Friday, Stats Canada published their monthly Consumer Price Index Report, and showed that while on the surface Prices are not going up much, if you look a little closer, eating Good Food (i.e. Fresh Veggies and Fruit) continues to sky rocket (in comparison to the over all index).

There actual statement in their generic report states:

Excluding gasoline, the CPI rose 1.9% year over year in March, matching the increase in February.

Six of the 8 major categories had increases, which suggests that if you claim that CPI is running at 1.3%, there must be some components dropping significantly to reflect this low number, and (as usual) Gasoline, Natural Gas, and Fuel Oil are the big ones.

CPI For Past 5 Years

Five Year CPI Graph with and Without Gasoline

Main contributors to the 12-month change in the CPI:

Main upward contributors:

  1. Purchase of passenger vehicles (+3.2%)
  2. Electricity (+7.5%)
  3. Fresh vegetables (+14.9%)
  4. Food purchased from restaurants (+2.6%)
  5. Fresh fruit (+11.3%)

Main downward contributors:

  1. Gasoline (-13.6%)
  2. Natural gas (-17.4%)
  3. Fuel oil (-25.8%)
  4. Mortgage interest cost (-1.5%)
  5. Women’s clothing (-1.8%)

As you can see nothing you can eat is getting cheaper, and note also that most power and resource types are dropping in price, however, electricity (allegedly the power of the future) is still going up in price. In Ontario the price increase is even more marked.

Bank of Canada’s core index

The Bank of Canada’s core index increased 2.1% in the 12 months to March, after rising 1.9% in February.

This suggests the Bank of Canada will not be able to blame Inflation as a reason to raise Interest Rates (for now).

Reports from the Past While.

If you want to have a walk down memory lane about how prices have been going up, here you go.

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Disabilities, Tax Time, The Queen and #MoneyStories

The CBC had an interesting story about a disabled person who had both legs removed, who had to re-file to keep their disability claim (effectively to prove their legs had not grown back). While this sounds horrible, it was most likely an admin error at the CRA, as normally they are pretty good on the disability claim side of things. The CBC however also trumpeted, Delay at CRA hurting disabled Canadians, advocates say, which is sensationalized, but has some ring of truth. The entire disability claim system is complicated and quite daunting for a lot of folks, if you want proof check out my article CRA Child Disability Benefit (How To) and the 160 comments on it from various folks asking for help. The article also talks about the private firms that folks engage to help the process that end up gouging their customers (in my opinion), which I outline in Disability Tax Credit: Please Do It Yourself. No one should be profiting on someone’s disability claim. I also agree with the assertion that the system needs to be made simpler for the average person to make a claim, or there needs to be more help for those folks. The CRA does have a Nurse on call that can help out with disability claims, if you tweet their account (so keep that in mind as well).

Sad to hear we have lost another great musician with the death of Prince this week. Remember folks, your hero age the same way you do. I never saw Prince live, but evidently it was something else.

The Queen at 90

The Queen and 3 generations of her children

Remember that your tax deadline is April 30th, and there is no extension planned by the CRA. You had your chance to have free Turbotax, although I have 5 licenses to give away, and only 3 comments on my giveaway post, who knows?

The Queen turns 90, and continues to work a withering (to me) schedule of events. I have problems getting to work in the morning, and this nonagenarian still works harder? I gotta step up my game, God Save the Queen!

My Writings for Week Ending April 22nd

Another week where I wasn’t overly motivated to write. I assume this is a short lull, so I continue to find older writings from my archive of over 220 unfinished posts, with A Personal Spending Surplus ? If you have a spending surplus, you should pay off debt, and then once that is done, you should save it, stop lifestyle creep!

A Money Thought

Time is the only limited resource in your financial plan, keep that in mind!

👇 For more great financial articles from this week click here 👇

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A Personal Spending Surplus ?

Before the previous Federal Election, the Tories claimed they had a “surplus” I read over the Annual Financial Report of the Government of Canada Fiscal Year 2014–2015 is the statement of the National Debt and saw that one of the ways a surplus was possible in the fiscal year 2014-15 was by ministries delaying spending, which made me wonder if it would be possible to do the same thing with our own personal finances?

Debt Subliminal

This is NOT a Debt Reduction Plan

Suppose we look at a young family, with a Home Line of Credit which holds the debt on their house (as opposed to a regular mortgage, this is an important part of my scenario). This young family goes to a financial planner, who tells them they needed to cut down on their spending and get to a point where what they spend is less than what they earn (similar to the concept of this government’s surplus).

The family is lucky in that their Home Line of Credit’s minimum payment is the Interest Charge for that Month (and luckily their Line of Credit interest rate is nice and low). The young family does have a lot of expenses, with small children, car payments and a large amount of discretionary spending (and the debt that accrued because of that spending). The family decides the best way to reach the zen of spending less than they earn is by not paying down their largest debt (their house), so that they can pay for all of their other spending (cars, vacations, nice clothes, cable, etc.,).

This idea actually works well (assuming the bank doesn’t call the line of credit and ask for all of their money), in that the family is not spending more than they make, but there is a problem. Their debt load isn’t actually dropping, and they will eventually have to pay down the debt on their house, which is a huge problem. An even bigger problem will be when interest rates go up, so in the end, this family is living in a financial fool’s paradise.

At the end of it, the Tories “surplus” didn’t really come to fruition, and thanks to a new Government, we are back to deficit financing programs and such, but there are promises of balancing a budget some time soon. This might well be how our example family ends up as well (i.e. much farther in debt).

Remember as I always say, Hey we got extra money, let’s spend it! (No, I don’t I am being sarcastic).

