Archive for March, 2013

H&R Block has offered their top 10 tax myths:

Maternity leave income is not taxable. “You are required to report your EI benefits as income. In most cases, Service Canada withholds less than the lowest tax rate so you may have tax obligations at the end of the year.

RRSP contributions do not have to be reported if I do not use the deduction. “Even if you are not claiming a deduction for the contributions you made in the year, you are still required to record the fact that you made them. So all your contributions from March 2, 2012 until March 1, 2013 should be recorded on your 2012 tax return.”

Tips are not considered income. “Servers and others working in the hospitality industry are required to record and report their tips on their tax return. For servers, tips may be as much as 200-400 per cent of their income.”

Students get refunds on their tuition. “In order to receive a tax refund, you need to have overpaid your income tax during the year. If a student does not have taxable income, they cannot use their tuition and education credits on their return. They have the option to transfer up to $5,000 to a parent, grandparent or spouse or they can carry forward credits to use in future year.”

Mothers are required to claim the children first. “The lower income spouse is required to claim childcare expenses whether it is the mother or father. Either parent can claim the child tax credit.”

I earned less than $10,000 so I do not have to file a tax return. “Even if you did not earn more than the $10,822 personal amount, filing a tax return may trigger benefits like the quarterly GST/HST payment. And if you had tax withheld, you should receive a refund.”

I can claim a flat rate amount for my business mileage. “Self-employed Canadians are required to keep a logbook to calculate the auto expenses for their business.”

Child support is a tax deduction. “Unless your agreement is dated before May 1, 1997, child support payments are reported on your tax return but they are not a deduction or included in income.”

If I work outside of the country, I do not need to file a tax return. “The Canadian tax system is based on residency. If you are emigrating, you should indicate your date of exit on your last tax return. If you are working outside of the country but have substantial residential ties to Canada still, you will be required to file a Canadian tax return.”

Mortgage interest is a tax deduction. “Only self-employed Canadians who work from home are allowed to claim a percentage of their mortgage insurance as a business expense. The tax benefit of owning a home comes when you sell. Every Canadian receives a capital gains exemption on the sales of their principal residence.”

http://www.hrblock.ca/documents/TS13%20Media%20Advisory%20Tax%20Myths.pdf

 

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John Kay On The Market

Prof. Kay doesn’t pull any punches when discussing the worst flaws of the market, the financial sector or the euro zone.

On the often-expressed industry view that people just need to better understand how the financial sector works:

“I do not know what is under the bonnet of my car and I do not want to know. … Nor do I want to read large volumes of disclosures about what’s under the bonnet of my car every time I sit behind the wheel. What I want is the confidence … that the combination of a modest amount of regulation together with a manufacturer’s concern for his reputation means that … I can expect that most of the time it will do more or less what I want it to do. That’s very far from being the kind of comfort which people can today bring to their purchase of financial services.”