Changes to Disability Tax Credit

The proposed 2021 Federal Budget has possible changes to how disabilities are evaluated. Specifically, “…update the list of mental functions of everyday life that is used for assessment for the Disability Tax Credit…”. When I first read the statement, I worried this was an attempt to shrink the pool, but I have been assured this is not the case.

A portion of the statement is as follows:

To help more families and people living with disabilities access the Disability Tax Credit, and other related support measures like the Registered Disability Savings Plan and the Child Disability Benefit: 

* Budget 2021 proposes to update the list of mental functions of everyday life that is used for assessment for the Disability Tax Credit. Using terms that are more clinically relevant would make it easier to be assessed, reduce delays, and improve access to benefits.

* Budget 2021 also proposes to recognize more activities in determining time spent on life-sustaining therapy and to reduce the minimum required frequency of therapy to qualify for the Disability Tax Credit. To ensure these changes enable applicants to have a fair and proper assessment of their eligibility for the Disability Tax Credit, the government will undertake a review of these changes in 2023.

It is estimated that, as a result of these measures, an additional 45,000 people will qualify for the Disability Tax Credit, and related benefit programs linked to its eligibility, each year. This represents $376 million in additional support over five years, starting in 2021-22.

Part 3: A Resilient and Inclusive Recovery

It is the final line of that statement that makes me less paranoid about this.

Caveat Disability Tax Credit

As with previous changes, these will not come into play until after the Budget (2021) is passed by parliament. What the results of the review ends up doing, remains to be seen. My concern is still with the “…Using terms that are more clinically relevant would make it easier….” phrase. This suggests the Doctor filling in the T2201 forms will need to know the correct vernacular for the forms.

  • The RDSP Page is the Overview of all articles I have written about the RDSP (including DTC and other areas).
    • RDSP : Laying the Ground Work (first things first)
      What needs to be done BEFORE you can apply for a Registered Disability Savings Plan? A major aspect of this is the Disability Tax Credit (DTC), make sure you click on this page to get started.
    • RDSP : Working with The Account
      Now that you have succeeded getting your Disability Tax Credit (DTC) you need to open an RDSP account with a bank or such, but how is that done? It is not as easy as you might think. This page outlines many of the issues that have arisen for my family working with an RDSP account.
    • Disability Tax Related Topics
      Thanks for my RDSP and DTC work I then had to learn a great deal about the tax implications of having a disabled child.
    • Autism Specific Articles
      Being the proud Father of a child on the Autism Spectrum I also ended up writing a great deal about Autism specific things as well.

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What the Hustler Taught Me About Banking

One of my favorite movies is “The Hustler” (the original with Paul Newman and Jackie Gleason). Mr. Newman played “Fast Eddie” Felson a hustler who wants to be a success, and his goal was to beat Minnesota Fats (played by Mr. Gleason). The movie is an intricate set of stories, one of which is the thematic premise about how to deal with your victims (patsies, marks, etc.,):

The Hustler at Amazon
The Hustler at Amazon Canada

“Always leave a mark with some money in their pocket, that way they keep coming back”

The Hustler

That is how banks have done it for years. They are finding new and more exciting ways to bleed some money out of you, but not so much that you decide to bank somewhere else (also, they are all doing it, your only other option is to put it in your mattress).

The scary part is that Insurance, Telecomm Companies and most service providers have gone to this model. Bleed out as many fees as they can, until you threaten to leave.

My opinion of the banks’ thinking in this area? Let me quote Fast Eddie from the Colour of Money:

“Money won is twice as sweet as money earned.”

They aren’t earning all this extra money, they are winning it off you.

Whining?

These days, it is hard to find a service not attempting to extract extra service fees. Airlines, have gone berserk with fees, we shall see if COVID somehow reforms their fee lust.

Learn how the game is played, or you will get hustled.

This was originally written many years back, I have added a bit more to it.

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Good Friday is a day of reflection. Why is it called Good Friday? (click here to find out) It is a day of endings, but of new beginnings too. If you need a milestone to start new behaviours Easter is actually better than the New Year. In the Christian perspective Easter is the New Year.

The old problem? We still have COVID, and all the associated issues. Vaccines are now deploying, but not as fast as they should. Businesses are failing, jobs are being lost and people are dying. Amazing what you get used to, I suppose. I have not been jabbed yet, even though I am over 60, but that may happen soon? Given all the vaccinations going on, why are the numbers so bad today? People are people.

