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Tax Refund – Smart Ways

February 10, 2020 theRipregistry , , No comments

APRIL 30, 2019

5 smart ways to use your tax refund

By Sheryl Smolkin

Expecting an income tax refund? Before rushing out to spend it, consider how you can put it to work to enhance your financial future.

5 smart ways to use your tax refund

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You just pushed the send button on your income tax return and you can’t wait for your refund to go into your account. You might be thinking about what you’ll use it for. An exotic vacation? A down payment on a new car? Here’s another thought: You can use that money to brighten your family’s financial picture over the long term.  

Here are five ways you can do that:

1. Start an emergency fund.

You can use your income tax refund to start an emergency fund, or add to your current emergency savings. Aim to have enough money to cover about three to six months of necessary living expenses. Keep that money in an easily accessible, high-interest emergency savings account or a tax-free savings account (if you have contribution room). That way, you will be better able to weather a financial crisis, like the loss of a job, a car breakdown or unexpected, unpaid time off work.  

2. Top up your RRSP.

For the 2019 tax year, the registered retirement savings plan (RRSP) contribution limit is 18% of earned income from the previous year, up to $26,500. That number will be adjusted if you put money in a company-sponsored pension plan. Yet studies steadily show that less than half of Canadians put money in their RRSPs every year. If you haven’t been contributing the maximum to your RRSP, you can use your income tax refund to help build a larger retirement fund.  The interest on your money will also compound over a longer period than if you only put money in at the end of each year.

3. Pay down credit card debt.

According to CreditCards.com, the average adult Canadian carries about three credit cards. The Canadian Bankers Association reports that about 60% of Canadians pay off their accounts in full each month. That means 40% of us are paying interest rates of 15% to 20% on our outstanding balances. Paying down or paying off your credit card debt will free up money that you can use to boost your retirement savings.

4. Pay down your mortgage.

Given that the average Canadian home sold for $609,700 in February 2018, according to the Canadian Real Estate Association – and the sale price of an average detached home in Toronto topped $1.2 million the following, per the Toronto Real Estate Board – there’s a good chance you took on a large mortgage to purchase your family home. Mortgage interest rates have started to inch up, and your payments may no longer be affordable the next time your mortgage renews. So, depending on your situation, it may make sense to take advantage of early pre-payment privileges to reduce your mortgage debt as quickly as possible. Once your mortgage is paid down or paid off, you can catch up on your RRSP.

5. Open an RESP.

For the 2018-2019 school year, the average undergraduate tuition fee was $6,571, according to Statistics Canada. And that’s only one year out of a four-year program, and doesn’t count books and living costs. Those expenses can add tens of thousands of dollars to the bill – and by the time your young children are of university age, the total will likely be a lot higher. If you’re not saving for your child in a registered educational savings plan (RESP) you’re leaving free money on the table.

That’s because when you contribute to an RESP for your child, the Canada Education Savings Grant adds 20 cents to every dollar you contribute, up to a maximum of $500 on an annual contribution of $2,500 until your child is 17. Special rules apply, so it’s important that you speak to your financial advisor in order to maximize the grant. Using your tax refund to make annual RESP contributions is a great way to invest in your child’s future.

theRipregistryTax Refund – Smart Ways
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How Your Cell Phone Can Keep You From Getting the Lowest Mortgage Rate.

November 27, 2019 theRipregistry , , , , No comments

by: Richard Moxley, November 25, 2019 pub.

“Despite what you may have heard, your cell phone payment history does affect your credit score.

Cell phone accounts work differently than a credit card or a line of credit. A cell phone is an open or “O” account, which means the balance has to be paid in full at the end of each month.

There is no such thing as a minimum payment with an “O” account like there is with credit cards and lines of credit. You can’t just pay a portion of your bill. The amount that you see on your statement has to be paid in full otherwise your credit score will suffer.

Unfortunately, many Canadians don’t view paying their cell phone bill in full or on time as being as important as other payments. Lenders disagree. The bank underwriters (the people who review your application) are thinking, “If you can’t make or keep track of a cell phone payment, what are the chances that you are going to be responsible with your mortgage payment?”

Costly Missed Payments

Let’s take a look at one borrower, John, who was declined for best-rate mortgage financing on the purchase of a new house because he had three late payments on his cell phone bill during the last two years. His argument wasn’t unique.

measures of financial distress in canada
Is this you?

“I called (the phone company) before the payment was due and asked if I could pay half of the bill this month and the remainder of the outstanding balance the following month,” he said. “The customer service rep told me that it was okay to take a couple of months to get caught up.”

