Archive | Finance

What to do about your debt and mortgages after the interest rate hike

Posted on 07 February 2018 by admin

Personal finance expert Laleh Samarbakhsh shares her advice on the best ways to take advantage of the increased rates.

Many consumers will soon find their debt loads heavier now that Canada’s central bank and the country’s biggest commercial lenders have raised their benchmark rates by one-quarter percentage point.

The country’s biggest banks raised their prime rates after the Bank of Canada hiked its overnight lending rate earlier this month by a quarter of a percentage point to 1.25 per cent.

It’s a challenge for Canadians still struggling to cope with the record amounts of consumer debt they amassed after the 2008 financial crisis because lenders use their prime rate as a benchmark for setting some other short-term rates including variable-rate mortgages and lines of credit. A hike is good news for savers as the prime rate also affects interest rates for savings accounts.

If you’re contemplating how to best take advantage of the increased rates or avoid falling into further debt, personal finance expert and Ryerson University business professor Laleh Samarbakhsh shared her advice.

Now that the rate has gone up, what financial choices should I be making?

With the interest rate increase, debt becomes more and more expensive. Before you do anything, you have to understand what kind of debt you have to start with.

We have good types of debt and bad types. Good types can include any investment that is made to contribute to progressing your future. For example, a student loan is a good type of loan because you are investing in your ability to make more money. At the same time, debt you have from real estate or your primary residence is considered a good type of debt because you’re accumulating equity.

Focus first on what is considered bad debt like credit card debt, lines of credit or any kind of debt with higher interest rates and no future investment. Pay off the debt with the higher interest rate first, but also consider what debt you have that is tax deductible.

If I have some money in a Tax-Free Savings Account, but also some debt, should I pull out that money in the account and pay off the debt?

A lot of times people might consider borrowing from a lower debt to cover a higher debt or borrowing from a TFSA to make a payment. My recommendation is if you have some tax deductibility because of debt you have, keep it. As much as paying off debt is important, if you won’t be able to pay off all your debt, you can use the deductibility you have from some to save on taxes and create an income to pay off the high-interest or bad debt.

We have had a successful year on the investing market, so if an individual makes contributions to their TFSA and has a portfolio with a higher return of 20 per cent or 25 per cent, it makes sense to keep that because the advantage is no tax being paid in the TFSA.

What should I do if I have been looking at buying a home or if I just bought a home and am dealing with a mortgage?

For individuals who care about their credit score and are applying for a mortgage shortly, consider your credit limit. The types of debt that have a credit limit should be paid off first to release your capacity.

The typical concerns after a hike are usually individuals with mortgages because those are the biggest debts people carry. My advice would be for individuals with variable mortgage rates to consider locking down a fixed mortgage rate.

What should I do if I have no debt, but want to take advantage of the hike?

Saving is making even more sense now because savings accounts will have fairly higher interest rates, so if you have no debt, my recommendation is to start with capping your Registered Education Savings Plan contributions first because that brings you tax savings.

Once the RESPs are capped, I would also invest in a Tax-Free Savings Account. The interest you make is tax-free, so I recommend maximizing your TFSA contribution.

After that, there are lots of forums and markets for investment and you can consult with your financial adviser about what is best to invest in at the time.

Some economists think we might see further interest rate hikes later this year. Should I act on those rumours now?

It’s hard to predict what is going to happen, but we know the decade of low interest rates are over. It’s important to be more careful with spending and what kind of debt we are taking on and how and what the plan for repaying it is.

If you’re concerned, take action sooner rather than later and don’t let it bring mental pressure to your daily life.

