Canadian Personal Finance Blog

Jim Flaherty is predicted to announce this to help ease the credit crunch, but is this going to help? We shall see, but it isn’t bad news, except for tax payers like us, who are now on the hook for these loans as well. This whole “bail out” thing seems to be another possible area where governments will overspend and this will lead to higher taxes. 

Stock Decline Continues

Not that you hadn’t noticed, but, stock prices continue to drop on sentiment (and not much else), as we seem to be in a “shame spiral” in terms of investing, where folks are getting out now just for the sake of getting out. Yes, some companies are announcing pretty shaky numbers, but not enough to justify this kind of sell off.

Is it time to buy yet? Not sure, call me in six months, I’ll tell you whether now was a good time to buy.

Ontario Deficit Provincially?

Evidently the forecast now is for a $500M deficit for the Province of Ontario this year, which means the province is going to have to make cuts or increase taxes to get their books balanced again, or make sure they make more money next year some how . Word is that the cuts will not happen and they will be protecting Education and Health Spending, and should be able to reverse this problem soon. I am skeptical about this statement, and hope this is not a trend we will start seeing at more levels of government.

Competition in Wireless World?

Quebecor announced they will be launching a wireless phone and data service to compete with the incumbents in the area (Bell and Telus).  This is very good news, as I feel that Bell and Telus are both gouging the hell out of the customers (I am a Bell customer currently). More competition is a good thing, and the fact that this offer is a GSM and HSPA play says again that CDMA (the incumbent North American technology) is not doing well either. Rogers, and Fido run a GSM network, whereas Telus and Bell did run only CDMA, but have since announced an “overlay network” with HSPA and GSM technology as well.

For those Nortel watchers out there, CDMA is one of the remaining “cash cows” in Nortel’s war chest, and this technology continues to erode (less and less spending worldwide).

More competition in this market is a very good thing. Time to walk into Bell and ask, “Why is my bill so darn high?” and see what “deals” they have for me.

Our friends at Stats Canada published their Leading Indicators for August 2008 yesterday and things in the Canadian economy seem to be doing ok, not great, but not as bad as some might think. 

The most interesting statement made was:

Household demand has remained the most consistent source of growth in recent months. Sales of furniture and appliances grew steadily, helped by a steady housing market. Housing starts rebounded in August. Meanwhile, personal services have become the main prop to growth in services employment. Sales of other durable goods were an exception to the strength in household spending, reflecting slower auto sales over the summer in response to record gasoline prices.

The housing index dropped, which may mean more reasonable housing prices or a slowing of the price increases we have seen, which is good as well.

Speaking of House Prices

The Citizen talks about how new price valuations for homes across Ontario are about to be sent out by The Municipal Property Assessment Corporation. Remember these valuations have been frozen for the past two years, so these new numbers could be pretty darn crazy (given a 20% price increase since 2005 on average in Ontario). 

“Residential property values have increased by an average of approximately 20 per cent across Ontario since 2005, when the last assessment update was done. Because of the four-year phase-in, property taxpayers will see an average assessment increase of five per cent next year,” Carl Isenburg, president and chief administrative officer of the Municipal Property Assessment Corporation (MPAC)…

 
I look forward to seeing this envelope in the mail.

Quick Run Around the Blogs

Some excellent articles this week from other bloggers worth having a look at:

• Nancy Zimmerman writes about 10 tips to change a small money habit, where she discusses how to stop buying lunch out (micro economics at it’s best). 
• Michael James writes about the Current Financial Mess and gives a very philosophical view that we are still living good lives, we just need to figure that one out. 
• All About Nortel has an excellent article questioning the former Telecom Diva’s decision to Sell Off Their Metro Ethernet product. Good research.
• The Canadian Capitalist writes about the implications of the Fall of AIG, a little depressing, but good research as well. 
• No Debt Plan writes an interesting view on Credit Card Victims Don’t Pay for 100% of My Credit Card rewards. 

My mother clipped an article from the Globe and Mail by Tim Cestnick about Student Tax planning that I thought had some really good points in it. As I have a new University student in the family who has been working for the past year part time, much of his advice I already knew about but a great deal was news to me.

Withholding taxes

As long as your student is not working in a co-op job or the like that makes a lucrative salary, most student shouldn’t have any taxes (Federal, or provincial) deducted from their part time jobs. Fill in whatever forms you need to make sure that does not happen (no point in loaning the government that money).

Scholarship and Bursaries

I did not know that in 2006 Scholarships, fellowships and bursaries became Tax-Free. This is no longer income was news to me, and I was very impressed to read that one. I would even be happier if my child received a scholarship, but she is working hard on that one (I hope). 

Research Grants

If you travel and incur expenses for your taxed research grant, you can claim those. Not pertinent to me, but still useful to know.

Tuition and Education Credits

I knew that we could claim tuition on taxes (even though it is about 1/3 of the total pay out for my daughter living away from home). There is also a $400 a month education credit (you’ll get a form stating the student was at the institution FULL TIME) that you can claim as well (up to $5,000 of these credits can be transferred to me, so that is GREAT). 

Text Books

Another HUGE cost for University (especially if you buy them new) are books. In 2006 there was a tax credit for books, student fees and equipment which is $65 a month for a full time student. Good idea, be even better if the books were deductible, but I guess that is too much to ask for. 

Student Loan Interest

The interest on accredited loans are deductible as well (make sure you have complete documentation on this). 

Moving Expenses?

If your child moves over 40 KM to or from school and then has a job, evidently you can make this claim, but I would look closer into this one and check with the CRA before you do anything.

Get more RRSP Room

It’s important to put in a Tax return even if your child doesn’t have to pay anything, because you are starting to build up their RRSP allowance. I remember one  year when I was in co-op, I made far too much money and was going to have to pay taxes, but simply put money in an RRSP in February and after a waiting period cashed it out and ended up losing about $50 in admin fees, but effectively floated that income to the next tax year, not sure the logistics of this now. 

Remember also the GST credit comes into play once your child is over 18 as well. 

Rent costs

If your child is renting an apartment, remember that tax credit if you live in Ontario. It would be even nicer if I could write off their residence fees, because those are a BIG expense as well. Sounds like a question for my candidates, whenever they knock on my door. 

All in all a very informative article.

One of my favorite topics to discuss with anyone political is: why is it that the Canadian Tax system seems to be skewed against the single income family?

Most of the time the response I get back is a lot of “baffle gab” about supporting families through social programs, etc., however that is not what I am saying.

If you gave a couple (be they married or not) an ability to pool their income and income split (as they currently can with pension income after age 55), you might be surprised at what comes of this. If I was able to income split with my spouse (when I was employed at least) the amount of tax I would have paid would have been staggeringly less than I did as a single income earner, even with the paltry tax credit for the “Married tax credit”.

I have done numerous articles on this one (and have caused some interesting discussions in the comments as well), so I won’t rehash the numbers, but I think if the government gave families or couples the capability to income split or income balance (if that made sense) and had the concept of the Household Income, I tihnk they might see:

• More single income families, since it would make more sense for a spouse to stay home instead of taking a lower paying job.
• Higher employment numbers, since there would be many people who would stop looking for work, as they are more of a family asset as a tax shelter.

Haven’t had any politicos appear on my doorstep yet, but given I am home all day long, I feel sorry for the first one to show up on my doorstep.