Susan and Frank found themselves in a similar situation. They were approved for mortgage financing but were then declined at the last minute due to a recent late payment showing up on their report in the same week they were supposed to be moving.

Arranging a mortgage and preparing for a move is stressful enough without having a financing issue in the eleventh hour. In the end they were able to find a resolution, but it resulted in a delayed closing. They had to get approved by a different lender at a higher rate. In addition to all the stress and time, this small mistake ended up costing them $3,459.28.

Despite what they tell you, late payments will continue to be recorded until your account is caught up. Underwriters will look at an applicant with an outstanding balance as someone who is not in control of their finances. It will drop your score and hurt your chances of being approved for best rates and terms.

A Matter of Principle

It’s common for consumers to not make a payment because they were unfairly charged or they found a mistake on their bill. On principle, I understand that you might not want to make the payment, however, even if you are disputing the charge, it will not stop the negative item from showing up on your credit report.

And keep in mind that one late payment can be enough to negatively impact your best rates and terms for future financing. Your cell phone company will start the collection process if an overdue balance is not paid within 60 to 90 days.

As you can guess, a collection appearing on your report does not help your credit score. Many of my clients echo my caution, and in hindsight wished they had simply paid the bill in the first place. If you find yourself in this situation, my suggestion is to clear the amount owing first, and then dispute the charges. That way it doesn’t lower your score or cause you to get charged higher rates just because of one account.

Warning…Warning

credit score warning
Beware!

If you have paid out or closed your cell phone account, make sure you get something in writing to confirm that there is no outstanding balance owing.

The same goes for an outstanding amount or settled collection. Don’t take anyone’s word for it or assume that it will be updated on your credit report. Are you starting to see a trend? Whatever you do, get confirmation in writing! If you don’t, it will make trying to correct the error even more difficult.

The only way to avoid having your cell phone report on both Equifax and TransUnion is to go with a pay-as-you-go contract. If you are on any other type of plan, keep your fingers crossed. You don’t want to be one of the unlucky ones to have a cell phone error or problem tarnishing your credit. To improve your chances of avoiding any issues, ensure you pay the full amount owing each month and keep good records.”

theRipregistryHow Your Cell Phone Can Keep You From Getting the Lowest Mortgage Rate.
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Can you reduce or avoid Capital Gains Tax on Stock

November 24, 2019 theRipregistry , , No comments

I was having lunch with a good friend of mine and she mentioned there were some stocks that a 91 year old lady wanted to sell and then split it amongst her 4 children.

Well of course you can sell your share, but then she is stuck with paying Capital Gains, because she will need to claim the income (growth/profits of the stock).
So this is how this works:

As of 2018, the capital gains inclusion rate is 50%For example, with a capital gains inclusion rate is 50%, if you bought shares for $10,000 and sold them for $15,000, you have to declare a $5,000 capital gain in the year you sold the shares

Can you gift stocks and property to family members in Canada and avoid capital gains all together. Not in Canada

Are Gifts or Inheritances Taxable?

There is no “gift tax” in Canada.  Any resident of Canada who receives a gift or inheritance of any amount from almost any source (except from an employer) will not have to include this in their income.  However, if capital property (e.g. real estate, investments) is given as a gift, the person who has given the gift will be deemed to have sold the capital property at fair market value (FMV), and will have to pay tax on any resulting capital gain.  The FMV is deemed to be the “cost” to the person to whom the shares were given.  If money or capital property is given or loaned to a spouse or a related minor child, attribution rules will apply.

As pointed out by the Video Tax News team in the April 2019 Life In The Tax Lane video, there could be a problem if capital property is sold to a non-arms-length person for less than FMV.  Subsection 69(1) of the Income Tax Act deems the proceeds to be at FMV when a taxpayer has disposed of a property non-arm’s-length for no proceeds or for proceeds less than FMV.  However, it only deems the acquisition cost to be at FMV if the property has been acquired at a cost higher than FMV, or by way of gift, bequest or inheritance.  It does not deem the cost to be at FMV where the cost is less than FMV.  This may result in the selling taxpayer to have deemed proceeds of FMV while the acquiring taxpayer must use the actual transaction amount as their cost.

theRipregistryCan you reduce or avoid Capital Gains Tax on Stock
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It’s that time… FFT

November 22, 2019 theRipregistry , , , No comments

5 RRSP TIPS

One of the best ways to save for retirement and cut your tax bill is with a registered retirement savings plan (RRSP).

Every dollar you put into an RRSP can be subtracted from your taxable income. This means you’re paying yourself first. And you may get a tax refund this spring when you file your taxes. If you’re looking for ways to grow your savings, check out these 5 RRSP tips.