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Government of Canada Launches Pre-Budget Consultations

Posted on 14 December 2017 by admin

Canadians Invited to Offer Their Ideas on How to Grow and Strengthen the Middle Class

Department of Finance Canada Our government is working hard to grow the economy and provide more support for the middle class. Over 500,000 new jobs have been created since 2015 and the unemployment rate is nearly the lowest it has been in a decade. Canada now has the fastest-growing economy in the G7, giving the Government the ability to reinvest the benefits of that growth back into the people who contributed most to that success. As Canada’s economy continues to grow, it is important to ensure that the benefits of that growth are shared by the middle class and those working hard to join it. That means continuing to make smart investments in people and communities to ensure continued progress for the middle class, and investing in lifelong learning to give Canadians the tools they need to find good, well-paying jobs in the economy of tomorrow. It also means ensuring that government policy and budget decisions consider impacts on all genders and advance gender equality. Leona Alleslev, Member of Parliament for Aurora—Oak Ridges—Richmond Hill is inviting residents, businesses and non-profit organizations to provide their input for Budget 2018. Let the government know what your family, community, and country need in order to position for the future with confidence. Canadians can submit their ideas and suggestions online through the website launched today, www.budget.gc.ca/pbc18 and to MP Alleslev by email at Leona.Alleslev@parl.gc.ca. Quote “Our Government’s plan to strengthen and grow the middle class is working. It is creating jobs, improving lives, strengthening communities and growing the economy. But we still have work to do. This is why we are continuing with our plan to invest in the middle class and those working hard to join it. Our government needs the ideas and suggestions of all Canadians on how we can strengthen our country together. I look forward to hearing from residents of Aurora—Oak Ridges—Richmond Hill to ensure we work together on Budget 2018 to build a strong foundation in order to position our nation for the next 150 years. – Leona Alleslev, Member of Parliament for Aurora—Oak Ridges—Richmond Hilll

 

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Ontario households squeezed by worst income growth in Canada

Posted on 22 September 2017 by admin

QUEEN’S PARK – Despite paying high prices for everything from hydro to housing, Ontario households faced the slowest median income growth in the nation according to 2016 Census data from Statistics Canada.

“This report shows what families already know – they’re being squeezed,” said NDP Economic Development critic Catherine Fife. “Household costs have gone up under Kathleen Wynne, but wages are being held back.

“It’s clear that Wynne doesn’t get what families are dealing with today. It seems like she doesn’t remember what it feels like to open her own hydro bill or worry about whether your kids will ever be able to afford to move out.”

Of the 152 Canadian cities included in the report, nine saw median incomes fall. Eight of those nine are Ontario cities. Windsor topped that list, with household incomes dropping 6.4 per cent between 2005 and 2015, and London was not far behind – with a 2.1% decline in median income during that same time period.

Fife said that not only have families been let down by Wynne, but that the continuation of cuts and underfunding in services people count on threaten to squeeze families even further, like paying more out-of-pocket for public transit or home nursing care.

“Ontario families need a government that thinks less about itself and its party and more about how everyday families are doing,” said Fife.

“It’s troubling that Conservative Patrick Brown opposes raising the minimum wage, choosing to stand with big corporations instead of regular Ontario families. He also stood with Mike Harris as he cut 6,000 nurses and closed 28 hospitals. He stood with Tim Hudak as he announced a plan to lay off 100,000 workers. And he stood with the Conservatives when they pitched the privatization of both Hydro One and Ontario Power Generation. He needs to come clean on what he’d cut – because families have an important choice to make about which leader will come after Kathleen Wynne: Andrea Horwath or Patrick Brown.”

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How Will the Auto Industry Fare After Central Bank Interest Rate Rise?

Posted on 26 July 2017 by admin

Perspective from Canadian Black Book on the July 12 Rate Hike and our Auto Industry’s Record Growth

Markham, Ontario, July 14, 2017 – On Wednesday July 12, Bank of Canada Governor Stephen Poloz announced a 0.25 per cent key interest rate increase, the first rise in rates in seven years.

How will this news affect the Canada’s auto business?

What most new vehicle buyers may assume, is that the cost of higher interest rates will get passed onto them today. It is actually unlikely in the short term, that that would be the case.

For the most part, manufacturer new vehicle incentive budgets will likely absorb the rate hike for consumers so that they can continue to advertise 0% or 0.9% or 1.9% for new cars. To keep things in perspective, on a $40,000 car loan a hike of 0.25% is only an extra $100 per year of interest.

All that said, if rates continue to climb, at some point the OEMs will have to pass along those costs to vehicle buyers, initially resulting in less cash incentives. This will then eventually raise monthly payment, all else being equal.

