Koroll & Company Blog

In the previous blog, we looked at the all important task of obtaining travel medical insurance before you travel. Now, let’s look at access to funds and residency.

Access to Funds

On a very practical level, such snowbirds need to think about how they will access funds needed to live out of the country for an extended period. Many snowbir

ds are eligible to receive monthly payments from both the Canada Pension Plan (CPP)and the Old Age Security (OAS). Fortunately, it’s relatively easy to arrange for payment of both while down south, as payments of both CPP and OAS benefits can be made by direct deposit to an account at a US bank where the Canadian recipient is located. Funds deposited in this way are converted to US dollars prior to deposit, and the exchange rate used by the Canadian government will typically be better than most which can be obtained locally.

Apart from Registered Retirement Savings Plan (RRSP) contributions made by individuals, tax planning strategies for 2017 must be completed by the end of the year. With December 31st fast approaching, there are only a few weeks left to take last minute steps towards reducing your 2017 tax bill. Luckily, there are a number of uncomplicated tax planning strategies that can be implemented in this short period of time.

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.

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.

Most Canadians approaching retirement know that they will be able to receive retirement income from the Canada Pension Plan (CPP) and Old Age Security (OAS) programs. Many, however, are unaware that there is a third federal program — the Guaranteed Income Supplement (GIS) — which provides an additional monthly income amount to eligible individuals who already receive Old Age Security.

The problem is, automatic enrollment in GIS is something that is planned for future implementation, but is not yet in place, which means that anyone who wishes to receive the GIS must apply for it. As such a number of Canadians are not taking advantage of it.

The good news? Where individuals receive the Guaranteed Income Supplement, whether the full benefit or partial amounts, all such amounts received are non-taxable.

The Canada Revenue Agency (CRA) doesn’t publish information or statistics on the number of individual taxpayers who owe them money in the form of back taxes, interest, or penalties.

Nonetheless, it’s a safe assumption that some percentage of the 28 million or so Canadians who filed a tax return this past spring either couldn’t pay their 2016 taxes when due or still owe money from past years, or both.

Being unable to pay one’s bills on time obviously isn’t desirable, no matter who the creditor is. There are, however, a number of reasons why owing money to the tax authorities is a particularly bad idea.

Here are 3 reasons you should avoid not paying your taxes owed to the CRA.

As it usually does when a natural disaster occurs, the Canada Revenue Agency (CRA) issued a press release, reminding affected taxpayers that they could seek relief from any interest and penalties which might otherwise be imposed as the result of late filing or payment of taxes.

Such relief is provided under the federal Taxpayer Relief Program and, although natural disasters are the most publicized instances in which the Program is utilized, it is in fact available to all Canadian taxpayers in a variety of circumstances.