Invest all year round

It’s easier to save smaller amounts over the entire year. You won’t need to rush to make a large RRSP contribution at the end of February. A few dollars now will go a long way later, once growth and time are factored in.

Reduce your combined tax by income splitting

Splitting income between you and your spouse may help you lower your taxes. When you put money into a spousal RRSP, the money will belong to your spouse. How much you can put in will depend on your contribution room but you get the tax deduction. This may be useful if you earn a lot more than your spouse does. Consider contributing to a spousal RRSP. You may get a bigger tax break than your spouse would by contributing to their own RRSP.

You may also get a tax break later when you and your spouse take money out in retirement. Thanks to the extra money you’ve put into your spousal RRSP, your spouse may take out more income. This may be useful if you earn a lot more than your spouse during retirement. When your spouse takes out a bigger share that means you can take out less from your RRSP. Which means you may pay less income taxes.

There may be exceptions depending on your plan. So it’s always a good idea to double check.

Watch out for over-contributing This can cost you

You may need to pay a penalty if you over-contribute to your RRSP. The government charges a 1% penalty tax, assessed monthly, for each month you’re over your limit.

Save your “extra” cash

Got a bonus, inheritance or cash gift? You can use it to give your RRSP a boost. Some employers may offer to move your bonus into your RRSP. This can be a great perk to take advantage of.

Grow your RRSP until age 71

You have until the end of the year you turn 71 to maximize your RRSP contributions. After this point, you’ll need to turn the money in your RRSP into retirement income. When you start to withdraw your money, your income will likely be lower. So you may pay tax at a lower rate.
SEE WRITE UP AT theripregistry.ca/blog https://theripregistry.ca/blog/
age Limit for contributing.

Bonus TIP: Your 2019 RRSP contribution room is available on your 2018 Notice of Assessment. You can also find it in your Canada Revenue Agency (CRA) online account

theRipregistryIt’s that time… FFT
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Get Ready – Did you know?

November 16, 2019 theRipregistry , , , No comments

Age limit for contributing to an RRSP

The year you turn 71 is the last year in which you can make a contribution to your RRSP.

You can contribute to an RRSP under which your spouse or common-law partner is the annuitant until the end of the year your spouse or common-law partner turns 71.

For ie: If you don’t have an income and your spouse has a contribution limit of $70,000. When filing as common law or married, you can lower his or her income by contributing to RRSP up to the age of 71 even after he/she has retired. If the spouse is younger for ie. and there is more room and haven’t used up $70,000 then you can continue to contribute, lowering your taxes year after year by doing a spousal RRSP up and until the spouse or common law partner turns 71.

Therefore if your pension and income after retirement is still high and you want to lower your tax bracket, there is an option, so take advantage of it.
Check out this link.

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4040/rrsps-other-registered-plans-retirement.html#P1125_32292

theRipregistryGet Ready – Did you know?
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Looking to buy a property?

September 19, 2019 theRipregistry , , , No comments

MAY 09, 2019

Do you need mortgage insurance?

By Helen Burnett-Nichols

Your home is likely the biggest asset you’ll ever own. So how can you protect it in case something were to happen to you?

Canadians owe $2.17 trillion in household debt, according to the Bank of Canada. More than 70% of that is residential mortgage debt. To protect these mortgages, homeowners have a couple of options. You can buy mortgage insurance from a financial institution. Or you can get mortgage protection with life insurance and critical illness insurance from an insurance company.

  • Mortgage insurance works by paying off the outstanding principal balance of your mortgage, up to a certain amount, if you die.
  • Mortgage protection, on the other hand, uses a combination of insurance policies to protect you:
    • Term life insurancecovers you for a set period, such as 10, 15, 20 or 30 years. It can be suitable if you’re looking for low-cost insurance. While the premium may be low for the first term, the cost will increase when it’s time to renew. Buying coverage for a long enough term to match your mortgage term – 30 years, for example – will keep the cost steady. (Read more: Is term life insurance right for you?)
    • Permanent life insurancecan be more expensive at first, but it covers you for life. The amount you pay can either be guaranteed to stay the same or vary over time, depending on the type of plan you choose. (Read more: Is permanent life insurance right for you?)
    • Critical illness insurance gives you a one-time payment if you are diagnosed with a serious illness that’s covered under the policy (and you meet the other policy conditions). You can use the money for medical expenses, to pay off your mortgage or for anything else you wish – it’s up to you. (Find out how a serious illness could affect your finances. Try this Critical illness insurance calculator.

