan

According to a July 23 publication by the Fraser Institute, we are getting poorer here in Canada and the prospects for economic growth are looking grim.  This should be of concern to every Canadian concerned about their “real income” – that’s their purchasing power – and by extension - their ability to fund consumption now and for important family milestones in the future:  retirements, education and homeownership.  It’s grim, but there are practical suggestions for a turn around plan. Here’s a synopsis of the report.   

According to a news release from the Canadian Securities Administrators (CSA), final rules were adopted to ban the payment of trailing commissions by fund organizations, such as order-execution only (OEO) dealers who don’t make investment suitability determinations.

The true financial test on how well Canadians will weather the financial storm brought on by the pandemic will occur in the months to come. A glimpse into that future is well described in a June 2020 report from the Bank of Canada. It suggests three catalysts, working together, that can lead to successful financial recovery:  

Should you buy a new car before year end to reduce your 2020 taxes?  It’s a good question especially because lucrative new tax rules were put into place for the write-off of most capital assets* on November 21, 2018.  Taxpayers can in fact, triple up on the usual first-year tax deductions when they acquire assets in the period between November 20, 2018, and December 31, 2023, and put them into use before 2028.  

We now have a better idea about the audit techniques CRA will have at their fingertips to ensure the Canada Emergency Response Benefits (CERB) received by laid off or furloughed employees, The Canada Emergency Student Benefit (CESB) and the Canada Emergency Wage Subsidies (CEWS) received by employers are validated. The numbers will appear on a new T4 slip, which is likely to cause a few headaches for small employers and create some new opportunities for bookkeepers and tax accountants. Here are the details:

Income inequality has been a topic of discussion for decades.  Now, with the pandemic as the catalyst, the advent of the CERB and future income uncertainty have brought this issue and a broader one – the right to a basic minimum income – some increased momentum.  There may be a simpler solution to help people immediately, and at the same time remove the controversy around incentives to work.

The federal government has raised the amount that can be claimed for meals under a variety of provisions in the Income Tax Act by 35%, from $17 to $23 a meal or $69 a day.  The last change occurred in 2009.  The new amount is generous, as the purchasing power of a 2009 dollar today is 83% of its value. If adjusted for inflation, the $17 meal in 2009 would cost $20.53 in 2020. More good news:  the change is retroactive to January 1, 2020.  There are three groups of taxpayers who will be cheering: