Koroll & Company Blog

Just about any financial or investment transaction can now be carried out online, and many Canadians conduct most or all of their financial affairs in an online environment, whether through their financial institution’s web-based banking and investment services or by using mobile apps.

The shift to managing one’s financial matters online has extended to dealing with income tax matters, and that’s a trend which has been both aided and encouraged by the Canada Revenue Agency (CRA).

The CRA’s most notable success in encouraging Canadians into the online tax world has been in relation to the filing of the annual tax return. Motivated, perhaps, by the prospect of quicker processing turnaround and faster receipt of tax refunds, Canadians have taken to online filing of returns in droves. For the latest filing year, 2016, over 24 million individual income tax returns (or 86% of total returns filed) were filed using electronic methods.

It has been nearly a decade now since the mortgage lending debacle in the United States caused a meltdown in real estate markets, which led in turn to a general crisis in the financial markets and eventually to the Great Recession of 2008-2009.

While no country was immune from the effects of that economic downturn, Canada did not experience the broad-based mortgage lending and real estate crash which occurred in the U.S. There were a number of reasons for that, but chief among them was likely the different regulatory environment of our banking system and in our mortgage lending practices.

For most Canadians, having to pay for legal services is an infrequent occurrence, and most Canadians would like to keep it that way.

In many instances, the need to seek out and obtain legal services (and to pay for them) is associated with life’s more unwelcome occurrences and experiences — a divorce, a dispute over a family estate, or a job loss. About the only thing that mitigates the pain of paying legal fees (apart, hopefully, from a successful resolution of the problem that created the need for legal advice) would be being able to claim a tax credit or deduction for the fees paid.

Unfortunately, while there are some circumstances in which such a deduction can be claimed, those circumstances don’t usually include the routine reasons — purchasing a home, getting a divorce, establishing custody rights, or seeking legal advice about the disposition of a family estate — for which most Canadians incur legal fees.

Back in July, the Department of Finance proposed tax planning changes for private corporations with an intent to add more fairness to the Canadian Tax System. 

The proposed changes focused on three specific tax planning strategies:

1. Income sprinkling using private corporations
2. Holding a passive investment portfolio inside a private corporation
3. Converting a private corporation’s income into capital

However, after receiving substantial backlash in the form of 21,000 submissions during the 75-day consultation period, ending October 2, 2017, the Government is announcing a number of changes to tax planning for Private Corporations.

A new approach will be taken that better targets the relatively small segment of high-income individuals, that the Government believes are receiving the biggest advantage from current tax rules. 

The fact that Canadian households are carrying a significant amount of debt isn’t really news anymore. For several years, both private sector financial advisers and federal government banking and finance officials have warned of the risks being taken by Canadians who took advantage of historically low interest rates by continuing to increase their secured and unsecured debt.

The risks most commonly cited by those advising debtors on having a greater degree of borrowing restraint was the impact that an increase in interest rates would have on their ability to repay — or even service — the debt they had accumulated.

In addition, those advising debtors on borrowings secured by home equity were concerned about a downturn in the real estate market could put those borrowers at risk, or even in a negative equity position, where the amount still owing on their home-related borrowings was greater than the value of their home.

Cyberattacks on government or on a private company, in a single country or worldwide, are more frequently making headline news. The hackers who perpetrate the attacks seek to profit by it — either by demanding payment from the entity whose systems have been compromised, or by obtaining confidential personal information (especially identifying or financial information) about individuals, which can then use fraudulently or sold to others who wish to do so. 

In September of this year, the credit reporting firm Equifax, one of the largest in the industry,  announced that it had been subject to a major cyberattack. The attack was especially concerning, both because of the nature of the information Equifax holds, and because of the number of Canadians affected.