Key differences between mortgage insurance and mortgage protection with life insurance and critical illness insurance

The main difference with mortgage insurance is that the payment goes to the lender. The amount you’re covered for declines as your mortgage balance declines. With mortgage protection, critical illness insurance gives you a one-time payment you can use for your mortgage or other expenses as you choose. And life insurance pays a tax-free amount to your chosen beneficiary (the person who receives the benefit) when you die. The payment can cover more than just the mortgage. The beneficiary may use the money for any purpose.

Beneficiary. With mortgage insurance, the money goes to the lender. With critical illness insurance, the money goes to you. With life insurance, it goes to whomever you name as the beneficiary.

Portability. If you change mortgage providers, your mortgage insurance doesn’t automatically move with you. If you move your mortgage to another lender, you’ll have to prove that your health is still good. You’ll also pay the mortgage interest rate the new mortgage provider offers. With life and critical illness insurance, you can take your policy with you if you transfer your mortgage to another company. There’s no need to re-apply or prove your health is good enough to be insured.

Flexibility. With mortgage insurance through a lender, your needs may change over time. But you don’t have the flexibility to change your coverage. With mortgage protection, you can convert term life insurance and term critical illness insurance plans into permanent plans later on.

theRipregistryLooking to buy a property?
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Student Forgiveness Loans!

September 10, 2019 theRipregistry , , , No comments

I FOUND THIS SITE AND THOUGHT IT MIGHT BE OF INTEREST TO MANY OF US… FIND OUT HOW TO GET STUDENT LOAN FORGIVENESS. A MUST READ!

YOUR GUIDE TO CANADA STUDENT LOAN FORGIVENESS
See below for credits

Student loan debt is a big problem in Canada, and it’s not going away any time soon. The average new graduate is carrying $28,000 in student loan debt. Pair that with high housing costs and low wages, and it’s no surprise that most millennials are putting off major life milestones because they simply can’t afford it.

There is a small glimmer of hope for those struggling with provincial and federal student loans, and it comes in the form of student loan forgiveness. I took advantage of New Brunswick student loan forgiveness when I wiped out $16,000 of my $42,000 in student loan debt. Without that loan forgiveness program and others like it, there’s no way I could have paid off $38,000 in two years.

If you’re one of the many young Canadians dealing with high student loan debt, I’ve put together a list of possible resources for you to tap to reduce your debt burden. Before you jump to your province and start going click happy, there are a few things you should know:

First, most of these programs are only for publicly funded student loans. If you have loans through a private lender, skip to the bottom of this blog post for additional resources.

Second, every province has a repayment assistance program (RAP). A RAP is there if you can’t make your minimum student loan payments. It’s not student loan forgiveness, it’s just there to help you if you are having trouble earning enough money to make your minimum payments. I’ve listed a few of them below.

Finally, some of these programs are applied to your loan automatically and some aren’t. Read the fine print on every website and mark the due dates on your calendar so you don’t miss out on your chance to reduce your student loans just because you didn’t get your application in quickly enough.

Enjoy!

FEDERAL CANADA STUDENT LOAN FORGIVENESS

Canada Repayment Assistance Plan (RAP)

The Canada RAP program is useful for university graduates who are having trouble paying their student loans back. The program makes it easier to manage your student loans by reducing the amount you have to pay each month or eliminating all together.

Canada Student Loan Forgiveness for Doctors and Nurses

If you’re a doctor or a nurse you can qualify for loan forgiveness for your Canada student loans by working in a remote or rural area. If you are a doctor, you could qualify for up to $40,000 in loan forgiveness over five years ($8,000 per year). If you’re a nurse you could qualify for up to $20,000 in Canada student loan forgiveness over five years ($4,000 per year).

BRITISH COLUMBIA STUDENT LOAN FORGIVENESS

B.C. Completion Grant

Full-time students who successfully complete a year of studies may have the B.C. portion of their B.C.-Canada student loan debt reduced. There is not need to apply for this grant, you are automatically considered if you have a B.C.-Canada student loan.

B.C. Completion Grant for Graduates

A $500 grant for graduates from an undergraduate program. You must have a B.C. student loan and you must apply within one year of graduation.

B.C. Loan Forgiveness Program

Recent graduates in select in-demand occupations can have their B.C. student loans forgiven by agreeing to work at publicly funded health care facilities in underserved communities in B.C., or working with children in occupations where there is an identified shortage in B.C.

Pacific Leaders Loan Forgiveness Program

This program forgives outstanding B.C. student loan debt at a rate of one third per year. If you continue to work for the B.C. Public Service for three years, your B.C. student loan will be paid off in full.