The bigger impact of a rate increase is its immediate effect on the strength of the Canadian dollar and what that will mean to the Canadian auto industry. Our more valuable dollar is of greater concern, for both the new and used vehicle market in Canada. The dollar has increased $0.06 since May, which is a significant climb. This could lead to a cooling of new vehicle sales and is expected to cause Canadian used vehicle prices to fall over time.

As the strength of our dollar had been declining since 2013, U.S. interest in Canadian used vehicles increased. Depending on who you ask, upwards of 200,000 vehicles have been being exported to the U.S. annually. U.S. buyers and/or Canadian exporters have been taking full advantage of a lower Canadian dollar and been moving vehicles across the border to sell at a higher price in the States versus here at home. This export demand has inflated our used car prices domestically.

As a result, Canadian consumers are being pulled out of their vehicle loans/leases early by dealers who are eager to sell the consumer’s current vehicle on the used market and put the consumer into a brand new one, often for the same or lower monthly payment. This “pull forward” activity is helping to drive record levels of new vehicle sales. This activity is also possibly due to higher used vehicle prices putting consumers into a positive equity position (owe less than the vehicle is worth) much sooner.

Given that the domestic supply of U.S. used vehicles is up by about 500,000 more off lease units versus past years, U.S. used prices are falling. The Black Book (USA) Price Index is showing a ten per cent decline since last year, which is significant. The U.S. vehicle market is bracing for a large downward adjustment in used prices. Add in a stronger Canadian dollar, driving up acquisition costs and there will be less demand in the U.S. for Canadian used vehicles

At some point soon, the rising Canadian dollar and falling U.S. used vehicle prices will make it unattractive for U.S. buyers to purchase Canadian inventory in such large volumes. The impact to the Canadian auto industry will be a slowdown of “pull forward” activity, as it won’t make economic sense to pull as many consumers out of their vehicles early because they won’t command such high prices on the used market. Canadian Black Book expects that a $0.85 dollar is around the tipping point for U.S. exports to significantly slow.

On the positive side, Canadian used vehicle shoppers and used vehicle dealers will be rewarded with better deals in the market compared to what they have seen over the last few years.

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Canada ‘very prepared’ for NAFTA renegotiation talks with U.S., trade minister says

Posted on 28 May 2017 by admin

Francois-Philippe Champagne said he had a “good first meeting,” with U.S. trade representative Robert Lighthizer in Vietnam during the Asia-Pacific Economic Cooperation forum gathering.

HANOI, VIETNAM—Canada is prepared to start talks to renegotiate the North American Free Trade Agreement and is confident it will get a successful outcome, Trade Minister Francois-Philippe Champagne said Sunday.

“When you start a discussion you start with saying, ‘Well, we’re the first client’,” Champagne said on the sidelines of a meeting of Asia-Pacific trade ministers in Hanoi. NAFTA, negotiated more than two decades ago, “has been amended about 11 times so we said we’re happy to sit at the table,” he said.

Robert Lighthizer, the new U.S. trade representative, has begun the process for renegotiating the three-way agreement with Canada and Mexico, issuing a 90-day notice to Congress.

During his election campaign, President Donald Trump called NAFTA a “disaster” that cost millions of U.S. jobs and crippled the U.S. manufacturing sector. A few weeks ago, he was considering whether to pull out of the agreement entirely.

Champagne said some parts of the deal could be modernized, citing e-commerce, but he wouldn’t say whether Canada had any limitations for the discussions.

“We are very prepared and we are taking that very seriously, but we’ll put things on the table when it comes to the time to negotiate,” he said. “I am confident, if history has been guiding us, that if we succeeded 11 times that we are likely to succeed again.”

Champagne said he had a “good first meeting,” with Lighthizer in Vietnam during the Asia-Pacific Economic Cooperation forum gathering. “Whatever discussions you have start from the premise of a very fruitful relationship,” he said.

Champagne also met Sunday with the 11 remaining members of the trans-Pacific Partnership, a trade deal from which Trump the U.S. in one of his first acts as president. The TPP would have included 40 per cent of the global economy.

