Best of: I Should Divorce My Wife?!? (WTF?)

Family Over Blogging

A busy week means most of the posts this week were written on the weekend or are Best of, due to me dealing with Family Health issues, so I give you one of my first posts from 5 years ago, I Should Divorce My Wife ? I enjoyed writing this and it did cause a fair amount of stir even back in my early days.

I Should Divorce My Wife (Tax Wise)?

I read that one on the Alan Baggett news site, and scratched my head but it is actually how the tax system is set up currently. If I divorce my wife and pay her Alimony (not child support, remember that case a while back, where that is taxed in the payers hands) I can effectively split my income.

I remember having this argument that in the Government’s eyes the following scenario would be ideal:

  1. Divorce my wife, and pay her half my salary as Alimony (thus sharing my income)
  2. Have my children live with me, so I might be able to claim the Child Tax Credit and Ontario Tax Credit
  3. Rent my wife an apartment in the basement of my house (with it’s own entrance).
  4. Have my wife take care of the kids (as daycare) and write off the money I pay her on my income as well (and she does it in my home, so I write that off too).

OK, ok, this is a ridiculous scenario (and I’m sure some might even claim illegal, although I’d love to see that taken to court), but this is how SCREWED UP the entire Canadian Tax System is! I checked this with Quicktax and it was quite happy to show me the obscene amount of tax I’d save.

Alan’s tax bible is an interesting read, as are his stories (they are a little “he said, she said” which at times I am not fond of), but still interesting to read how some people are persecuted by the Tax system, while others get off “scott free”.

Please let me repeat, I do not condone the above tax sharing concept (but if you get away with it drop me a line, I’d be curious to hear).


Punishment Fit the Crime? (TFSA Overpayment)

Don’t do the Crime if You Can’t do the Time?

So this past weekend, I got to do one of the things I really enjoy, and that was watching a Formula One race. The Europen Grand Prix race was horrific in one spot (a tremendous crash which both drivers walked away from) and it had controversy, which sort of fits with another story this weekend, that I have been reading about.

The race controversy centered around a driver not stopping for the Safety Car, which was recognized by the Race Stewards, and the driver was punished with a drive through penalty (he had to drive through the pit lane at slow speed). The controversy arises by the fact that because the driver jumped the safety car, he gained a significant advantage and still ended up in 2nd place, whereas the Ferrari 2 meters behind them, that did pull in behind the safety car, came in 9th place instead.

In my opinion, the punishment given by the race stewards did not fit the crime committed (and more importantly the advantage gained by this breaking of the rules).

What does this have to do with Personal Finance? Good reader, this past weekend the CRA decided to revisit their punitive charges against folks who did not follow the rules of the new TFSA plans and made overpayments (in the eyes of the CRA).

If you received a letter from the CRA about a TFSA overpayment read this page very carefully about what you need to do next, and what may happen next.

Evidently the letters may only be warnings from the CRA:

If you have received a return from the CRA regarding your TFSA, it does not automatically mean that you will be subject to a tax. It may just mean that more information is needed.

Will the CRA tax everyone who overpaid into the TFSA? My guess would be, maybe not you may get off with a warning, given the complexity of the rules and scenarios presented, but we shall see, since the CRA can do what they wish (since in their opinion their rules have been contravened).

As opposed to the Formula 1 controversy, I feel that taxing everyone who made these TFSA mistakes is not making the punishment fit the crime, either. A warning is sufficient, with a statement that next time they will have to pay penalties, in my humble opinion.

Anyone disagree?

More than 34,000,000 Strong

I remember as a kid hearing that the population of Canada was 21,000,000 and thought how huge that number is, but now Stats Canada is claiming that we have surpassed 34,000,000 in Canada, but how many of those live within 100 miles of the Canada/U.S. border is still very high (is my guess). Our population growth slowed a little, but we are still growing pretty darn fast, maybe we’ll all have to move a little farther North?

Did we all “use our loins” to quote a well-known 70’s politician? Nope, immigration growth is more than double our “natural” growth (where natural is births minus deaths, there are more births than immigrants), so if you think Canada is simply growing naturally think again, we still are a land of immigrants (and should be darn proud of it).

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G-20 Not Just for Rioters

Given all the fun and excitement in Toronto this past weekend, we might forget that a group of world leaders met and attempted to create some semblance of continuity in the world economic recovery (however delicate and easily broken it might be).

The leaders published a statement, which I can only find on the CBC web, with an interesting tag map, or brain map (or maybe just a word collage, I am not sure).