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Loose Money, Free Stuff, Hockey and #MoneyStories

For all of you worried about interest rates jumping, you have another month reprieve with the Canadian Dollar rebounding (along with Oil Prices) and a “strengthening” of the economy, The Bank of Canada kept the overnight rate the

Bank of Canada

Bank of Canada’s New Graphic for E-money

same for a while longer. Their exact statement about why they kept the rates the same is:

Overall, the risks to the profile for inflation are roughly balanced. Meanwhile, financial vulnerabilities continue to edge higher, in part due to regional shifts in activity associated with the structural adjustment underway in Canada’s economy. The Bank’s Governing Council judges that the overall balance of risks remains within the zone for which the current stance of monetary policy is appropriate, and the target for the overnight rate remains at 1/2 per cent.

So the Canadian economy seems to be “in the zone” for now, however, that zone continues to be the in dire need of stimulation zone.

The Hockey season is over in Ottawa, after a disappointing season. The team owner who proved that he is much better at finding a replacement liver, than a winning coach, has fired all the coaches. What team to cheer for now there are no Canadian teams left? I think I’ll just watch the Jays and Formula 1 and move on.

Under the your mileage may vary category, I submitted my tax on-line on this past Saturday, and when I checked at MyCRA on Tuesday, the return had been processed and I am due to receive my refund on this coming Monday. That is a very quick system, given these are the dog days of the Tax Year (i.e. the CRA is most busy).

Sorry to see Tom Mulcair get the boot from the top seat at the NDP, but someone was going to have to eat that stunning election collapse. The only question now is, will the NDP return to being the Political Party of the Oppressed and Downtrodden, and the conscience of Canada or continue their move to the center? The Liberals are hoping for the first one (I bet).

I have a special treat for you, at the bottom of this post another great John Oliver video, but this time on something very on topic, Credit Ratings.

My Writings for Week Ending April 15th

When people make statements like I Just Don’t Like Saving I kind of scratch my head and wonder how they got to that point, but surprisingly I hear this more often than you think.

You would think a giveaway would cause a flourish of comments, however, not on my site! No comments have shown up yet? This explains my inability to get a date when I was younger as well (I suppose), but remember I have 1 comment now, and 5 on-line Turbotax licenses to give away (thanks to my friends at Intuit ).

I have Said This Before

Experience is learning from your mistakes. Wisdom is learning from the mistakes of others

👇 For more great financial articles from this week click here 👇

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Tax Tips for Prize Winners

For those of you who read here regularly, I don’t normally have Guest Posts, but Intuit answered a question of mine about lottery winnings and payment (see in article) and, I am giving away 5 TurboTax On-Line Licenses! The contest will run until 6:00 PM on April 19th.

To enter, answer the following question (in the comments section of this article, and include a valid E-mail Address):

If I bought my Lotto Max ticket with Petropoints, are my winnings now taxable?


Tax Tips for Prize Winners

By Jennifer Gorman, TurboTax

Earlier this year, it was announced a Mississauga woman had won Canada’s largest lottery jackpot ever – $64 Million. We’ve all dreamed about winning the lottery, retiring early, living a life of luxury and taking vacations at any time. With that said, let’s take a look at what winning the lottery means in terms of taxation for any lucky winners.

Casinos and Lotteries

Canadians are in luck when it comes to lottery and most casino winnings as they are considered windfalls and are tax-free! Even winnings from most sports pools, sweepstakes, or lotteries sponsored by a charitable organization are generally tax-free.

However, while the Canada Revenue Agency (CRA) doesn’t require you to pay tax on the winnings themselves, you are subject to tax on any money your windfall generates. Interest earned from bank accounts, GICs, and savings bonds is considered taxable income and must be reported on your tax return.

Does method of payment for the winning ticket make it taxable? No, method of payment for your ticket, even if it’s given to you as a gift, doesn’t change that the winnings are considered non-taxable windfalls.

Thinking of going pro as a card shark? The CRA has recently begun examining how “winnings” by professional gamblers are treated. Because of the expectation of profit, the theory is that monies won by professional gamblers should be classified as business income and subject to tax like any other type of business income. This means professional gamblers could also deduct related “business” expenses such as travel expenses, tournament fees, and equipment used in gambling. This theory is interesting as it opens to door to claiming a business loss if you didn’t win enough to cover your gambling expenses.

Workplace contests

Prizes won through your workplace are generally counted as part of your income. Your employer will deduct income tax, Canada Pension Plan and in some cases, even Employment Insurance premiums on this type of award. Your T4 will have the amount of the taxable benefit listed in box 40.

The one potential exception to this if you win a prize in a draw by a social committee in your workplace. If the social committee, which is entirely funded by employee fundraising, paid for the prize, then any gifts or awards the social committee gives out are non-taxable. This isn’t the case if the committee is funded by the employer, as any gifts or awards the social committee gives out are taxable benefits.

Niagara Falls or Vegas?

While both can be lots of fun, if you hit the jackpot from an American source, your winnings will be taxed. The US Internal Revenue Service (IRS) considers all winnings, even from lotteries, to be taxable. If you hit the jackpot at a US casino, expect a good chunk of those winnings to be withheld by the casino to ensure your tax obligations are met before you even leave the country. Even if you win big from your own home on a US online poker site, for example, your big score will be considered to be American income and taxed accordingly. You may also be required to submit a US tax return the following April to ensure the proper amount of tax was remitted to the IRS.

About Jennifer Gorman:

Jennifer is a tax expert with more than 20 years experience helping Canadians. She enjoys holding seminars in her hometown in Newfoundland to teach seniors and students how to use TurboTax to prepare their own returns.


Site Note: Now just because this article talks about winning at the lottery, this does not mean I want you to go out and buy lottery tickets! That is not the message to take away from this, this is an informational piece about taxation.

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