Some nations are pushing to continue with the TPP despite the loss of the U.S., arguing that too much effort went into negotiating it and that there are benefits for remaining countries, though some have been less committed.

In Hanoi, there was a sideline meeting on Sunday of TPP-member nations and ministers agreed to start a process to put it into force, according to a joint statement. They will ask senior trade officials to arrange how to take the continue the partnership and report back by the APEC leaders’ summit in November.

“Canada’s always been clear: we will look at whatever options would be to the net benefit of Canadians and Canadian workers,” Champagne said. “This is very much now at the stage of looking at options.”

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Panama Papers have helped fuel ‘a more aggressive CRA’

Posted on 23 March 2017 by admin

For the Canada Revenue Agency, the Panama Papers was a line in the sand.

Unlike those exposed by previous leaks, tax cheats named in the massive database won’t be offered amnesty; instead, they’re more likely to end up doing hard time.

“This is a more aggressive CRA,” said assistant commissioner Ted Gallivan in an interview with the Star. “There are some actors who need that threat of a jail term to stop, or they actually physically have to be locked up in jail to get them to discontinue their activities.”

Tax fraudsters identified in the Panama Papers will not be allowed to clear their name by declaring their hidden assets and paying back taxes and interest, a process called voluntary disclosure.

“(The Panama Papers) allows us to showcase how the CRA has changed,” Gallivan said. “There’s a bit of a paradigm shift for us: no voluntary disclosures and a lot more criminal investigations. That reflects a shift to more severe consequences for people who are participating in aggressive tax avoidance or tax evasion.”

From now on, the CRA will also fingerprint anyone charged with tax evasion, which could affect their ability to travel abroad.

“It’s about more than revenue,” said Gallivan. “It sends the message that it’s not just tax evasion, it’s not just white collar crime, it’s a serious criminal offence and it comes with serious criminal consequences.”

Internationally, Canada has long been considered lax on white collar crime, with few prosecutions and prison sentences measured in months, not years. But after the Panama Papers were made public last April, the new Liberal government quickly announced a nearly $500-million investment in the CRA to bolster tax enforcement.

Early results reflect an ongoing reorientation toward fewer, high-value tax cheats and a focus on multinational corporations.

The number of criminal convictions for tax evasion has dropped dramatically from 137 in 2011-12 to only 17 so far in 2016-17, yet the criminal fines imposed have almost tripled from an average of about $46,000 to over $123,000 for each offender.

Sentences are up, too, from an average of 18 months in 2011-12 to 26.5 months this year, according to numbers provided by the CRA.

Additional tax collected by CRA audits has increased almost 45 per cent over the last six years from $8.7 billion in 2011-12 to $12.6 billion in 2015-16. More and more of these audits target large and multinational corporations, producing tax assessments that have more than doubled in the last three years from $6.1 billion in 2013-14 to a projected $13 billion this year.

In order to move more quickly from investigation to prosecution, in the last year 230 people have been added to the compliance department and lawyers are now being embedded in investigating teams.

The Panama Papers even spawned a new branch of the CRA, known as International, Large Business and Criminal Investigations, which operates under Gallivan’s personal watch. This branch, which has 100 specialized auditors, will be taking on the most complex, big-ticket cases that often have an offshore component and involve sophisticated tax professionals, the enablers of tax evasion.

“The new thinking of the new branch is in addition to finding the taxpayers, we need to find the promoter, the head, and go after the head that’s driving this behaviour and put them out of business,” Gallivan said.

In the 2016-17 fiscal year so far, tax professionals have been fined $44.3 million for their role in facilitating tax evasion — a huge increase over the $200,000 handed down last year — and the information gleaned from the Panama Papers promises an uptick in years to come.

It helps that the CRA obtained parts of the leak before it was made public and got the ball rolling early.

“It gave us the advantage of timing. By the time the public took interest in this, we were already fairly well advanced in our work,” said Gallivan.

But the gears of justice move slowly. Almost a year later, there are 75 audits and several criminal investigations underway, but no charges have been laid.

Investigators, Gallivan acknowledged, have had difficulty finding the individuals behind shell companies used to defraud the tax collector, a phenomenon highlighted by the Star’s Canada Papers investigation.

