Public Service: Government Cheques Going Away

I was contacted by an agency about posting something here about the fact that Government Cheques will be going away very soon (April 1, 2016), and they included a blurb about it. My regular readers know my opinions on Guest Posts, however, given this is somewhat Public Service, I will publish this one. Remember I didn’t write this, nor do I necessarily agree with all the statements in it, but you should really get your government cheques direct deposited (unless you don’t have a bank account, then I am not quite sure what you can do, does it direct deposit to your mattress?).

Life of a Government Cheque

Journey of a Government Cheque

Federal payments by direct deposit are coming your way!

When you consider that it costs approximately 83 cents for the federal government to issue payments by cheque and around 11 cents for direct deposit, you can understand the Government’s decision to eliminate cheques (except in exceptional circumstances) as of April 1, 2016. After that date, all payments made by the federal government including Old Age Security, Canada Pension Plan, GST/HST payments and Tax refunds to name a few will be made by direct deposit.

The majority of Canadians have already enrolled for direct deposit. If you’re one of a dwindling minority who hasn’t done so yet, here’s some information that may help you get on-board.

How direct deposit works

With direct deposit, you designate a bank account and authorize the deposit of specific payments directly into that account. Your privacy is assured and your funds will be electronically transferred directly into your account – its secure and reliable.

How to enroll for direct deposit

You can get the forms online but you don’t need a computer or access to the Internet. You’ll find the forms at your local Service Canada Centre and at your financial institution. The latter will even help you fill it out. If all of your cheques are to be deposited in one bank account, you only need to fill out one form that takes just minutes to complete. Once you’ve enrolled, you can track all deposits made to your account and continue your bill-paying by going to the bank if you like as well as all your other banking routines.

There are lots of reasons to like it – Benefits of direct deposit

Direct deposit is:

  • Fast. The money is guaranteed to be in your bank account on time.  That’s especially important if you have arranged automatic withdrawals to pay rent, property taxes, hydro, etc.
  • Secure. There’s no risk of your payment being delayed, misplaced, lost, stolen, or damaged.
  • Convenient. The money is in your account when needed even if you’re away from home on a holiday or unable – for any reason – to get to the bank right away.
  • A time-saver. There’s no need to adjust your schedule (picking up the kids, attending classes, visiting the doctor, etc.) to accommodate banking hours and there’s no need to wait in line for a teller or ATM either.
  • Easily Managed. If you receive more than two or more payments, for example the Universal Child Care benefit and EI, they can be deposited in one account or in different ones – even at different banks.
  • Designed to save taxpayers money. The government estimates that direct deposit will save taxpayers about $17 million each year.

More information is available

Visit your bank or other financial institution or call toll free 1-800-O-Canada (1-800-622-6232). You can also find more information, including a short informative video, at Public Works and Government Services Canada’s website: www.directdeposit.gc.ca

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At The Mercy of Foreigners!!!

This is one of the battle cries I have heard talking about Canada’s National Debt and how we soon won’t be able to have control over our own destiny, as the Federal Government’s Creditors will start dictating to us about fiscal policy, Bunk! I say to that.

As usual the media gets it a little wrong. While the above rant may have some grain of truth with our soon to be turkey stuffed friends down south, in Canada that is not true at all. In fact Canada is really quite good figuring out who(m) is holding the Federal Government’s Debt.

International Comparison of Non-Resident Holdings of Central Government Debt

A very interesting graphic, which explains where some folks seem to get it wrong. Yes, our friends in the U.S. have a high degree of non-residents holding the Federal Debt (more than 2 times as much as Canada). It’s more interesting to see that Australia has such a high level of foreign investment.

Have a read of the document that is linked to the graphic (i.e. click on the graphic), if you are curious about exactly who, what, where and how the Federal debt works. Interesting stuff.

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If I Were the Government

So I saw an interesting graphic on Tumblr comparing the U.S. government spending to a median family income and how it might look, so I have tried my best to dredge up this comparison for Canadians.

