All posts by Financial Independence Hub

How Trump’s tax reform will impact Canada

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By Veronika Chang

Special to the Financial Independence Hub

On July 27, key Republicans from the U.S. House, Senate and White House released a joint statement on tax reform, echoing President Donald Trump’s tax plan announced earlier this year. In the statement, they repeated Trump’s commitment to make taxes “simpler, fairer, and lower.”

The GOP promises to protect American jobs, lower tax rates for all American businesses, and create a system that encourages American companies to bring back jobs and profits from overseas. The statement also had welcome news for many Canadian businesses since the border-adjustment tax is no longer on the table. It had been previously endorsed by Paul Ryan, Speaker of the House of Representatives.

Back in April, the White House revealed Trump’s tax plan promising significant tax cuts for corporations. His plan proposed to drastically cut the corporate tax from the top rate of 35% to 15%, which would be a welcome relief to American business. The initial plan with the border-adjustment tax would have unilaterally imposed U.S. tax on imports into the country, generating $1 trillion in revenue for the U.S. government. This border-adjustment tax would have replaced the revenue “lost” from the proposed tax cut.

75% of Canadian exports are to the U.S.

The U.S. is Canada’s largest trading partner, and exports to the U.S. represent about 75% of total Canadian exports. The border-adjustment tax would have been a heavy U.S. tax bill for many Canadian businesses, so its demise is a relief for any Canadian business with a U.S. presence. However, an America-first tax policy, along with the Trump administration’s tough stance during the initial NAFTA negotiation talks, will remain a concern for Canadian businesses, many of which rely on the American market.

The U.S. has one of the highest corporate income tax rates in the world. Slashing it to 15% would restore America’s competitiveness in the business world and give the U.S. a competitive edge over Canada, where the federal corporate tax rate is also 15%. In the past, tax-savvy American businesses have taken advantage of Canada’s lower corporate tax rate by moving operations north of the border; this is called an “inversion.” Continue Reading…

Back-to-school tax refresher

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By Lisa Gittens, Tax Expert at H&R Block

Special to the Financial Independence Hub

With August winding down and Labour Day around the corner, students across the country will be making their way to colleges and universities. As they say goodbye to their curfews and hello to independence, they’re forced to take on new responsibilities like doing their own laundry and managing their finances.

While this won’t be new for all millennials – a recent survey by H&R Block Canada found that 63% of respondents 18-24 were already filing taxes without help from their parents – everyone can benefit from a study session on personal finance and tax tips.

Take advantage of budgeting apps

Don’t put down your phones! Millennials should take advantage of mobile apps when it comes to managing their money. Apps like Mint and YNAB (You Need a Budget) can be valuable assets when budgeting. Most banks offer free apps to help their customers manage their finances.

Maximize your tax return

It’s never too early to start thinking about taxes. In 2016, the average refund for a student at H&R Block Canada was more than $1,100. That’s 21 music festival day passes, 346 thrift shop t-shirts, or 49 bottles of Canadian craft gin … depending how you look at it. There are simple things students and recent graduates can do in order to maximize their tax returns: Continue Reading…

5 small business ideas you can start for under $10,000

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By Emily Lil

Special to the Financial Independence Hub

Have you ever dreamed of opening up your own small business but wondered where you’d find the capital to do so? It turns out that there are scores of businesses that require no more than US$10,000 to start. With such a low start-up investment, there is no excuse to wait before launching your dream business.

1.) A Cleaning Business

All you need to start your own residential cleaning business is a mop, a vacuum, and some bulk cleaning supplies. Develop a game plan and begin by cleaning residential spaces. When you’re ready, commercial clients tend to pay greater hourly rates. Cleaning services make up a billion-dollar industry. Advertise in your local newspaper or register your business with Amazon Services to help customers discover you more quickly. When business is booming, consider embracing the high-paying niches in the cleaning market, such as bio hazard cleaning and commercial janitorial services. While these jobs require more complex equipment, they could lead you to earn a six-figure salary.

