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.   

Close to 7 million people have already filed their returns and so far it looks like this tax season should be business as usual.  Right now, the average tax refund is $1,825, the average amount due is $3,196, and when it comes to meeting tax deadlines, there is no indication that tax filing deadlines will be extended. In our March opinion poll, tax and financial pros agree with this, particularly when it comes to instalment payments.  Specifically, 60% of poll respondents feel that further postponement of taxes due would not be appropriate. Here are two noteworthy comments:

April is a month full tax milestones with the pinnacle being the April 30 tax filing deadline for individuals.  Note that for businesses, the final application deadline for Canada Emergency Business Accounts (CEBA) loan ended March 31. Here’s a handy tax milestones calendar from Knowledge Bureau for the month of April, excerpted from the Knowledge Bureau Advanced Tax Update Course. 

Old Age Security (OAS) and Guaranteed Income Supplement (GIS) benefits are indexed quarterly, but the formula for OAS increases is based on increases to the Consumer Price Index.  When the CPI drops, OAS payments remain constant for the subsequent quarter, as they did in the first three quarters of 2020.

The government has recently appointed a new Task Force on Women in the Economy.  However, what’s missing among the 18 educated and highly qualified women on the board* is representation from the many women who, through self-employment and independent business ownership, contribute so much to growth in our economy. That’s a big miss.  Here is why that is important: 

The timing could be better.  The federal government has chosen April 19, 2021 as the date for their first federal budget in two years,  in the midst of a third wave of a trying pandemic.  This could also well be the busiest week of tax season for taxpayers and their advisors. Yet, the important roadmap to economic recovery and the tax changes to pay for it will likely be set forth. Join us for a special Knowlege Bureau Report after the budget day.

Many taxpayers are unaware and in fact shocked to learn that the bushel of apples, gaggle of geese, or barter services of any kind provided in anyway, including those online, are taxable.  Whether they are paid in kind to settle a debt or simply as a trade, all have a commercial value that may have tax implications.