How about Bitcoin? I keep getting asked about it because I am a Technology Geek and I write this, and my answer is simple, what? I have always viewed Bitcoin as currency (at best), and I have shied away from Currency Arbitrage whenever I could. I am not investing directly in Bitcoin, although the Index Funds I hold might do something with it. What about other Cryptocurrencies? What about XRP ? It is actually being used as a currency, but no one really talks about that. Axios (on HBO) episode 6 season 4 does a segment on XRP, very interesting. There are many cryptocurrencies out there.

Tax Time is here! I have already submitted my return and got my refund. I have also realized I may not have claimed something and may need to send an update. Tax Time is a wonderful time of year, so go get it done.

The good new is the Suez Canal has been cleared, so shipping can start again. The better news is the number of Memes that are created because of it. See farther down for only a few of these classics.

Inflation (year over year February 2021) 1.1%
Bank of Canada Overnight Rate April 2nd0.25%
Unemployment Rate (as of February 2021)8.2%
Real GDP By Expenditure (Q4 2020)(quarterly change)2.3%
Population of Canada (Est January 2, 2021)38,048,738
CIBC current prime rate2.45%
BMO current prime rate2.45%
Scotiabank prime lending rate2.45%
TD prime lending rate2.45%
Tangerine prime lending rate2.45%
Some Useful Financial Data for Canadians as of April 2nd, 2021

COVID19 Data Canada

Click here to find an up to date graphic from the Government of Canada

Total Cases971,715
Total Deaths22,900
Data as of April 2nd, 2021

Past Writings

So, haven’t done one of these in a long while. I am reworking some of my older articles, and attempting to start writing a bit more often. Maybe I’ll try to become an #Influencer? 💩

  • CPP and EI for 2021, never mess with a winning topic. The deduction allowances have changed and here is where you can read about it!
  • Quick Financial Thoughts just a few financial ideas to read about.
  • A Mortgage Changes You no matter what anyone tells you. You either learn to be fiscally responsible, or you lose your home.
  • Chutzpah in Job Interviews a rewrite from before I got laid off, when I was interviewed by an interesting chap. I assume he was well intentioned, but still, don’t use a term when you can’t pronounce it correctly. Also, never correct someone interviewing you either.
  • The One Thing That Helped me Get a Job is back when I was hunting for a job and the things I learned about how to find a job.
  • Paying Off Debt is Risky ? An odd comment on Instagram (when I was trying to become an influencer) caused me to erupt here.
  • My CRA Error ERR.021 what happens when the CRA gets advice about possibly hacked accounts? The hilarity that follows, is astounding.
  • RDSP Grant Entitlement Statement 2021 for another year we can put $1000 into our son’s RDSP.
  • How do You do your Taxes? A rewrite of an older commentary on doing your taxes.
  • Property Tax Alternative idea? Property taxes are becoming more and more expensive and it is mostly due to the sky-rocketing prices of homes in major Canadian cities.
  • Advice for New Grads? Another rewrite of some notes I made for an interview, for a magazine, that no longer exists.

EQ Bank Savings Plus Account

Easter, a time to rebuild and restart?

As I have said many times, Easter is a great time to restart things. How about those resolutions you made on January 1st?


Sobering Message From Preet B.

At the end of it, somebody gets paid

Rick Mercer’s Nasty View on Taxes

I don’t think there is a more descriptive video for Tax Time than this Rick Mercer classic.

Rick Mercer for Governor General

That looks Stuck

That is what most of us thought of…

Hoyes Nails It

Possibly the best explanation of why minimum payments on Credit Cards are not doing you much good.

Canada is #1 But Maybe Not For a Good Thing

Bubbles get Big in Canada

Random Thoughts from the Past

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Advice for New Grads?

I got called by Insight Magazine to give some advice to new grads on what they should be doing about their finances, many years ago. It was so long ago, the magazine no longer exists. I gave some answers to the interviewer, but as usual, I was not sure I was very clear or eloquent, so now I will attempt to be more clear to those that might have read the article.

Get The Heck Out of Debt

You have just graduated from University, and you might be carrying upwards of $70K in debt (hopefully in student loans only). You most likely won’t be paying that debt off in your first year of working (should you find a job right away). If you can pay it off, good for you! However, you should put together a plan on how you are going to pay off that debt and WHEN it will be retired.

