Trudeau is right: 40% of Canadians don’t pay income taxes, which means someone else is picking up the bill
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Many people were upset with Prime Minister Justin Trudeau this week for saying “low-income families don’t benefit from tax breaks because they don’t pay taxes.”
Of course, some were upset because they felt it was untrue. But Trudeau was speaking the complete truth when it comes to income taxes (HST, realty taxes and other consumption taxes are another story). It is just a truth that he may not want many Canadians to know.
On average, two of every five Canadian households do not pay anything towards federally and provincially funded expenses such as health care, education, community and social services, national defence, public safety and even the good old Canada Revenue Agency. One household of every five pays much more than 70 per cent of all of those costs.
It didn’t used to be this way, but it is now.
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Three tips to help retirees minimize their taxes and maximize their cash flow
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Two-time heavyweight boxing champion and, later, grill aficionado George Foreman once quipped: “The question isn’t at what age I want to retire, it’s at what income.”
A new CIBC retirement poll out this week found that 74 per cent of respondents worry about having enough income in retirement. According to the poll, Canadians’ top anticipated sources of retirement income include: Canada/Quebec Pension Plan benefits (85 per cent), Old Age Security benefits (80 per cent), RRSPs (63 per cent), TFSAs (58 per cent) and income from a pension plan (53 per cent).
Yet the vast majority of those surveyed — 89 per cent — didn’t fully know how their retirement income is taxed, which may result in lost opportunities to claim various tax credits or implement strategies that might save thousands of tax dollars annually.
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Everything you need to know about the enhanced CPP — from how much you'll pay to how much you'll get
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While it comes too late for retiring Baby Boomers, the generations that follow will benefit nicely from the newly “enhanced” Canada Pension Plan (CPP).
Higher premiums to fund it began this month. Once fully phased in almost half a century from now, CPP will replace 33.33 per cent of the average worker’s lifetime earnings to a higher pensionable earnings limit of $65,400 (rounded down, 2019 dollars.)
That compares to a replacement of pre-retirement earnings up to 25 per cent of the current Year’s Maximum Pensionable Earnings limit (YMPE) of $57,400 in effect in 2019. The boost means the maximum pension will eventually be 50 per cent higher than before, according to CPP expert Doug Runchey, of Vancouver Island-based DR Pensions Consulting.
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Your personal business better be real if you are using it to claim expenses for tax purposes
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Moonlighting can be a great way to use your skillset to bring in some extra cash on the side. For some, it may also be a way to justify writing off some otherwise “personal” expenses, such as expenses for the business use of a work space in your home, for tax purposes. But be forewarned — if you don’t operate your business in a commercial manner or it’s deemed that there is a significant personal element associated with your so-called “business,” any losses you incur from that business may be denied by the taxman.
Take, for example, the recent case involving an Ontario accountant who was employed, full-time, by a local municipality from March 2005 through May 31, 2007, as its treasurer, chief financial officer and ultimately, as chief administrative officer. In 2007, the year under review by the Canada Revenue Agency, the taxpayer earned nearly $83,000 of employment income from the municipality.
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Minimize your 2018 tax bill with these seven last-minute tips
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Jamie Golombek: Here's what to do now to reap significant tax savings when you file your 2018 tax return next spring
With just days to go before Dec. 31, here’s some last-minute tax-planning ideas to contemplate during the final week of the year that could reap significant tax savings when you file your 2018 tax return next spring.
Tax-loss selling
With the recent tumult in financial markets, you may actually have some accrued losses sitting in your non-registered portfolio this year. If so, consider some last-minute tax-loss selling, which involves selling investments with accrued losses at, or close to, year end to offset capital gains realized elsewhere in your portfolio. This Thursday, Dec. 27, is the last trade date in order for your transaction to settle in 2018.
It’s critical that your trade settle in 2018 if you want to use your loss against other capital gains realized this past year, including using it to offset capital gains distributions you may have just received this past week from your non-registered mutual funds.
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