2.) Gardener

If you’re an avid and successful home gardener with a wide knowledge of plants and an artistic eye, garden consulting may be the perfect start-up for you. Garden consultants are typically paid by the hour to work with home gardeners, answering questions, and guiding decisions. You may also be asked to develop a cohesive plan including what types of plants, soils, and rocks to incorporate into a garden. If you’re planning on becoming a full-time garden consultant, work on developing a portfolio, advertise in local directories, and develop meaningful contacts. You’d be surprised at how many people desire to skip traditional landscaping services for a more in-depth informative service like garden consulting.

3.) Freelance Writer

If you’re a skilled writer, you can start a home-based business with little to no start-up investment. Continue Reading…

Ask Tyler: Should I sell my stocks, given the North Korea situation?

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By Tyler Mordy, Forstrong Global

Special to the Financial Independence Hub

Diversifying Fire & Fury

What danger does the North Korea situation present for global investors? Clearly, Trump’s indulgence in nuclear brinksmanship carries risk. Pyongyang potentially firing missiles at US territory in the Western Pacific is also real. And there is a global existential threat should it ever escalate into intercontinental warfare.

Yet, rather than add to the volumes of prognostications about North Korea’s specific situation, consider the track record of major events and their impact on markets.

Most geopolitical events are false alarms

First, most geopolitical events are false alarms. As card-carrying members of the change-anticipation field, we understand the desire to divine the big events: to be first to spot the outlines of a looming disaster can be glorious (and career-enhancing).

But most warnings are false alarms simply because big turns are rare events. Remember Y2K, Saddam Hussein’s so-called “weapons of mass destruction” and, recently, Brexit? None of these widely-feared threats materialized or they delivered benign outcomes.

Second, more often than not, geopolitical events create opportunity. Rummaging through past post-crisis periods produces a long list of stellar returns after the initial event. For example, the Cuban Missile Crisis in October 1962 was a 13-day confrontation between the US and the Soviet Union, widely considered the closest the Cold War came to full-scale nuclear warfare.

However, after the crisis subsided, the Dow went on to gain more than 10% that year. Or take the Korean War, when the North invaded the South. This conflict lasted from June 1950 — July 1953. During that time, the Dow was up an annualized 13.6%. History is brimming with similar examples.

Such events often have binary outcomes

Finally, geopolitical events may have binary outcomes. By this we mean that a negative scenario would either produce an extremely large portfolio loss or gain. There is no knowing which ahead of time. As such, narrowly focusing on one type of risk is speculative at best.

Continue Reading…

Sharing mortgages with unequal incomes

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By Alyssa Furtado, RateHub.ca  

Special to the Financial Independence Hub

When you decide to buy a home with another person, there’s a good chance there will be a difference in your incomes. Whether the difference is big or small, it raises questions about how expenses will be split up. Two people with unequal incomes getting a mortgage together is a very common occurrence: couples make up a vast majority of homebuyers. But you can also buy a home with a friend or family member.

If you’re planning on sharing a mortgage with someone else, here’s what you need to know to make it work.

How will the home be owned?

If you’re purchasing a home together, you need to discuss how the ownership will be structured. If you’re a married or common-law couple, you’ll probably opt for what lawyers call joint tenancy. Both parties share a 100% stake in the property and both are fully responsible for everything related to the home, including the mortgage, taxes, and maintenance. If one partner dies, the other becomes the sole owner of the home.

If you’re buying with a friend or family member, you might opt for what lawyers call tenancy in common. With this structure, each person owns a separate share in the property and is responsible for their share. If you’re planning on being tenants in common, and one of you earns a higher income, you’ll need to discuss how that affects each partner’s ownership stake in the home and who will be responsible for what payments.

Who pays for what, and why?

When making decisions about how to share expenses, couples in joint tenancy usually take on equal responsibility. Since both partners are 100% owners of the home, finances are joined and mortgage payments are made using a joint account. Household income is the only thing that matters in this situation. Couples have to work together to make decisions about their budget to ensure the mortgage, property tax, and maintenance costs are all paid.

For tenants in common, you can choose to split up ownership and expenses a few different ways:

Continue Reading…