Carrying debt is a drag on your finances, and the sooner the debt is retired, the easier your financial life will be. You should not aspire to “get used to living in debt”, this is the one thing my generation does NOT want to hand down to you.

Don’t Fall In Love With Having Money

Just because you have graduated from University and you no longer have to eat Kraft Dinner with Hot Dogs for dinner, does not mean you must go out every night to eat. You have lived a frugal lifestyle as a student (I am assuming), but if you continued that frugal lifestyle for a while longer, you may be able to pay down your debt faster and then be on a much stronger footing financially.

Yes, you deserve to enjoy life, but it is very easy to get used to the “Let’s go out to dinner tonight we deserve it” lifestyle, and once you are in that lifestyle the habit is very hard to break (speaking as a 49 year old, I can attest to that issue).

You cannot live your parents’ lifestyle (yet) so don’t try. It took them 30 years to get where they are, don’t rush your spending habits to mimic their spending habits.

If your parents paid for you to have a Samsung or an iPhone or paid for your Cell phone bill, maybe it’s time to get rid of this expensive toy? You don’t need $120 a month cell phone bills. Discretionary spending (i.e. money haemorrhage) is a bad thing which you must watch diligently. Middle age mens’ wastes spread, but their spending spreads like that as well, don’t let it happen to you.

Have a Savings Plan

The sooner you start saving, the better it will be for you when you reach my age, however, saving while still carrying discretionary debt (i.e. non-mortgage debt) is paying Peter to feed Paul. Lowering your debt is first and foremost, if you have left over moneys from your year, yes, starting an RRSP early is a good thing to do, but pay your debts first.

Savings is good, getting out of debt is better.

Get the Heck out of Debt

Did I mention this yet?

Banks Can be Negotiated With

As I have pointed out before Free Banking is possible, but it is more likely for old farts like me, who have a good track record with the bank already.  Paying $12-$25 a month in bank service charges you should try to avoid, since you most likely don’t use enough services with the bank to justify this charge. Go with as cheap banking as you can.

The Three Worst Ideas After Graduation

  1. I deserve a new car! -or- I deserve a vacation in Las Vegas!
  2. I’m a little short until my next pay cheque, I’ll get a pay day loan
  3. I am only carrying a few hundred dollars on my credit card balance this month

Keep this in mind, did I mention Get the Heck Out of Debt?

Last Pieces of Advice for New Grads

Originally published in 2010

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Property Tax Alternative

Alternate Property Tax Model

So after whining about my Property Tax bill, I think I have come up with a simple(r) model for Property Tax valuations which could make lives simpler (simpler for me). Remember that Property Tax is a Wealth Tax, taxing the apparent value of your house.

Simply put, your Property Tax is set when you buy your house. When the price is set, that is what your property taxes will be based on, until the house is sold again. It no longer is a wealth tax or a perceived value tax.

Sounds easy doesn’t it? The municipalities could tweak it so that they could add an inflationary increase each year, so that their incomes could slowly increase. Maybe a check on the valuation at sale (i.e. the City can have an independent body valuate the house at sale time and then base property taxes on that value), in case folks try to sell houses for $1 or the like.

PolicyAdvisor - The Brand New Way to Compare and Buy Life Insurance

Advantages?

  • Property tax increases would be limited year over year to only an inflationary increase. Currently in Ottawa Property Tax has been going up higher than inflation in terms of percentage of perceived value.
  • If someone stays in their house for a long period of time, they will not end up having to sell their house because their neighbourhood suddenly went “up scale” and their Property Taxes have sky rocketed (as in Vancouver), good for Fixed Income seniors.
  • May cause a boom in contracting work for upgrading houses, since it’s value will not increase unless it is sold (i.e. why move to a bigger house, when it ends up being cheaper to add a room to my current home)
  • Less yearly paper work with new valuations and warning home owners of the pending change.

Disadvantages?

  • Municipalities incomes may not be as large as they need them to be and it may force them to cut services (to run a balanced budget)
  • Tom-foolery and shenanigans are still possible given there can be manipulations of these systems, like we have seen with rent controlled properties and such.
  • Might throw cold water on the housing market, with folks maybe staying in an older house, instead of buying a brand spanking new one, because it costs more (and the older house has been inhabited in for a while)

Opinions? Should I write this one up and present it to the Ottawa City Council as a progressive and exciting way to move forward in the 21st century? Maybe if I add a Green element to it, it might be an easier sell (it will help the environment, because it will slow housing developments)?

Rewritten from an article in 2010.

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