Posted by Tim Stobbs on April 15, 2010
As I was entering the last few tax forms that are coming in (invest income is good, but waiting for the tax forms takes forever) into QuickTax I’m finding myself looking at an unfamiliar sight. I owe taxes?!?!
You have to realize that I’m used to my wife owing a little bit of CPP each year, but I’m in a bit of a surprise that I personally own anything. I’ve been on refunds for such a long time that I’m having some difficultly adjusting, since I usually leave a bit of cushion on my tax planning to make sure I have a small refund. Yet in hindsight this isn’t surprising at all for a few reasons.
- Second Job – It’s just about impossible when taking a second job to have the right amount of tax coming off at the start, unless you are very good at calculating the tax implications of that additional income. I’m not that good, I always seem to be off a bit.
- Selling some stocks – Upon opening our TFSA’s in 2009 we sold off some stocks in our taxable accounts which triggered capital gains/losses.
- Home Buyers Plan – When I did my tax planning I messed up a little bit and forgot about my home buyers plan repayment, which is about $700.
All in all it’s not much that I owe, about $300 right now. So from a tax planning side I did fairly well, I’m just off a little bit from owing/refund goal of $0. A reminder the deadline to file is April 30 in Canada.
So how did you do on your taxes this year? Are you having a refund or do you owe?
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Filed Under: Tax
Posted by Tim Stobbs 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.
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Filed Under: Tax
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:
- 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.
- 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.
- 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.***