This model is already flawed as I am only looking at the model where I (the Big Cajun Man) will take on the guise of the Federal Government and not all governments in general (which would change the debt number much as you will see). The average family income is borrowed from 2011’s median family income from Stats Canada as well.

The numbers I am using are gleaned from a report from Stats Canada, and are at best an estimation.

Income for the BCM Family $76,000.00
Spending Costs
   Life expenditures $74,512.00
   Debt charges $9,608.00
Total Spending $84,120.00
Net Income -$8,120.00
Debt charges as a percentage of income 12.64%
Current Family Debt $180,453.00
Debt after this year $188,573.00
Income Compared to Debt 42.12%

What does this mean? Well if I were the Government I’d be spending over 13% of my income on paying off my debt, however, if you look at my debt, it isn’t really that far out of whack, is it? A family with $180K worth of debt is a little high, and they should think about paying it off soon, but then again it is do-able, over a long period.

Oh and here is a nice graph I made too.

If I Spent the Way the Feds Spent

If I Spent the Way the Feds Spent

If you look at the U.S. Model it is a much higher Debt in comparison and a much more dire looking pay back scenario.

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Personal Auditor General

Another blast from the archives from the year 2008 (just before I was laid off), note how critical I was of the government. Do you have your own Financial Auditor General?

The Canadian Government is a mega-business in terms of size and jurisdiction, and to keep this monster organization in line there is the Office of the Auditor General. Yesterday the Office of the Auditor General put out its 2008 Annual Report, and as usual it is full of many interesting issues with the Government specifically in the area of spending. There are some very interesting comments on User Fees in general and how they have been arbitrarily added by many government agencies without a specific accounting of what the “fee” is for. Interesting reading.

The concept of the Auditor General got me thinking about whether I could stand an audit of kind by a 3rd party of my finances. My answer is I don’t really think so, however it might actually be a great idea to force me and my family to explain some of the purchases and financial decisions that have been made over the past little while. Think of having to explain to someone why I held on to my High Tech stocks for so long? Makes me cringe just thinking about this whole idea, but to me it sounds like a good idea.

I have previously written about the Quarterly Financial Review (which we are almost half way through the second financial quarter) and also about your Financial Resume, and these ideas are great concepts to help families communicate with each other about their current financial status (especially once you have a few reviews under your belt so you can actually compare and contrast quarter to quarter), but I am thinking that maybe these ideas aren’t quite enough. If you add more accountability (pardon the pun) to your Personal Financial Life you may be forced to make more informed decisions (i.e. you are less likely to rely on your “gut” or impulses, if you know you have to explain later to someone why you did what you did).

Any ideas where this kind of “Personal Audit” could be implemented are welcome.

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Taxing Government Benefits

This is an interesting topic for me. I am asking specifically, why does a Government tax Benefits that they pay?

An example is the Child Tax Benefit is not taxed (i.e. you don’t pay income tax on it), however the Universal Child Care Benefit is taxable  income. The benefits themselves are quite similar, yet one is calculated on the basis of your previous year income and may (or may not) be paid to you on that basis, tax-free because the other is a payment everyone gets that is then clawed back as it is counted as part of your taxable income (unless you make too much money, in which case you don’t receive it at all). It’s no wonder folks make mistakes on their taxes with these seemingly similar systems with wildly different tax rules.

Taxable all of them

Taxable all of them

How much does the government spend on collecting these taxes? The CRA is one of the larger government departments, and there must be a great amount of money spent on calculation of who owes what and collection of that money (in most cases), but what if all government benefits were effectively tax-free?

It is already being done with some benefits, why are some taxed then? I realize things like CPP payments, EI Payments and such being untaxed would take a big chunk out of the Government’s income stream, but if the Government simply paid less, would it not end up being the same thing? There must be a way to make this all a zero sum game (i.e. the Government gets to keep their money, but folks still get their benefits as well).

You give out money, and then you must figure out a way to take it back because you think the recipients didn’t deserve that much, seems a very odd way to do business (in my opinion), isn’t it? Yes I am being a little simplistic in my statements, but why must it be some complex an argument?

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