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Why are my support payments taxable?

By Randall Orser | Personal Income Tax

There are two kinds of support payments: child and spousal. Child support payments are those payments that you and your spouse have agreed on, or are court ordered, to help cover the cost of raising the children by the one spouse. Spousal support payments are those payments that you and your spouse agreed on, or are court ordered, that cover that spouse’s own maintenance (living expenses). Generally, the agreement or order must stipulate whether the payment is a child or spousal support payment.

Your payment is considered a support payment if the following five conditions are met.

  • The payment must be made under the terms of a court order or written agreement.
  • If the recipient is the payer's current or former spouse or common-law partner, the payer must be living separate and apart from the recipient at the time the payment was made because of a breakdown in the relationship. Otherwise, the payer must be the legal parent of a child of the recipient.
  • The payment is made for the maintenance of the recipient, child of the recipient, or both, and the recipient has discretion as to the use of the amount.
  • The allowance must be payable on a periodic basis. The timing of the payments must be set out in the court order or written agreement.
  • The payments must be made directly to the recipient.

For tax purposes, child support payments are not taxable income to the recipient. However, they must be laid out in the court order or agreement as child support payments. If your order or agreement predates May 1 1997, then the recipient would have to include the payments as income, and the payer gets a deduction.

Spousal support payments are taxable income to the recipient, and a deduction for the payer. As with anything tax wise, there are exceptions. Child support has priority. If your court order or written agreement specifies child support payments and support payments for the recipient, priority is given to the child support.

This means that all payments made are first considered to have been made toward child support. Any amount paid over and above the child support amount is considered to be support payments for the recipient. All child support payable to a recipient must be fully paid before any amounts paid as support for the recipient can be claimed as a deduction. Any arrears in the amount of child support is carried forward and added to the next year's support payable. The priority of child support does not apply when the child support and spouse or common-law partner support are payable under different court orders or written agreements and the recipients are different people.

Payments made after the death of the recipient are not deductible by the payer. Whether the payments are made to the estate or the children, these payments would not meet the conditions of a support payment. Payments made by the estate of a payer to the recipient are neither deductible nor taxable. The amounts do not meet the conditions of a support payment because an estate cannot have a spouse or common-law partner.

If you have to claim support payments you received, then it’s because they are for spousal support. Check your agreement or court order to ensure you are doing this correctly, and keep track of your child support payments as you may not have to claim the support payments if the child support is not paid in full.

A Formula for Disaster

By Randall Orser | Small Business

A majority of family-owned businesses have no succession plan to deal with retirement, disability or death. The cost of such negligence is often steep.

Except for the most bitter divorces or hotly contested lawsuits, nothing else comes close to the intense emotions and complex challenges of engineering a succession plan for a family business. That’s precisely why so few owners actually engage in the process. Only 30 per cent have a succession plan in place, according to a 2007 study by wealth management firm Laird Norton Tyee.

Even for those who do, tiptoeing through the minefield of succession planning leads to disaster more often than triumph. Just 30 per cent of family enterprises survive a second generation of stewardship, according to the Family Firm Institute (FFI). A scant 12 per cent make it through a third generation.

 “The biggest issue with succession planning is recognition of the need and a sense of urgency around doing it,” says Beth Wood, assistant vice president at Springfield, MA-based MassMutual Financial Group and supervisor of another 2007 study, co-sponsored by FFI. “Our data, based on responses from 1,035 family businesses with at least $1 million a year in revenues, suggest that almost 75 per cent of business owners are within 10 years of retirement, but have not selected a successor or put a succession plan in place,” says Wood, who runs the succession planning practice at MassMutual. “In addition, 30 per cent of the owners have no estate plan in place beyond a will. That is a concern because in our last survey, in 2002, only 19 per cent had no estate plan beyond a will. So the problem is getting worse.”

For any successful privately owned enterprise, estate taxes represent the single biggest threat to long-term well-being if not handled properly, says M. Katharine Davidson, a partner at law firm Dreier Stein Kahan Woods George, LLC in Santa Monica, CA. In Canada, probate taxes can be quite high depending on the value of the estate. As a result, one of the most important goals of a succession plan is to dramatically reduce estate tax exposure.

Expensive misconceptions

Many business owners mistakenly believe they have effectively addressed succession because they do, in fact, have an estate plan. “There is a huge misconception about what a succession plan is, which is why so many people do not have one,” says Ricci Victorio, vice president and a partner-director at 35-year-old succession planning firm The Rawls Group in Fairfield, CA.

“Most business owners do not really understand what a succession plan entails. Many owners think, ‘I have a buy/sell agreement, I’ve got a will, I’ve got a trust.’ Those are standard estate-planning tools. However, what they have overlooked is whether they have trained a successor and whether they have one in place. And they have not asked themselves whether they have managers and the bench strength to carry that successor into the next generation, or whether they’ve provided a way for their successor to inherit, buy or earn the stock so they have a smooth transition of ownership.”