“Some actual people have multiple corporations with millions of dollars and millions of dollars of non-compliance,” he said. “Taxpayers who are conducting these things certainly go to great lengths to obscure them.”

Last year, an international evaluation of Canada’s financial system flagged lack of transparency in corporate ownership as an impediment to law enforcement.

But Canadian enforcement efforts are only a small part of the solution. The post-Panama Papers world is about to get much more complicated for wealthy individuals who hide their money offshore and multinationals that shelter their profits in tax havens.

The EU and G20 are set to publish a new black list of unco-operative tax havens this summer, shortly after the first global system of tax information sharing becomes operational. The OECD’s “automatic exchange” system will allow tax auditors in one country to see what their citizens are declaring in another. There are 54 participating countries in 2017 and next year Canada will start sharing its tax information, along with 46 more countries.

For the 2016 tax year, Canadian multinational corporations with more than $1 billion in annual revenue will have to report to the CRA their profits, sales, employees, assets and taxes paid on a country-by-country basis. This information will then be fed into the international sharing system, creating a web of tax oversight that will be much more difficult to escape.

To prepare for this new “big data” era in tax collection, the CRA is ramping up its use of computer analysis to troll the information looking for red flags suggesting suspicious activity.

Instead of just checking the math on people’s tax returns, the CRA is developing algorithms to cross reference outside data — including real estate transactions and luxury purchases — with what people claim to be making.

“The agency knows that people who are trying to avoid paying taxes often manipulate their tax return so they look like they’re low income,” said Gallivan. “The system will flag that despite somebody’s low income on their tax return, they have a lot of money. When we see that flag, we dig deeper.”

The CRA recently started receiving real time data of all international electronic money transfers and is building a computer system to monitor more than 1 million transfers each month in real time.

Because it could take two or three years to get the system up and running, auditors are currently going through them manually, Gallivan said, having flagged more than 41,000 transactions worth $12 billion last year. The manual review will ramp up to looking at 100,000 transfers this year.

“The money flow is exactly where our focus is now,” he said. “We do have to be accountable for results.”

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Student Debt Is Rising, And Mental Health Problems Are Rising With It

Posted on 02 June 2016 by admin

Many of this year’s new post-secondary graduates have left the academic world carrying tens of thousands of dollars in debt. Meantime, those heading to college and university this fall will soon contend with steep tuition rates that often result in a similar burden.

While schools attempt to lessen the load by offering financial aid, average student debt appears to be climbing. So some institutions are also responding by beefing up their mental health services to help students cope with life in the red.

“We’re worried about one type of debt — student debt — and we want to know how to pay it off as quickly as possible,” said Dillon Collet, who is about to enter his final year at the University of Toronto’s faculty of law and sat on the dean’s advisory committee on financial aid.

The committee organized a financial aid workshop that discussed the psychology of debt. It was well-attended, Collet said, with about 60 students in the room and a lineup outside.

The committee’s student representatives also pushed to have tuition fees — and their connection to student stress — to be discussed at the faculty council’s meeting each year, Collet said.

“A lot of students suffer silently.”

Estimates suggest average student debt in Canada is past the $25,000 mark.

In 2013-14, graduates finished school with an average of $12,480 in federal loan debt, according to numbers from the Canada Student Loans Program.

However, that figure doesn’t include provincial or private loans. An Ontario student graduating from a four-year university program, for example, shouldered an average of $22,207 in provincial debt in 2012-2013. That makes for a total debtload of more than $34,000 if they also borrowed the average sum from the federal government.

The Canadian University Survey Consortium surveyed more than 18,000 graduating university students from 36 Canadian universities for its 2015 annual report. The average debt-ridden student owed $26,819.

Such a debt load can have an impact on a student or graduate’s mental health, though only a small amount of published research exists on the apparent link.

A 2015 journal paper analyzed data from a U.S. Bureau of Labour Statistics survey of more than 8,000 youth in the United States — where tuition fees are significantly higher than in Canada — to determine if debtload and psychological well-being were connected.

