Tag Archives: taxes

20 different ways to use your tax refund

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Tax refund ahead clock

By Adrian Mastracci, KCM Wealth

Special to the Financial Independence Hub

Let’s examine some wise ways to apply your tax refund in 2016. There are no shortages of sound possibilities for the personal finances.

Everyone can reap value from these practices. For example, refunds can be spent, saved and invested.

First park the refund into a saving account to resist impulse, say for 30 days.It gives you time to reflect and evaluate your needs and options. Try your best to get lasting value from this worthy source of cash. Many of the allocations you make are typically not reversible.

Here are 20 sensible ideas dealing with your tax refund: Continue Reading…

Tax Changes for 2016

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Aaron Schechter
Aaron Schechter

By Aaron Schechter, CPA, CA, TEP – Crowe Soberman LLP

Special to the Financial Independence Hub

In the Aesop fable of “The Ant and the Grasshopper,” a hungry grasshopper is refused food by the hard-working ant when the winter comes. The fable sums up the moral lessons about the virtues of hard work and planning for the future. As you get ready to file your 2015 personal income taxes, now is the time to look ahead and plan for 2016.

Reduction in the small business corporate income tax rate

Canadian-controlled private corporations (CCPCs) are entitled to claim a small business deduction on the first $500,000 of business income.  Commencing in 2016, the federal tax rate will decrease by 0.5% a year for four years, reducing the small business income tax rate in Ontario to 15.0% in 2016, 14.5% in 2017, 14.0% in 2018, and 13.5% in 2019.

Tax planning point: Defer the receipt or recognition of corporate income eligible for the small business deduction limit to future years.

Increase in the top personal federal tax rate

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Beware out-of-the-blue phone calls and emails from fraudsters posing as Taxman

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Illustration depicting a phone with a scam call concept.Now that employer T4s are being issued, tax time is officially under way, and with it there seems to be a rising incidence of telephone scam attempts from fraudsters purporting to represent the Canada Revenue Agency, or CRA.

The warnings have been out there for months in various media outlets and via the CRA itself, as a quick Google search will reveal.

However, the problem hit home for me last week when I received two disturbing phone calls in two consecutive days. The voices were foreign-sounding in both instances and both insistent and aggressive: the gist was that unless I sent them money immediately, that the CRA would commence legal proceedings against me.

Coming as they did out of the blue, I didn’t think to take notes or string them along: the first call I hung up almost instantly, the second time I briefly tried to engage the perpetrator in a dialogue that went nowhere. “I don’t think so,” were my last words.

On January 16, 2016, the CRA’s web site revealed most of what you need to know about these phone scams. The first step is to recognize that a particular phone call, email, text message claiming to be from the CRA and requesting certain personal information is unlikely to be what the perpetrator claims.

Don’t provide personal info over phone

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“Top 10” Early Tax Planning Tips for 2016

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David Rotfleisch-03-500W
David Rotfleisch

By David Rotfleisch

Special to the Financial Independence Hub

While tax season for calendar 2015 is just around the corner, the best time to influence your tax position for calendar 2016 is: right now. Here are the “Top 10” early tax planning tips for 2016 to help reduce your tax, contribute to your RRSP, help out family members, and also support your favourite charities.

  1. Adjust Source Deduction amounts

Salaried employees have income tax deducted by their employers from each pay cheque. The amount of these deductions is computed on the assumption that the employee is only entitled to the basic personal exemption. Taxpayers with other exemptions such as children can fill out and give their employers a CRA form TD-1 http://www.cra-arc.gc.ca/E/pbg/tf/td1/README.html showing other deductions to which they are entitled, thereby reducing the amount of taxes that will be deducted at source. For deductions that don’t appear on the TD-1 form, such as spousal support payments or RRSP contributions, form T1213 Request to Reduce Tax Deductions at Source http://www.cra-arc.gc.ca/E/pbg/tf/t1213/README.html can be submitted to CRA.

  1. Contribute to an RRSP as Soon as Possible

While many Canadians contribute to their RRSPs in the first 60 days of the year, the earlier the contribution is made, the more the RRSP benefits from the effects of compounding. If you don’t have a lump sum to make your annual contribution at the start of the year, consider making regular monthly payments. The RRSP limit for 2016 is the lesser of 18 per cent of 2015 earned income or $25,370.

  1. Income Splitting

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Book review: The Crash of 2016

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crash2016Regular Hub readers may find this blog post familiar. That’s because it originally ran this time a year ago: in January 2015. Given that the year 2016 is now actually here, and last week’s market activity certainly had “crash-like” elements, it seemed appropriate to bring this one back  to the top of the queue. Starting with my byline below, the review is as it appeared a year ago: In a couple of spots, I’ve added editor notes to clarify dates and timing.

By Jonathan Chevreau

.As a rule, I avoid reading too many financial books based either on Greed or Fear. Still, when you have a good chunk of your net worth invested in the stock market, it’s hard not to have a twinge of doubt when you encounter books like Thom Hartmann’s The Crash of 2016.

I paid no attention to this book when it was published late in 2013 but now it’s 2015, well, 2016 isn’t so far away now, is it? (editor’s note: that was the review’s original sentence; of course, it is now 2016).

Why am I writing about it now? I wasn’t responding to a belated PR campaign by the publisher (Hachette Book Group) but stumbled on it while searching for other books on Kindle. The Kindle sample on offer didn’t enlighten me much about the author’s thesis (that should have been a clue!) so I ordered it from the local library, not feeling any urgency to get my hands on it.

Indeed, the last time I read such a book was Harry Dent Jr’s The Great Crash Ahead and of course so far that prediction has yet to manifest. Continue Reading…