There are also emotional and psychological reasons why so many business owners fail to tackle the issue. “People don’t like to deal with their own mortality, so they don’t like to do succession planning,” Davidson says. “They often also don’t want to deal with some of the hard questions about how to treat family members. There are always relationship issues at hand and they don’t want to disrupt family harmony. And people are so busy running their business, because that is what has made them successful, that they don’t take the time to look to the next step.”

The consequences of such neglect can be very expensive, says David Mahmood, founder and chairman of Dallas-based investment banking firm Allegiance Capital Corporation. “Lack of a succession plan can literally destroy your business,” he says. “So, no matter your age or how good your health is, you need to have a plan in place. Nobody gets out of bed in the morning and expects not to make it through the day because they will get killed in a highway accident or drop dead of a heart attack.”

David Auchterlonie, chairman and CEO of corporate turnaround management firm The Scotland Group in Newport Beach, CA, has witnessed the carnage poor succession planning can inflict. Of 200 cases he has handled over the past 22 years, about one-third have involved family-owned businesses. Of those, succession issues have invariably been at the core of the problems the businesses faced.

“The most common issue is the inexperience or the lack of capability of the designated – or designated by default – successor,” says Auchterlonie. For example, he cites a $100 million distributorship whose owner died suddenly. His eldest son, who held an MBA degree of dubious practical value, took over the company and proceeded to offer deep discounts to its best customers. That, in turn, eroded the company’s financial performance and led to a desperation sale at a fire-sale price.

Victorio agrees with Auchterlonie that a less-than-competent successor, often enabled by a sense of entitlement and the failure of rank-and-file management to expose to the owner his or her lack of qualification for the heir apparent role, is a common problem. Facing it is also among the most emotionally wrenching aspects of succession, she adds.

Yet another emotional issue, one that is often ignored, the experts say, is that the son or daughter or other family member designated as successor actually does not want the job, but a lack of communication or pressure from a parent facilitates an unfortunate circumstance that quickly becomes a catalyst for failure.

As a result, Victorio says, a growing trend is a “succession bridge,” meaning that the plan skips a generation but keeps the business in the family. Typically, an outside CEO is recruited to run the business while a grandchild completes business school and then works in a training or mentoring program under the tutelage of the interim executive until he or she is ready to assume command.

But if in doubt about the existence of a competent successor who has the requisite ambition and drive to shoulder the long-term burden of a business, the best course is usually to sell the company at the peak of its value, the experts say.

Meeting the challenge

More than anything else, perception and attitude determine the success of a succession plan. “The important thing to understand is that succession planning is a process,” says Victorio. “It is not a project. It does not have an end date.”

Key components of a solid plan include a realistic understanding of where the business is today – its strengths and weaknesses – and where the owner wants it to go, as well as a careful assessment of who is the best successor. Often, that means looking outside the family or current management team.

But the grand tradition is for a capable successor to carry on for the family and build the value of the company. Sumita Batra, CEO of Ziba Beauty, a chain of specialty salons in southern California, has endured a succession process for the past four years. Since she took over four years ago, a partnership that includes her mother – the founder of the business – husband, sister and brother has successfully doubled the size of the company, from six stores to 12.

The most important lesson Batra has learned, in going through a transition she acknowledges has been difficult at times, is that a family bond and shared trust are more important than anything else. “Blind trust must exist between the family members to come out of a process like this without damaging your family relationships,” she says. “And you have to put the emotion aside. What I learned is that you can go through a very, very tough experience and instead of getting distant, you can actually become even closer. And the business can grow and become even more successful.”

Where Does Our Tax Revenue Go?

By Randall Orser | Personal Income Tax

People just hate paying taxes. I think a lot of that has to do with we really don’t know where it goes. It all goes into that sinkhole we know as General Revenue. From there what happens to it is a mystery. Of course, there are many things the government spends money that really tick off people, and that has much to do with this hatred for taxes. So where does this money we grudgingly pay to the government go exactly?

The following figures are from the Department of Finance for the fiscal period 2013 to 2014, and we accept no responsibility for their accuracy, nor for how much they may tick you off. We did search for more current figures, however, the government doesn’t seem to put this information out as much as it used to in the past.

For the fiscal year ending March 31, 2014, Canada’s federal government spent $276.8 billion. That represents roughly 15 per cent of our country’s $1.9-trillion economy.

Transfer payments

Payments that go directly to persons, to provincial and territorial governments, and to other organizations are called “transfers.” Transfers are the largest category of government spending. They made up about 61 cents of each tax dollar spent ($169.4 billion).