“Students who took out more student loans were more likely to report poor mental health in early adulthood,” said one of the paper’s authors, Katrina M. Walsemann, an associate professor at the University of South Carolina.

Canadian experts have also noticed a link, even though Canadian students don’t generally go into as much debt as their American cohorts.

Jillian Yeung Do, York University’s director of student financial services, witnessed it while working with a student. While she couldn’t provide much detail for privacy reasons, she said she became really concerned about a student.

“After that encounter, I decided that it would be a good idea to — for myself, personally, and as well for the entire team — to be trained in having these conversations with students,” she said.

The university’s health educator taught the financial services staff how to identify students in distress, listen to them and provide proper referrals. York University also plans to launch a new financial literacy campaign soon, she said.

The University of Toronto’s faculty of law staff, including its financial aid workers, will also have training on mental health issues next month, said Alexis Archbold, the assistant dean of the JD (juris doctor) program. She’s also the chair of the dean’s advisory committee on mental health and wellness, formed this past academic year.

Archbold and the committee spent the year listening to students’ primary concerns. Unsurprisingly for a professional program, she said, high tuition and the anxiety of the corresponding debtload emerged as one of the common themes.

The school’s new academic, personal and wellness co-ordinator will work with Archbold this summer to develop a wellness strategy, she said.

The committee will continue to hear from students on how to improve the strategy, which seems to fall in line with at least some of what the students want.

“We want a platform in which we can engage with the faculty and the administration,” said Collett, “and we can really talk about the nuts and bolts.”

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5 Ways Students Can Score A Summer Job By Graduation Day

Posted on 28 April 2016 by admin

Julie Dossett

Communications lead for LinkedIn Canada

Now that the end of the school year is just about here, students are heading online in droves to hunt for jobs and summer internships. In Canada, there are more Google searches for summer jobs in April than any other time of year, and globally, LinkedIn sees more students active on the platform than any other time of the year.

For those of you that haven’t yet found a role, there’s no need to panic. Here are my five top tips to help those looking to jump start their career.

1. Nurture your network:
Don’t leave it until after graduation to start growing your professional network; start connecting with family, friends and contacts from internships and other work experiences now. As 80 per cent of job openings are never advertised, tapping into your network can help increase your odds of finding your dream opportunity.

2. Search for relevant positions with LinkedIn Student Jobs:

Know what you’re looking for, but not how to find it? LinkedIn’s Student Jobs tool connects you with student internships and jobs for graduates on LinkedIn, and allows students to filter by industry, location, company and more.

3. Complete your profile:

Hone your profile, making sure to avoid generic buzzwords to help you stand out from the crowd. The more complete it is, the more appealing it will be to others, so make sure you fill out each section to boost your chances of being ‘found’ by recruiters and potential employers.

Remember, a great profile doesn’t just state what you’ve done; it should show who you are. Start with a strong opening summary statement, then complete the profile sections designed just for students, such as courses (for anything related to your desired industry), volunteer experience and causes (to help round you out), projects, languages, certifications, organizations and more.

4. A picture tells a thousand words:

LinkedIn isn’t Facebook. Upload a high-quality photo (your profile will be 14 times more likely to be viewed) of you alone, professionally dressed. You don’t need a professional photographer to take a professional headshot; your smartphone can do the trick. LinkedIn has created a guide on taking the perfect work selfie. Consider uploading PDFs, photos or documents to your profile to create an online portfolio that showcases your best projects.

5. Connect with your university alumni: 

Reach out to alumni who are already working in your dream job or field, and use their career paths to help you map your own. Become a member of your university’s alumni group on LinkedIn; engage productively and professionally in group discussions by commenting on an article someone has posted or starting a discussion of your own. Introduce yourself and be upfront about your goals. Often, you’ll be surprised by how willing people are to give you the inside scoop on the graduate job market.

Bonus tip: 

Want to really stand out? Publishing a post on LinkedIn is a great way to demonstrate how you can communicate ideas and opinions. Share your thoughts on issues or trends in your field or share a personal anecdote (suitable for a professional audience!). A short but well-articulated post can help show potential employers who you are and how you think.

