Cindy Nagassar

The past few months have seen a barrage of financial events and changes. Like a 100 item buffet, information and choices presented by the local, national and world economies are information overload and show no sign of abating. Therefore I am introducing a new feature the Very Important Trivia Hall of Fame.

I am valuable to you when I find that gold nugget or diamond that is relevant to your financial situation.

For example: An acquaintance asked me to do his father’s tax return. After checking his T slips it became clear that the father qualified for the Guaranteed Income Supplement, a government benefit available to low income seniors. Both he and his son were unaware of this program.

And the Inductees Are…

For almost a century Canadians have been paying personal income tax. Personal tax was started as a means of financing World War 1. Since then Canadians have been deferring (two thumbs up) evading or avoiding(big red X) paying income tax.

One step to ensure that an income earner pays no more tax than he or she must is to understand there is an essential difference between a deduction and a credit.

Canadians also need to learn that getting a large tax refund year after year is not the best idea. Apparently that is a hard lesson to learn because at present there are millions of dollars of unclaimed refunds according to the Canada Revenue Agency. We can be assured that the owners of those refunds are NOT the same people who complain about the government.

Only 50% of a capital gain is subject to tax. But don’t write this in stone or even felt pen. One certainty about taxes is that little ever stays the same. It is a game of moving numbers!
If you are your own boss you must pay both employer and employee portions of the Canada Pension Plan. As of 2006 that was 9.9% up to a maximum of $3821.40.

I still contend that it is not possible to sneeze with your eyes open. Unless of course, you are a snake or a fish. Please feel free to prove me wrong.

Well here we are in the midst of fall. It has been such a beautiful spring and summer that I am reluctant to put my sandals in the back of the closet until next year.

What has transpired in the financial realm that is of relevance? Let’s do a recap of the past few months.

First off I hope that all of you have done your 2005 tax return, especially if you owe money. Remember that the penalties for overdue taxes are an immediate 5% on the unpaid balance and daily interest thereafter.

Putting that task in the procrastination pile will not make the problem go away! Most of you know you can ask for my help, moral support or otherwise.

“All but the most sophisticated Canadian citizen will spend a life time paying off their debt.”

Is that true? If so why? Is debt a fact of financial life?

The comments from respondents were very instructive. However, the lack of response was even more eye opening. Only 8 people bothered to send an answer. So maybe debt isn’t a big deal. Let’s find out.

The word ‘sophisticated’ caught a few readers’ attention. They wanted to know what it meant. In the context of that quote it means knowledgeable. It does NOT mean rich or well off.

One person asked if debt included mortgage payments. Technically it does, but the more worrisome part of most peoples’ debt load is the debt on depreciating liabilities or non tangibles. Want two examples? Depreciating liability: car. Non tangible: Putting a weekend away or a meal out on your credit card and still paying for it a year later.

Dear Joanne,

Here I am on Deerfoot Trail again, the 100km/h freeway that cuts through our city. You say I shouldn’t complain because in Montreal gas went from $1.03 to $1.34 in a matter of hours. But I can still see the loonies and toonies flying out the tailpipe. Now that wouldn’t be so bad if they actually fell on to ground where some needy person could pick them up. But the money is evaporating into thin air or should I say ending straight up in the oil companies’ coffers.

Sure my RRSP mutual funds have oil stocks but what a roundabout way to make money. Shouldn’t I be thinking of conserving gas and using that money to invest myself? We all know the answer to that question is YES! But caution:

As one successful mutual fund manager recently said: “If you do what everyone else is doing in investing you will get hurt”.

Credit has become so much a part of our lives that we don’t even give it a second thought.

Lila’s casual attitude towards her credit is due to her lack of knowledge.

Credit had its beginning in the 1850s. Isaac Singer wanted to increase sales of his sewing machines. Very few people could afford to buy them outright. His plan allowed buyers to put $5 down and $5 monthly. (1)

Today peoples’ credit histories are a critical reflection of their ability to be trusted.(2)Granting credit has grown into an extremely competitive multibillion dollar industry. The target? Our wallets!

So let’s dissect Lila’s situation for educational purposes.

1. As of 2002 there were millions of dollars in unclaimed refunds the Canada Revenue Agency could not find owners for?
2. Personal income tax was started in Canada as a means to finance World War One?
3. Tax avoidance is legal?
4. Tax evasion is illegal?
5. Tax deferral is impossible?
6. A tax deduction and a tax credit are the same?
7. A large tax refund is a good idea?
8. The Canada Pension Plan rate is double the rate for self employed people as it is for employees.
9. Only 50% of capital gains are tax free.
10. It is possible to sneeze with your eyes open.