Transfers to persons

Major transfers to persons cost 26 cents of each tax dollar spent ($72.2 billion). The biggest category within transfers to persons was elderly benefits. These transfers include:

Old Age Security

Guaranteed Income Supplement

Allowance for Spouses

Total elderly benefits cost about $41.8 billion, or roughly 15 cents of each tax dollar spent.

Another major transfer to persons is Employment Insurance (EI) benefits. Altogether, EI benefits cost over 6 cents of every tax dollar spent ($17.3 billion). The final category of transfers to persons is children’s benefits. The federal government provided $13.1 billion to help families raise their children through the Canada Child Tax Benefit and the Universal Child Care Benefit. These payments cost almost 5 cents of every tax dollar spent.

Federal support for health care

Federal support for health care goes beyond cash payments under the Canada Health Transfer and the Equalization and Territorial Formula Financing programs. The federal government also provided over $6 billion last year for:

First Nations health services

Health care for veterans

Programs for public health

  • Health research

Other transfer payments

Last year, spending on federal grants, contributions and subsidies added up to $36.7 billion, just over 13 cents of each tax dollar spent. This included:

$6.3 billion in assistance provided by Employment and Social Development Canada in support of learning, skills and employment, and social housing

$6.2 billion in transfers by Indian Affairs and Northern Development for First Nations and Aboriginal peoples

$3.4 billion in transfers by the Canada Revenue Agency, which includes transfers made to individuals and corporations through the tax system

Other funding was provided in support of farmers and other food producers, research and development, infrastructure, regional development, health research and promotion, the arts, amateur sports, international assistance, and multiculturalism and bilingualism.

Other program expenses

After transfers, the bulk of federal tax dollars went to cover the operating costs of the more than 130 government departments, agencies, Crown corporations and other federal bodies that provide programs and services for Canadians.

Government operating expenses such as salaries and benefits, facilities and equipment, and supplies and travel made up 29 cents of each tax dollar spent ($79.2 billion). Close to half of this spending—14 cents of each tax dollar—went to just three organizations.

National Defence

First, spending last year by National Defence, including the Canadian Armed Forces, made up 8 cents of each tax dollar spent ($21.5 billion)

Public Safety

Next, operating costs of Public Safety and Emergency Preparedness represented over 3 cents of each tax dollar spent ($9.8 billion). This includes funding for the Royal Canadian Mounted Police, the federal prison system, and border traffic and security operations.

Canada Revenue Agency

And third, expenses of the Canada Revenue Agency, which administers the federal tax system (and also collects taxes for all provinces except Quebec) totalled $7.8 billion, or 3 cents of each tax dollar spent.

Other operations

A further $32.6 billion—12 cents of each tax dollar—was spent on the operations of the other federal departments and agencies. These included major departments such as:

Employment and Social Development Canada

Environment Canada

Fisheries and Oceans Canada

Health Canada

Industry Canada

Department of Justice

Natural Resources Canada

Public Works and Government Services Canada

Transport Canada

Veterans Affairs Canada

Funding also went to federal agencies such as the Canadian Food Inspection Agency and Parks Canada.

Paying for Parliament

One of the smallest spending slices goes to Parliament itself—the House of Commons, the Senate and the Library of Parliament. Last year, the combination of salaries and benefits for Members of Parliament, Senators and parliamentary staff, and spending on facilities and services, totalled about $534 million. That’s less than one-quarter of a cent of every tax dollar spent.

Crown corporations

Crown corporations (organizations owned directly or indirectly by the Government) cost $7.5 billion, or 3 cents of each tax dollar spent. Most of these expenses were recorded by three organizations:

Canadian Commercial Corporation—$1.7 billion

Canadian Broadcasting Corporation—$1.7 billion

Atomic Energy of Canada Limited—$1.3 billion.

Funding was also provided to cultural organizations (including the National Gallery of Canada, the Canadian Museum of History and the Canada Council for the Arts), to enterprises like VIA Rail, and to the Canadian Tourism Commission.

These costs were partially offset by revenues earned by the Crown corporations, which totaled $3.5 billion in 2013–14. These revenues are included as part of the Government’s other revenues discussed in the section entitled “Where the money comes from.”

Public debt charges

Interest charges on Canada’s public debt—money borrowed by the federal government over the years and not yet repaid and liabilities for pensions and other future benefits—cost $28.2 billion. That’s 10 cents of every tax dollar spent. Currently, 74 per cent of the Government’s un-matured debt is owed to Canadians, including citizens and domestic institutions holding federal bonds, treasury bills and other forms of the debt.

