Handy Tax Return Tips

Canadians had to pay over $1 billion in additional taxes in 2012; primarily because what they reported on their tax returns didn’t match the dollar amounts provided by employers, financial institutions and other sources according to Canada Revenue Agency (CRA). 

In addition to collecting more tax dollars, the CRA will charge you interest, which is currently 5% on any overdue amounts; as well as penalties if you file your return late or under-report income repeatedly.

It goes to show paying attention to tax rules up front can go a long way to save you time, money and undue complications down the road.

Tax Tips to Avoid Costly Errors

Double-check you have included all income from all sources;

Compare information on tax slips to investment statements or other supporting documents to ensure accuracy;

If you are missing information, do your best to get it; estimate amounts when information doesn’t arrive in time to file;

Report all RRSP contributions, even If you are going to claim the deduction in a later year;

Determine if you are eligible for a deduction or credit before you claim it, (in 2012 CRA rejected one in five tax credits and/or deductions claimed);

Make sure your current address is on file with employers, financial institutions and the CRA so that you receive all tax slips and correspondence;

Be punctual – file your return by the deadline, which is April 30, 2014 for most taxpayers, and respond to any direct CRA correspondence within the required timeframe.

Hope these tips help when completing your tax return this year.  If you have any questions, talk to your accountant or give me a call.

Have a great weekend,

Tracey

 

 

 

 

 

 

 

 

Source:  Advisor.ca original article posted 03-20-14 by staff.  Jamie Golombek, CIBC Managing director, tax and estate planning

 

Happy Birthday, Bull Market

It was five years ago last week that the stock market bottomed out at 6,547 amid the throes of the financial crisis.  March 10^th, 2009 marked the start of the current bull market and in true celebratory fashion investors looked beyond the turmoil in the Ukraine to push stocks to further gains. 

So, what would have happened if you invested at the bottom of the market?  If you were lucky enough to have invested then, you would be pocketing some substantial gains by now.  However, not all gains are created equal.

If you had invested $10,000 in a broad market index fund, it would be worth approximately $30,971 by now.  Comparing that to gold, you would have only made $4225 on the same $10,000 investment, for a total of $14,225.  If you had invested in Bonds, the value of your investment would have grown to $14,086.  Had you been too nervous to invest at all; and left your money in a Monday Market account, you would have netted $26 on your original investment.

Economic Data Remains Mixed

Financial markets have recently benefited from some better–than-expected economic data, including improvement in manufacturing as well as a rebound in the jobs market.  The February labor market reports show that 177,000 new jobs were created last month.  This represents a significant improvement over December and January, and suggests part of the earlier weakness may, in fact, have been related to the poor weather.

However, overall the economic data continues to be mixed.  Despite last month’s uptick in jobs growth, the speed of the labor market recovery remains slower compared to previous recoveries.  Furthermore, the labor market participation rate remains low and long-term unemployment high, reaffirming that the U.S. jobs market is still troubled.  Outside the labor report, the Institute of Supply Management’s non-manufacturing survey (a key gauge of the service sector) also sank to a four-year low in February.

Happy Birthday! And Many More?

In any case, it does seem that investors are looking past the weak economic data and that momentum, low interest rates and ‘good enough’ economic and earnings figures have been enough to keep stock prices moving higher.  But now that the bull market is entering its sixth year, where does that leave investors?

Russ Koesterich, Chief Investment Strategist, of Blackrock, Fidelity Investments; says equities are no longer cheap and that stronger economic growth will be needed to drive earnings and prices higher.  But he does believe stock prices are more likely to head higher rather than lower from here.  Equities still look like a more attractive option than cash or bonds.  Cash investments are effectively paying nothing and traditional areas of the bond market offer little return after factoring in the effects of inflation and taxes.

As such, he encourages investors to maintain their emphasis on stocks.  Even after a five-year bull market, and prospects for more volatility ahead, both the macro environment (low inflation, low rates and gradually improving economy) and relative valuations offer sound argument for overweighting stocks.

If you have any questions or would like to review your portfolio to ensure you are well positioned going forward, give me a call.

Have a great weekend, and Happy Spring!

Tracey

 

Source:  Fidelity Investments, Russ Koesterick, Chief Investment Strategist, Blackrock article written March 10/14.  Advisor.ca March 17 post by staff.

 

 

CMHC Premiums Increasing

Effective May 1, 2014, Canadian Mortgage and Housing Corporation (CMHC) will be increasing their homeowner mortgage loan insurance premiums.

Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price when buying a home.  This insurance protects the lenders against mortgage default and enables people who purchase homes with only 5% down access to interest rates comparable to those available to people who have 20% or more as a down payment.

