Happy Thanksgiving

Happy Thanksgiving to you and your family. Hopefully you are enjoying this long weekend, and are enjoying the Feast of the Harvest.

For those wonder about how we celebrate it in the Big Caj family, this picture sums it up nicely:

Thanksgiving

New Age Thanksgiving

Stick that in your pipe and smoke it! This is how my son described Thanksgiving to his sister, and she drew it for him, you can’t tell me the mind of a child in the Autism Spectrum isn’t wonderfully different.

Happy Thanksgiving!!

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Hockey before turkey? What the heck is going on around here? The Hockey Season has already started, the games are on Rogers, and it isn’t even Thanksgiving yet? This is a very confusing time for a simple Big Cajun Man like me. What sport to watch? CFL or NFL Football? Baseball Playoffs? Hockey ? Lacrosse ? UFC? WWE? Accountant Death Cell Matches ? Nude Actuarial Hopscotch? Lawn Bowling ? Urban Tidily Winks ? So many choices.

Lovely Leaves

Lovely Leaves on Highway 7

Thanksgiving weekend, a time for all of us to celebrate the bountiful harvest, and our families, and slaughter as many turkeys as possible.

The leaves are changing colours (the Leafs are still blue, happily for the Blunt Bean Counter), and we get to enjoy Mother Natures own fireworks display of amazing colours this weekend as well.

Luckily Air Canada can put a damper on all of this, by imposing a tariff on carry on luggage, thus causing people to be even weirder while traveling. Wait until you are sitting next to a family traveling, where each of them are wearing 4 change of clothing (one on top of the other) on the plane, that is going to make for a very fun time. I even have a new name for this new Canadian cultural anomaly, layer packing™ (you heard it here first).

Canadian Blood Services, really needs donors, if you haven’t given lately, time to drop by, the blood supply is dangerously low!

 

My Writings for Week Ending October 10th

Turkeys have died by the hundreds of thousands for you to enjoy a lovely turkey dinner, some would view this carnage as barbaric, I have no such qualms with this aviary genocide.

Scotia Bank Value Visa

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Splitting Income For Single Income Families

One of the earliest articles that I had on-line (back in 2005) was that the Canadian Government Hates Single Income Families, and I still feel that the Government really isn’t trying to help out single income families. The set of articles was a bit inflammatory (as I was want to do in those days), but the point about Income Splitting still is an interesting discussion point.

My guess is that the Government does not want to change the tax system to allow Income Splitting, for a lot of reasons, but one of the biggest reasons is they don’t want to cut one of their income streams down  (this is not me putting on my Aluminum Foil hat and claiming this is a government conspiracy, just that it is only good business sense to not decrease your incomes, especially when you carry as much debt as all levels of government currently do).

I have written about the joys of income splitting for the retired folks out there (who have pension income), but a family with a single bread-winner (who isn’t retired), is not extended that same privilege. Typically a single income families’ major tax breaks are (assuming there is a spouse or common-law partner involved):

  • Schedule 5: Line 303 where you can claim up to $11038 (minus whatever your spouse’s net income comes out to)
  • Family Care Giver credit, if you are taking care of a disabled family member

That is pretty much it. With lower incomes you may be able to claim medical expenses and such, but that is about it.

The concept of a Household Income, that can pool two folks’ income into one and then split in half (for tax purposes) sounds fair to begin with, but evidently the CRA and the Government are not in agreement on that. Think about:

  1. Lisa is a designer and earns $80,000 a year, while her spouse stays at home with the kids
  2. Gunther earns $45K at his job and his spouse earns $35K at her (or his) job, and they have their kids in daycare
Inequal Tax Solutions

Only in the Tax World is this statement True

At first blush you’d think that these two families pay the same taxes, wouldn’t you? However, we know that this is not how the tax system currently works, and that in fact, Gunther and his spouse have a higher net income because they both earn in a lower tax bracket, whereas Lisa is taxed in the higher bracket for that part of her income (remembering that the tax brackets have graduated income levels).

Is this right? My opinion is no, but then again, Mrs. C8j and I lived in a scenario where she stayed at home with the kids, and I worked, so naturally I would be more inclined to think a Household Income or Income Splitting would make more sense.

I am curious to hear what my readers think of how the Canadian Tax system treats dual-income families as compared with single-income families.

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Nortel : What is Left?

Most of my regular readers know that I am a survivor of the great Nortel debacle, and I have had a lot of folks ask me questions about whether I am one of the unlucky people (still) standing in line hoping to get money from the former Canadian Technology Demigod, and the easy answer is no (fortunately), I don’t think they owe me anything (but I am not positive, there may be payments for patent work).