Taking the time to do some online research, strengthen your profile and create (and maintain) a robust network doesn’t require a significant time investment and can pay dividends for your career in the long term.

While as a student or recent graduate you might not have a wealth of relevant professional experience, cultivating a strong online brand which showcases your passion and where you want to go in your career can help you make a lasting impression on recruiters and prospective employers.

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Canadian Taxes Are Lower Than Most Of The World: OECD Report

Posted on 22 April 2016 by admin

Tax season has arrived in Canada.

For some, it’s a time to celebrate how much they’ll receive on their returns. For others, it’s time to complain about how much they have to pay to the government.

Sure, it’s frustrating to have to cut a cheque to the feds. But as a new report shows, it’s much, much worse in other countries.

The OECD issued its “Taxing Wages 2016″ report on Wednesday. It aims to show how much personal income tax and employee contributions people make in 34 countries.

The report measures a tax burden by calculating a “tax wedge”: total taxes that people pay, minus family benefits.

Tax wedges were calculated in various ways, such as how much you pay when you’re single, or whether you’re a couple with two children.

The tax wedge for Canadian couples with children was 18.8 per cent, seventh-lowest among all OECD countries.

Countries with higher tax wedges were mostly concentrated in Europe. Topping the list for couples with kids was France, at 40.5 per cent, followed by Belgium (40.4 per cent), Italy (39.9 per cent), Finland (39.3 per cent) and Austria (39 per cent).

Meanwhile, Canada’s tax wedge for single people ranked 10th from the bottom, at 31.6 per cent. Here, too, European countries dominated the top ranks.

Canada did, however, rank higher when it came to income taxes. It came 13th in income taxes on couples with children and 14th for single people.

Denmark was far and away the highest when it came to income taxes, at 31.9 per cent for couples with children and 35.8 per cent for singles.

The report comes months after the federal government reduced taxes on middle-income earners ($45,282 to $90,563) from 22 per cent to 20.5 per cent. The new rate came into effect on Jan. 1.

Canadians have until April 30 to file their taxes, but the Canada Revenue Agency is also allowing people to submit their forms by May 2.

 

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5 debt-tackling strategies

Posted on 07 April 2016 by admin

Whether you’re losing sleep over exploding bills or simply looking to stop depleting your savings account, here are some strategies to consider:

Go to someone in the know

Seek advice from financial professionals who specialize in debt management. If they’re simply recommending another way to consolidate debt rather than a process to repay it, that won’t help you in the long run. Push back for other solutions or go elsewhere.

Unify your debt

It sounds simple, but putting your debt in as few accounts as possible will give you a better handle on where your money goes. Don’t get too distracted by low initial interest rates without looking at total interest costs. The better organized your debt and the faster you repay principal, the less total interest you’ll pay.

Keep track of where the money goes

Take the time to track your expenses every week or month (there are several free online programs that can help) to figure out exactly where your money is going and where you could be cutting back. Meridian Credit Union’s Paul Shelestowsky tells all his clients to do this regardless of age. “It’s a lot harder to get in over your head when you’re tracking your money day in and day out,” he says. “Then you can develop a realistic budget to meet your goals.”

Change your spending patterns

You can organize your debt load perfectly, but if you’re not changing the way you spend, you’ll just end up with a different colour of debt, says MoneyFinder CEO Stephanie Holmes-Winton. She suggests creating a cash-flow plan that puts a dollar limit on high-risk expenses, such as credit-card purchases for non-essentials. The advisors she trains help clients find an average of $3,300 a month in spending that they didn’t know they could control. You can also set up your bank account to automatically pay everything from property taxes and utility bills to credit-card balances, which will prevent you from falling behind on payments and facing ballooning balances due to interest charges.

Don’t stop saving

A good financial plan should include contributing to debt repayment and savings simultaneously. Cutting back on long-term investments for a while to tackle debt makes sense, but putting money aside for unforeseen emergencies is essential too. “People who put all their efforts into paying debt tend to bail on themselves when they hit an emergency,” Holmes-Winton says. “They think they have no control and give up altogether.” Having an emergency fund also prevents you from having to dip into your retirement savings during a crisis.

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