Some very interesting statements, with the word committed used a great deal, but not a lot of substance about what these commitments might actually mean, for instance:

We committed to accelerate the implementation of strong measures to improve transparency and regulatory oversight of hedge funds, credit rating agencies and over-the-counter derivatives in an internationally consistent and non-discriminatory way. We also committed to improve the functioning and transparency of commodities markets. We call on credit rating agencies to increase transparency and improve quality and avoid conflicts of interest, and on national supervisors to continue to focus on these issues in conducting their oversight.

Good thing to ask for this kind of stuff, wonder how it will all be implemented?

….Reflecting this balance, advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016. Recognizing the circumstances of Japan, we welcome the Japanese government’s fiscal consolidation plan announced recently with their growth strategy. Those with serious fiscal challenges need to accelerate the pace of consolidation. Fiscal consolidation plans will be credible, clearly communicated, differentiated to national circumstances, and focused on measures to foster economic growth….

Very interesting, this one points the fingers at the big debtor states, like our friends to the south about how they should maybe stop relying on printing money to deal with overspending (my interpretation, feel free to disagree). How will this happen, I have no bloody idea, but it will be interesting to see if countries other than Canada push forward on this.

All in all an interesting weekend, I am glad I didn’t go to my “Pry Bar and Black Clothing Convention” held near the G-20 site (yes a very weak attempt at humor).  I look forward to the next set of G-8 and G-20 meetings, which seem to be scheduled for Seoul, South Korea, and whether the disruptive forces that follow these meetings make their way to South Korea or not (and how they might be treated there).

This Week

Given this week is a fairly disrupted week in terms of Canada Day being on Thursday and other personal events in my life, there may be a couple of “Best of” postings that come up, my apologies, to my regular readers if this transpires. To my new readers enjoy some of my older postings.


The Small Entrepreneur

The National Film Board of Canada has some very interesting video shorts and documentaries up on their web site, but this past year they have started up an interesting series of shorts, which have been shot over a period of time, GDP: Measuring the Human Side of the Economic Crisis is an amazing piece of work and it is on going, so well worth going back to the NFB site to revisit the stories that intrigue you.

One of the stories really interested me, and I have included episode 11 of the story of Edgar and Zoran. This episode shows to some of us how something we take for granted (Canadian Citizenship) is something very important to potential immigrants like Edgar.

When Zoran opened his Calgary carwash, Alberta was booming but local labour was in short supply. A few years later the economic ground has shifted – and the fortunes of the immigrant entrepreneur are intertwined with those of his Filipino guest-workers.


Random Thoughts: Shake, Rattle and Roll

Tsunami on Fake Lake?

Yes, much humor has come from the Great Earthquake of 2010, one of which was that the Fake Lake they built in Toronto for the G-8, had a Tsunami on it. The other good joke was that Ontario shifted slightly to the left due to the new HST. We also saw that CPI increase was a little lower in May, which is good, but mostly due to Gas and Energy costs moderating. My guess is from the astounding silence no one wants to admit they are a Big Fat Personal Finance Panda.

What was new in the land of Financial Blogging? Lots of interesting new facts and another roller coaster weeks on the markets cause more interesting discussions, like the following:

  • Michael James spoke of Costly Liars at the Front Door discussing the onslaught of folks at our front doors wanting to look at our water heaters (and possibly slam our Natural Gas or Water Heater bills). Never buy anything sold to you door to door, is a simple motto to live by.
  • Speaking of Hot Water Heaters the Canadian Capitalist had a “Tony Soprano moment” when his hot water heater gave up the ghost and dumped a lot of water in his basement. He described his predicament and also savings in Installing a New Hot Water Heater, pointing out it ends up being cheaper to buy one, than to rent one.
  • Preet discusses even more Hot Water in The $57,000 Lake Revealed, sorry no Hot Water Heater, but a lot of Hot Water for the Government for building a lakefront set in Toronto, because they didn’t want to let the press into where the G-8 summit is being held.
  • Larry MacDonald shows that even the most professional of us in the world of money can get caught up in Lotto Fever with his article 1 in 1 chance of becoming a millionaire, ok it’s a trick on his part, but it’s a good post.
  • The Canadian Couch Potato points out that Not All Indexes Are Created Equal and be careful with Indexes and Index Funds, to make sure you choose a good index to go with, in your passive investment strategies.
  • Can you eat well on $25 a day? Canadian Dream: Free at 45, does an Experiment on Eating on the Very Cheap, interesting idea, a little synthetic, but still an interesting experiment.
  • The Frugal Trader over at Million Dollar Journey wants to know your opinion on An Increase in CPP? and whether you agree with it. I think it’s an interesting idea, but I suspect Canada’s Medical System is going to bankrupt the government LONG before CPP does.

Giveaway Coming Soon

Someone kindly gave me a copy of Quicken 2010, and given the year is half over, maybe it’s time I actually gave it away, so stay tuned, I will announce this huge contest soon.

Weekly Reminder

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