All posts by Financial Independence Hub

Top 5 Income Tax Stories of 2016

Posted By Financial Independence Hub | December 5, 2016

By David J. Rotfleisch, CPA, CA, JD

Special to the Financial Independence Hub

Some of the biggest Canadian income tax stories this year have an international connection. Here are my top five picks for income tax stories for 2016:

1.) Panama Papers and Bahamas Leaks

The top tax story of 2016 is the Panama Papers leak in March followed by the Bahamas leak in September, both a result of investigations by the International Consortium of Investigative Journalists (ICJ).

The leak was unprecedented in size and scope and consisted of data and secret papers demonstrating murky and in some cases illegal offshore financial transactions of celebrities, financiers, politicians and ordinary citizens from Canada and all over the world. Encrypted internal documents from Mossack Fonseca, a law firm based in Panama, were released to the ICJ by an anonymous whistleblower.

While headlines mentioned billionaires, entertainment and sports celebrities, politicians, public officials, as well as the network of global law firms, banks and accounting firms that sell and profit from offshore financial secrecy, ordinary Canadians have been caught in the web as well.

Passport information of about 350 Canadians was revealed. And the Royal Bank of Canada used Mossack Fonseca to organize offshore corporations on behalf of its Canadian clients.

The Bahamian leak added yet more information from internal records from the official registry of the Bahamas, a known Caribbean tax haven. Information was added to the same searchable data base as well as details of some 175,000 Bahamian corporations, trusts and foundations set up over the past 25 years.

Canadian Revenue Minister Diane Lebouthillier announced that CRA would carry out an investigation to determine how many Canadians set up offshore corporations and bank accounts to evade taxes.

CRA has indicated that it reviewed the searchable database, identified 2,600 records with a Canadian link and undertook tax investigations into 85 Canadians. To-date, CRA has executed search warrants and launched 60 income tax audits.

2.) Fraudsters Impersonating CRA Collections Officers

A continuing top story from 2015 is the Canada-wide epidemic of bogus phone calls from scam artists claiming to be CRA collections officers and threatening Canadians with jail time for alleged unpaid taxes.

Thousands of Canadians have been contacted by these call centre fraudsters and hundreds have been victimized into making payments to these criminals for taxes not owing. While a number of payment methods were used by the fraudsters, the most common payment was via iTunes cards.

5 surprisingly smart Financial Habits of Millennials

Posted By Financial Independence Hub | December 3, 2016

By Maricor Bunal

Special to the Financial Independence Hub

Millennials often get a bad rap for a lot of things. They are usually perceived as narcissistic, entitled, lazy, spoiled, and (perhaps the greatest stereotype of all) irresponsible with money. But having grown up in a sluggish economy, millennials may not be as bad with money as most people think. In fact, when it comes to personal finance, millennials are actually making some smart money moves that their older counterparts would do well to emulate.

Here are five surprisingly smart financial habits commonly used by Gen Y-ers that older generations should consider picking up.

1.) Use technology to manage finances

Millennials are a generation that grew up with technology, so it’s only natural that they would tap its power to help them with their personal finance. These days, Gen Y-ers rely on various mobile apps and tools to easily track and manage their money. Some of the most popular budgeting and finance apps today include Mint, GoodBudget, and PocketGuard. These apps are used to record and track purchases, monitor spending patterns, and even make automated, hassle-free payments.

2.) Choose experiences over material possessions

Buying a home with an Income suite? What you need to know

Posted By Financial Independence Hub | November 30, 2016

By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

As Canadian real estate becomes steadily more expensive, homebuyers are increasingly exploring new affordability options. Renting out a portion of your home to help offset mortgage costs has become a popular method – and with the price of an average detached house well past the $1 million mark in the Toronto real estate market, it may be the only way some buyers can move beyond condos and townhomes.

For these buyers, assuming the role of landlord in exchange for a bigger house or better neighbourhood seems a smart trade-off. However, renting out part of your property – especially when you also dwell there – can be a complicated undertaking, and requires extensive research and resources. Here’s what those considering the purchase of a home with secondary suite should take note of.

What is a secondary suite?

Also referred to as an income suite, secondary suites are separate units within a principal residence. It must have its own private entrance, kitchen, sleeping and living areas. In order to comply, and be protected by, your province’s Residential Tenancies Act (RTA), you cannot share any of these living facilities with your tenant, as they’re otherwise considered a boarder. Continue Reading…

Robo advisers will expand beyond investing to insurance & lending

Posted By Financial Independence Hub | November 29, 2016

By Pramod Udiaver

Special to the Financial Independence Hub

While the online advice industry is still relatively new to Canadian investors, the breadth of online financial services has been evolving quickly. This is good news for investors who are looking for more goal-based investing options and services that consolidate their various financial needs.

Goal-based investing considers a client’s goals and the steps needed to achieve them. This practice helps investors see their financial goals as easy-to-navigate paths, with clear beginnings and ends. It ensures investors fund their accounts based on desired results, rather than how much they think they might need. And it takes the uncertainty out of investing by showing exactly how and when each goal will be achieved.

While investing and insurance goals are not generally planned under the same service, insurance is an important part of any financial plan and the goal-setting process. Progress towards our goals can be thwarted by events like disability, serious illness, or the death of a loved one.

Role of insurance

We see that in many cases, even if one of these events were to occur, clients say they would still want to stay on a path to achieve their goals. Proper insurance can help them stay on track by replacing a portion of their income while they are disabled, allowing them to maintain a desired standard of living and keep saving. Life insurance can ensure that goals set for one’s family, like sending kids to good schools, allowing the surviving spouse to retire comfortably, or the desire to leave a legacy in the form of a charitable donation, can still be achieved.

What is goals-based investing?

Posted By Financial Independence Hub | November 28, 2016

By James Gauthier, CIO, Justwealth

Special to the Financial Independence Hub

Most individuals are aware of the importance of investing – not everybody does it, but they know that it can be beneficial for their future.

For those who are able and engaged in investing, a good percentage will invest their savings through their financial institution, a financial advisor or some will do it on their own. Financial planning helps investors figure out questions such as “How much do I need to save?,” “How much can I spend?” or “What rate of return do I need to make?”

Before you attempt to answer these questions, you should be asking yourself the question “What is the objective of my investment?” The responses to this question can vary greatly, but might fall into one of the following categories:

• Saving for the short term (such as a down payment for a home in a few years)

• Saving for the long term (such as a retirement nest egg)

• Generating income (either as a primary or secondary source)

•Preserving your capital (looking to keep up with inflation or just very risk averse)