ALBERTA STUDENT LOAN FORGIVENESS

Alberta Repayment Assistance Program (RAP)

Similar to the Canada RAP program, the Alberta RAP helps graduates who are struggling to make their monthly payments. This program reduces or eliminates your student loan payments. You have to reapply every six months.

SASKATCHEWAN STUDENT LOAN FORGIVENESS

Saskatchewan Repayment Assistance Program (RAP)

Saskatchewan also has a repayment assistance program if you are having trouble making your monthly payments. This program limits your monthly payments to no more than 20% of your gross income.

Graduate Retention Program

The Graduate Retention Program provides Saskatchewan income tax credits of up to $20,000 for tuition fees paid by graduates who live in Saskatchewan. To be eligible you need to live and file your income tax return in Saskatchewan. The tax credits are non-refundable.

Loan Forgiveness for Nurses and Nurse Practitioners

This program encourages nurses and nurse practitioners to work in rural and remote communities. You can use this program to receive $4,000 per year up to a maximum of $20,000. You must have a Saskatchewan student loan to qualify.

MANITOBA STUDENT LOAN FORGIVENESS

Repayment Assistance Program (RAP)

Surprise! Manitoba also has a repayment assistance program.

ONTARIO STUDENT LOAN FORGIVENESS

OSAP Grants & Bursaries

There are 12 grants and bursaries available to students with Ontario student loans. Most of them only apply to you if you are currently a student. You must have Ontario student loans to qualify.

QUEBEC STUDENT LOAN FORGIVENESS

Deferred Payment Plan

A version of RAP, the deferred payment plan allows you to pay back your student loans in accordance with your income. The deferred payment plan can be applied to a variety of financial institutions, not just provincial student loans.

NOVA SCOTIA STUDENT LOAN FORGIVENESS

0% Interest on Nova Scotia Student Loans

If you live in Nova Scotia, filed your income tax in Nova Scotia and have Nova Scotia student loans since 2007, you can apply for 0% interest on the provincial portion of your student loans. Your monthly payment will remain the same but 100% of your payment will go to your loan principal.

Nova Scotia Student Loan Forgiveness Program

This program is for Nova Scotia student loans (not federal student loans) issued after August 2015. You must be a Nova Scotia resident obtaining a four-year degree at a Nova Scotia university to qualify. You are automatically assessed for this forgiveness program, which can forgive up to 100% of your Nova Scotia student loan.

Debt Cap Program

The debt cap program applies to students who received Nova Scotia student loans between August 1st, 2011 and July 31st, 2015. Anyone who obtained a four-year undergraduate degree qualifies. You are automatically assessed for this program when you graduate. You could have up to 100% of your Nova Scotia student loans forgiven.

Debt Reduction Program

Anyone who received student loans between August 1, 2003 and July 31, 2008 can apply for Nova Scotia’s debt reduction program. You must have successfully graduated from your degree program to apply.

NEW BRUNSWICK STUDENT LOAN FORGIVENESS

Timely Completion Benefit

The timely completion benefit is available for students with New Brunswick student loans who graduated from a four-year undergraduate program after August 1, 2009. You must have a total federal and provincial student loan amount totaling more than $32,000 and you must apply within seven months of graduation.

PRINCE EDWARD ISLAND STUDENT LOAN FORGIVENESS

PEI Debt Reduction Grant

Receive up to $2,000 per year of study, as long as you take out at least $6,000 per year in student loans. You must have PEI and Canada student loans to qualify and you must apply within 60 days of your last day of class.

NEWFOUNDLAND STUDENT LOAN FORGIVENESS

Newfoundland and Labrador Debt Reduction Grant

With the elimination of the Newfoundland Student Loan, all financial assistance from the province is in the form of a non-repayable NL Student Grant effective August 1, 2015. If you receive provincial funding after August 1, 2015 you will be automatically assessed for this grant.

This may not be an exhaustive list. If you know of other programs that aren’t listed here, or if any of these programs have expired, I encourage you to email me and let me know so I can keep this list up to date.

If you’ve already applied for all of the grants you qualify for and you still have student loan debt left (as I did), the next step is to pay it off. I encourage you to use my debt repayment spreadsheet to find out how quickly you can pay off your debt.

Most of the programs listed above are only available for federal and provincial student loans. If you have your student loans with a private lender, you won’t be able to use the programs above. If that is the case, consider looking into student loan refinancing as a possible way lower your interest rate and pay off your debt quicker.

posted March 9, 2016 from https://myalternatelife.com/canada-student-loan-forgiveness/

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