Observational Personal Finance essays, stories, case studies and how to articles with a distinctly Canadian Point of View, from the Chief Kibitzer of Personal Finance. Paying it forward as best I can.
If your child has a disability, which has been recognized by the CRA (with a Disability Tax Credit), there are things you can claim along with the DTC. If your child needs to attend a specialized school or needs tutoring, due to their disability. School fees, in specific, can be a considerable expense.
The rules continue to evolve, so here are the latest rules (May 2022)
School for persons with a mental or physical impairment – an appropriately qualified person, such as a medical practitioner or the principal or head of the school, must certify in writing that the equipment, facilities, or staff specially provided by that school are needed because of the person’sphysical or mental impairment.
I have written about what to include when you appeal for these expenses. It seems now a letter from the school would be good to add to your submission. Remember, the more details explaining how the program helps the child’s disability, the better. This makes it easier it is for the CRA to understand your claim.
A simple letter saying, “I think my kids’ school fees are a medical expense,” will not work with the CRA. It would help if you had detailed explanations of why the school directly helps your child.
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 in 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.
Given the rising interest rates, if you have been using your HELOC (Home equity Line of Credit or Secured Line of Credit) for investing or for debt payments, here are 3 solid ideas to do with that account.
Reduce the principal
Pay it Off
Close it
With interest rates rising, paying off debt has now become a solid investment plan. It will pay upwards of 4% in this situation (as of May 2022).
1. Reduce the HELOC Principal
If your HELOC rate is at 4.5%, every dollar you pay to the principal saves you 4.5%. That money stays in your pocket, so it can be used for other things, and it is risk-free. This makes it an excellent investment.
This gem has disappeared for a long time, due to very low-interest rates. With rates now going up, paying off debt is a good investment, again.
2. Pay it Off
This fits in nicely with the Debt is Bad view that I have. This is also a follow-on to (1) Reduce the Principal. Having no debt creates so many choices and options in your life. You can then invest the money you were paying off the HELOC principal with.
3. Close It
This assumes you have achieved (2) by paying the line of credit off. Why close it?
I am confident many financial planners will poo-poo this perspective. I have always found borrowing to invest a risky thing to do, but paying off debt is never risky. You could put that money in a HISA for the moment until you decide what to do with it.
Who had war in Europe on their 2022 Major Events bingo card? Just when you thought we might have a respite from the Pandemic, life continues to morph. We have the odd concept of nearly full employment, and folks refusing work? Not sure that is completely true, but unemployment is not an issue currently.
The Pandemic may be over in many folks’ eyes, but for me, I continue to lose at least 20% of my team each week to either exposure or actual cases of COVID. We’ll have to live with this? Do I need to have my team 20% over-staffed? Not sure I like this brave new world.
Ottawa lived through the (alleged) Freedom Convoy, and now we have Rolling Thunder coming to visit. No, it is not Bob Dylans’ Rolling Thunder Review or the bombing campaign over Hanoi, it is a group of Motorcyclists that are protesting. I’ll get back to you on the exact topic, one day.
Some Useful Financial Data for Canadians as of April 29th, 2022
Interest rates are now in the, isn’t that interesting, period. The bank prime is up 3/4% since January, might be time to lock in?
The Latest from Me
Been a quiet year (2022), due to family issues. I am learning far too much about Wills, Power of Attorneys, Homologation, Dementia, and Quebec law in general. When I find time, I will attempt to elaborate on my financial journey of the past year or so.
TD Mutual Funds to Directline? thanks to how the E-series funds were going to be dealt with in TD Mutual Funds, I had to move 2 accounts to Direct Line. I should have done this sooner and both moves were, not without some excitement
Retiring at 40 FIRE! as a mathematician I felt I could do a version of a “Math Dad Joke”. Didn’t really cause too much of a stir.
Inflation at 6.7% March 2022 in Canada remember all those articles I wrote saying it was coming? Well, it did finally arrive. It does prove even a broken clock is right twice a day.
Did I mention to pay your taxes? Just a reminder, make sure you pay them, or make arrangements with the CRA.
Other folks’ writings
Michael James had A Conversation About CPP with a friend (not me). Lots of good questions, which is something MJ does, when you try to talk to him about a subject. Do any of those questions pertain to you?
Our friends over at Reegan Financial have put together an RDSP Calculator, that goes into great detail about what an RDSP can do for you. Yes, it is the world’s most complicated savings plan, but still, a very good idea for a disabled loved one (or yourself.
With the aging of the population, will Dementia and related topics become more important?
Dealing with dementia and its impact on one's finances
Do your retirement plans include the possibility that you or your spouse might have Dementia? Dealing with it, is not cheap#Dementiahttps://t.co/k4oHpS02AT
As with each year, we receive a Grant Entitlement Statement for my son’s RDSP. This year is no different, but things may change soon.
Estimated reading time: 2 minutes
RDSP Grant Entitlement 2022
Statement of Grant Entitlement 2022
As you can see, this is an essential piece of information. I now know that in 2022, I can deposit $1000 in my son’s RDSP, and it will be matched with $1000 in grants.
This amount will increase once my son is over the age of 17 19, as the income they will use to determine the grant will be his income instead of our household income. When he turns 18 19, his grants should be much higher due to his estimated income (based on his income from age 17). (Age is 19, thanks to Ron Malis for correction).
Inflation is back for those who have been somehow living a quiet life entirely off the grid. Inflation is the rising of the: Cost of Living, Consumer Price Index or daily life essentials.
What caused this? It depends on who you ask, but we are in an interesting situation. We have inflation, near full employment, and now rising interest rates. The interest rates are a reaction to the rising prices. No matter what caused it, we are living in interesting times once again. Can the fragile economy that needed historically low-interest rates to withstand this onslaught survive? Will the Real Estate markets implode? I’ll tell you in 6 months.
Lovely graphics from Stats Canada help us understand where the price explosions are coming from.
All the parts of the CPI graphically shown and how they have increased
When did this all start? Have a look at this graphic, which is very helpful.
12-month change in the Consumer Price Index (CPI) and CPI excluding gasoline
We had a good run with low inflation, but looks like we are going to have to live with it now, but for how long?
What Shall We Do?
There are plenty of things that can be done if you have the financial ability to do so:
Lower your debt now, while interest rates are low. If you are unable to do that, maybe it is time to talk to a bankruptcy trustee or registered financial planner about what you can do about this. Things are not going to get better very soon.
Time to think about a budget again. Yes, budgets are very old-fashioned, but so was Inflation until a few months ago. If you have no budget, how do you know how Inflation is affecting you. If you have the ability to reign in your spending habits, now is the time.
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