I first wrote about leaving Nortel in On Being Laid Off, which was just a raw statement that I had been let go after 20 years working there, but I have mostly stayed away from the topic of Nortel. Given time has passed, let’s look back 6 years ago and I can expand on a few areas where I have had many questions about what happened to me in specific after I got laid off.

Nortel

Nortel Once a Giant Now Deceased High Tech Firm

In my article Nortel Teeters, I hinted that things might not go well should Nortel declare bankruptcy in January, 2009, but I really had no sense of just how lucky (and prophetic) that I was with my statements. At the time, I still thought the Canadian government would not let Nortel go into full bankruptcy, there was too much on the line, but I was sadly mistaken.

On January 15, 2009, I saw how close a bullet I had dodged (more like a howitzer shell) and learned Sometimes it’s Better to be Lucky in life. To paraphrase what I wrote:

  1. I had already been paid all of my severance money before the bankruptcy declaration
  2. I had removed my funds from the Nortel pension plan (earlier than I had planned, again by blind luck)

So, in fact, I wasn’t just lucky, I was the same as  the Irishman who decided not to take the Titanic, and take an earlier  boat. How was I this fortunate ? Thanks go to Michael James, My Wife and a few other folks, as they made me act quickly enough and I am lucky I did, because anybody owed money by Nortel on January 15,2009 were out of luck. Who might these unfortunate folks have been (aside from the folks who loaned them money (bond holders), subcontractors and other real creditors)?

  • Anybody owed severance payments of any kind, have received next to nothing (if not nothing) since that date (that I am aware of)
  • Folks on their disability insurance program, as Nortel was self-insuring, thus those folks stopped getting payments as well
  • The Nortel Pension was owed a great deal of money, as it was in a short-fall before the bankruptcy, that never got paid back (that is one of the bigger arguments about remaining funds).

In the news lately (this being 2014) there are discussions going on about the remaining funds from the Nortel dissolution (mostly from the patents sales  and the like), and who will be getting funds from this pool of money? Bond holders will be getting some money, that is for sure, and some of the European pensioners will get some money, but who gets what of the remaining money remains in question , the money seems to be in the hands of two people now. Two bankruptcy judges one in the US and one in Toronto are now deciding what to do with the left over billions.

For me, I was lucky (the understatement of the century), I am owed nothing more (that I am aware) from Nortel, for those waiting for hopefully a few crumbs from the remnants, I wish them Bonne Chance, and hope for the best for them, and their families. At times I have had survivor’s remorse, in that I managed to get away in one piece, and I know of others that were not so lucky, but that is how life works, I suppose.

 

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Pensions and Spousal RRSPs

Spousal RRSPs

When I first started writing I wrote many paragraphs on the importance of Spousal RRSPs, to enable being in a lower tax bracket when you retire. A problem many folks have is that if you only have an RRSP in the main breadwinners name, the tax rate the money comes out of the RRSP (into the RRIF) may be higher than when the money went into the RRSP, which seems wrong (in that you pay the government the maximum tax on things, I always like to try to minimize my tax payments, but that may be just my thing).

When I first wrote about this (in 2005), my scenario was:

  1. I might have a pension from my employer (BNR/Nortel) (yes later I learned how foolish that thought had been, but only long after planning things).
  2. My wife might have CPP but that would be her sole income.

At the time, the concept of splitting pension income was not on the table, so the only way to put money into my wife’s hands, was to put money into a Spousal RRSP. A spousal RRSP, counts against the contributors RRSP room, however when the Account has money withdrawn from it, it would be taxed in the spouses hand (this is a gross over simplification, in fact the money is only in the spouse’s hands 3 years after deposit). This was the only way to “split income” and thus lower the tax burden.

Currently, life is better for retirees, in that they can:

  1. Split their private pension income (this is a simple act on your tax forms, I believe)
  2. Split your CPP, a much more complicated scenario

So I have read where folks are saying that a Spousal RRSP is now obsolete for those with pensions, but I disagree.

Currently my wife has a small private pension, along with CPP, so I can simply use the Spousal RRSP as another means to even out our income levels at retirement. Before I retire, it is another way to put money in my wife’s hands as well, as the funds in there are “hers” (in the eyes of the CRA) after 3 years, so if there was a need for my wife to have income, aside from me, that is another option as well.

Question for my smart readers (that is all of you), what is your thinking on Spousal RRSPs? Still a good idea? Obsolete ?

Do same-sex couples get to take advantage of Spousal RRSPs? Anybody?

 

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