EI Forecast

Posted by Canadian Dream on March 15, 2010

Out of curiosity I looked into if there are forecasts for EI rates for the next few years and the results are not exactly encouraging.  First there was this recent forecast which projected the maximum increase ($0.15/year) until 2015, which actually tracks fairly closely to this older but more detailed forecast (see chart 2 on page 3).

Overall the  numbers will looks something like this (rate per $100 of earnings):

• 2010/11 – $1.73
• 2011/12 – $1.88
• 2012/13 – $2.03
• 2013/14 – $2.18
• 2014/15 – $2.33

So we are looking roughly at a 35% increase over the next four years and this according to our government is not a tax but rather a premium increase.  Which since it looks like my total EI deduction will easily be in excess of $1000/year when the current maximum is just under $750 doesn’t provide much comfort for me.  For employers, by the way, the matching rate is just 1.4 times the above numbers.

Overall expect to pay more for EI for many years to come.  The only good news in the longer term is if unemployment goes down we should see those premiums come back down by 2017 or so.  So at least I should see some lower rates before I plan to retire in 2023, I hope at least.

I am a Ticked off Taxpayer

Posted by Dave on March 9, 2010

“We have [taken] extraordinary measures to protect the Canadian economy,” Flaherty told MPs in the House of Commons.  “Like virtually all other countries, we needed to run a substantial deficit to do so. But unlike other countries, we are in a position to ensure our deficit will be temporary.” (Flaherty, March 5, 2010)

Everyone seemed so happy in the House of Commons – there was clapping, back-slapping and cheers.  I’m not sure if I’m the only one to ask this question, but is a $53 billion deficit something to get super excited about?  This is the best that our leaders can do – adding $160 billion to our debt over the next 5 years?  Really?

Admittedly I know very little about domestic finance, but what I do know is that if I applied the same methodology being used by the Federal Government to my own finances, I would be more than bankrupt pretty quickly.  I realize that the goal of government is different than my personal goals, but here’s what I see from the current budget as well as the projected deficits going forward:

1. Projected revenue is $213.9 billion;  projected deficit = $53.8 billion. If this was my house, I would be in big trouble – 25% of my income being spent on “stuff”, that may or may not better my financial position at the end of the year.
2. With income decreasing, spending increases? Does this make sense to you?  Is this how you run your house?  It seems contrary to any financial plan that I’m aware of.
3. Canada’s debt will have increased from $517.5 billion in 2009/2010 to $622.1 billion in 2014/2015. Does it really seem like a good idea for our Government to plan to overspend for the next 5 years (which is seen as temporary)?  This spending spree is really the best idea we can come up with?  I don’t really know what I would say if my wife sat me down and said she was planning on overspending for the next five years, but it was “okay” because by year 6 we’d be back to just spending what we were making (because we would definitely not make plans to repay what we’re borrowing anytime in the future).

As previously noted, I am not an expert in getting a country out of a recession, maybe the only way to do so is to spend your way out.  If so, I guess I’m fine with that.  My main problem with the whole thing is that the Government seems so proud of itself for overspending.  After handing down a budget showing the first deficit since the mid-1990s I think a more appropriate reaction by the finance minister and MPs would be to at least act apologetic.  For 35 seconds (after a rousing 2-minute finale) rather then act apologetic our Government stood and cheered. I don’t have $53.8 billion, I’m pretty sure that readers of this blog don’t have $53.8 billion, but our government thinks that at some point in the future we as a country are going to get together $53.8 billion (and interest) to pay down what they’ve decided to spend this year.

In response to this budget, the opposition parties responded by saying they wanted the Government to spend even more money on such things as pensions, climate change, health care, culture, job creation, tuition fees…….  I’m not really sure what the opposition parties are looking for here – do they figure we’re already in bad shape and we might as well hit rock bottom?

I don’t know where our government gets their ideas from, but maybe they need some new ones?  Am I alone in this, or is there similar sentiment out there?

***As an aside, I’d like to state that I am not really for or against any party.  I generally vote with the one that makes sense to me on the majority of the issues.  This post was not meant as an attack on the Conservative government, more of an address to our current fiscal policy, which doesn’t make sense to me.  To me, it would have made more sense for the Minister of Finance to come out say -
“we’re kind of broke right now and can’t afford to do anything, everyone who wants money, they’re just going to have to wait until we get some” – that is something I can understand.***

Pre-Tax Warm Up

Posted by Canadian Dream on February 1, 2010

Well with tax software on the shelves and ads everywhere for RRSP contributions you know we have hit: tax preparation season.  So while you wait for all those slips to come in you might want to consider doing a little pre-tax warm up.

What do I mean by a warm up?  Well rather than waiting to the last minute to find all your paper work and entering everything in to a program (if you use one) you start now and make your life a bit easy.

To help you out I’ve written up a list of steps I’ve done in various years:

1. Write a list of slips you expect to get. There is nothing worse than missing a slip because you forgot to change an address or someone wrote down your wrong address.  That way you can follow up in a timely fashion to file your taxes on time and ensure you get all your deductions and income in.  By doing the list now you can slowly add to it as you think about it and you recall all the paperwork you will need for some of those odder tax credits.  For example, I should look up my boys swimming lessons since I got a tax deduction for that in 2009.
2. Gather all related forms/slips into one or two folders. That way you don’t have to look around you entire file system for one slip later one.  Or if you get audited you will already have all the information in one place.
3. Estimate your T4. If you buy software consider entering in your information on your last pay statement for the year as an estimated T4 slip (if you have year to date totals).  It likely won’t be exactly right, but should give you a ballpark estimate of where you stand prior to getting all your final slips.   You can even do this for other slips if you have a good idea what they will be.  That way you can actually have a bit more time to think about any RRSP purchases you might need to do.
4. Read up on Tax Deductions.  Yes I know reading tax information is boring as hell, but if you save a lot of money it can more than pay for your time.  So try to find a good summary of tax deductions and read up on anything that might apply to you.  If you are looking for a place to start check out this site.

So that’s my ideas on a pre-tax warm up.  What have you done in the past to get ready? Or are you a last minute kind of person?