The CMHC mortgage loan insurance premium is calculated as a percentage of the loan based on the loan-to-value ratio.  The premium can be paid in a single lump sum at time of funding, or more frequently it is added to the mortgage principal and amortized over the life of the mortgage and becomes part of the regular mortgage payments.

As of May 1^st CMHC premiums for owner-occupied 1-4 unit properties will be:

Loan to Value Ratio                        Current Premium              New Premium

Up to and including 65%                     0.50%                                  0.60%
Up to and including 75%                     0.65%                                  0.75%
Up to and including 80%                     1.00%                                  1.25%
Up to and including 85%                     1.75%                                  1.80%
Up to and including 90%                     2.00%                                  2.40%
Up to and including 95%                     2.75%                                  3.15%
90.01% to 95% non-traditional          2.90%                                  3.35%
Down payment

For the average Canadian homebuyer requiring CMHC insured financing; the higher premium will result in an increase of approximately $5 to their monthly mortgage payment.  This increase is not expected to have an impact on the housing market.

The increase will apply to mortgage loan insurance premiums for owner occupied, self-employed and 1-to-4 unit rental properties, including low-ratio refinancing.  

CMHC’s new premium rates will be effective for new mortgage loan insurance requests submitted on or after May 1, 2014.  If you are purchasing a home and require CMHC, in order to qualify for the existing mortgage loan insurance premiums, you must have your lender submit your request to CMHC before the May 1^st cut off, regardless of the date of your home purchase. 

Here is an example of a Loan with a 95% loan-to-value ratio (or 5% down payment), based on a 5 year term @ 3.49% and a 25 year amortization:

Loan Amount                     $150,000             $250,000             $350,000             $450,000

Current Premium              $4,125                 $6,875                  $9,625                $12,375
New Premium                   $4,725                  $7,875                  $11,025               $14,175
Increase                              $600                     $1,000                  $1,400                 $1,800
Increase to Monthly        $3.00                    $4.98                     $6.99                   $8.98
Mortgage payment
 
If you have any questions, or would like more information give me call.

Have a great weekend,

Tracey

Source:  CMHC cmhc-schl.gc.ca

All mortgage related transactions are provided by Centum One Financial Group.  Any information in the enclosed note is provided by Tracey Marshall who is a registered mortgage agent under the Financial Services Commission of Ontario.  Centum One Financial Group is not affiliated or related to Security Financial

Travel Health Insurance; Don’t Leave Home Without It

If you are one of the lucky ones who are escaping this winter and traveling south to a sunny warm detestation; remember to include travel medical insurance as part of your planning process.

Our provincial medical plans only cover a fraction of the cost of medical care outside Canada.  Travel insurance can protect you from unexpected expenses if you or a member of your party requires medical attention.

Travel insurance comes in many forms.  Many people have coverage through their employee benefit plan.  However, if you are traveling on vacation (not on company business) double check if you and your family are still covered.  If you don’t have coverage through your employer, you can buy travel insurance from many different sources including travel agents, associations, the bank or an insurance broker like myself. 

The types of coverage available vary greatly.  Furthermore, you can purchase coverage once a year when you go on a trip; or if you travel often (including cross-border shopping) you can buy annual coverage that will be valid for all your trips.

The key to getting the right coverage is to shop around.  Here’s what to look for:

Competitive Rates.  When shopping around make sure you are comparing apples to apples.

Medical Questionnaires.  Read the questions carefully and answer honestly.  Your health helps determine your rates, along with your age and length of time you will be away.  Be sure to make full disclosure of pre-existing medical conditions or your policy may become invalid.

24 Hour Support.  Make sure the plan you choose has a 24-hour support line where they can be contacted if you do run into medical problems.

Upgrades.  Some plans will allow you to upgrade your policy to include trip interruption or cancellation coverage due to illness or even baggage coverage if your luggage goes missing.

Coverage Limits.  Be aware you can purchase policies with different coverage limits, for example $2 million v.s. $5 million in coverage.

Travel insurance like any other insurance is purchased with the hope you will never need it, however it is a small price to pay if something bad happens.  If you need some last minute coverage before you head off on your holiday, give me a call, I can help arrange it.

Have a great weekend,

Tracey

 

Source:  Dynamic Funds

Note:  All insurance and segregated fund transactions are provided through Hub Financial.  Any information in the enclosed note is provided by Tracey Marshall who is a registered insurance agent under the Financial Services Commission of Ontario.  Hub Financial is not affiliated or related to Security Financial Services.