Here’s a summary of where all your tax dollars go:

Canada Health Transfer (11 cents)

Canada Revenue Agency (3 cents)

Canada Social Transfer (5 cents)

Children’s benefits (5 cents)

Crown corporations (3 cents)

National Defence (8 cents)

Employment Insurance benefits (6 cents)

Other major transfers to other levels of government (6 cents)

Other operations (12 cents)

Other transfer payments (13 cents)

Public debt charges (10 cents)

Public Safety (3 cents)

  • Support to elderly (15 cents)

Unusual Tips for Entrepreneurs

By Randall Orser | Small Business

If there's anything a successful entrepreneur should learn, it's that there's always something they don't know. Even experienced entrepreneurs may find that there are a few tricks that they haven't heard of, things that may improve the way the run things. Smart entrepreneurs look for ways to improve their efficiency daily. If you want to be successful, you'll want to cultivate that same habit.

1. Organize Your Data

As an entrepreneur, you'll need to keep an eye on a lot of details, from the amount of materials and stock you have to how the audience is reacting to your marketing campaign. Being detail-oriented will make sure that you don't miss any opportunities and that you react to any missteps before they get out of hand. That means that any data or information that you have should be organized and readily available.

This will also help you when the time inevitably comes to make sales pitches, either to potential customers or possibly investors. If they need any data, you'll have it ready for presentation. This could easily turn a maybe into a definite yes.

2. Research Answers

The wonderful thing about the Internet is that you have, at your fingertips, a massive amount of information. Due to the ease at which this information is available it is almost criminally neglectful to not use it. If you have any questions, chances are that someone has already asked that question. Even if it does not fit your specific context, you may find the answer still relevant. Look at forums or see if Reddit has a subreddit for your question.

3. Write Things Down 

Entrepreneurs need to be detail oriented. The problem is that there's a lot to remember. Clients, employees, investors and more will ask and tell you about a great deal of things. You're probably going to remember most of it, but most will not cut it. You'll need to write things down, either in a notebook or on your phone, to make sure you forget nothing.

The things with you can do with the information you write down and organize are endless. You can use that information to spot trends, nip trouble in the bud before it sprouts, and even make suggestions to other entrepreneurs in terms of hiring or strategy. Knowledge is power, but only if you remember it.

4. Make Sure That Lines of Communication are Open

A big part of efficiency is communication. Everyone has to be one the same page. They need to know when other tasks are completed and they need full understanding of what needs to be done. As an entrepreneur, you can make sure the lines of communication are open simply by talking to people. Ask them what they think and check up on their tasks every once in a while. Keep everyone else updated, possibly through a mailing list or by simply making announcements. You shouldn't be the only one updating people, however. Make sure everyone knows that it's their responsibility to both stay informed and make sure that those around them are informed.

It's important to note that communication doesn't just involve making sure everyone knows how everyone else is going. It also means that employees, partners, and even clients should be aware that their opinions can and will be heard.

5. Be Nice

Politeness is free, so you should be as polite as you can to everyone you meet. Being a successful entrepreneur is all about treating people right. Treat customers right and they'll come back for more. Give your partners and investors the respect they deserve and they'll be more inclined to work harder on the start-up.

While the strength of your product is what is primarily going to determine the success of your start-up, it would be foolish to say that your attitude and relationships with other people has no effect on your future. It's probably possible to make it as a rude entrepreneur, but you'll probably find the journey a lot more difficult than if you took the time to be polite and kind.

While these tips will help, it's important to remember that there's a lot more to being a successful entrepreneur than unusual tips. There's having a good product, having a strong marketing campaign, and grit. The road might get bumpy, but if you apply these tips and stay in the fight, you'll likely find success.

Let’s Get Ready for Taxes!

By Randall Orser | Personal Income Tax

It’s hard to believe that another tax season will soon be upon us. Wouldn’t it be great if you were ready to do your taxes before the deadline of April 30th? I’m sure your tax preparer would be delighted to get everything ready and organized before then. Now is the time to be thinking about your income, deductions, and whether or not you’ll be owing come April 30th.

Income

What is your income this year? Just from T4s then you probably won’t be owing. However, add in other income from things such as interest, investments, rental or small business and you will probably end up owing. The amount and types of income will determine your tax owing. Most ones mentioned before are taxed at 100%; however, capital gains and dividends are taxed differently (capital gains are 50% of the gain and dividends you get a tax credit).

The amount of income you earn will determine which tax bracket you fit, and then how much tax you pay. It’s best to figure out what your income is early enough so you can estimate your tax bill and be ready to pay it by the deadline of April 30th. For small businesses, even though your return is due June 15th, the tax is due April 30th.

You can find a complete list here of all income that should be included on tax return along with the line number on the tax return.

You do not have to report certain amounts in your income, including the following:

  • any GST/HST credit, Canada child benefit, or Canada child tax benefit payments, including those from related provincial and territorial programs;
  • child assistance payments and the supplement for handicapped children paid by the province of Quebec;
  • compensation received from a province or territory if you were a victim of a criminal act or a motor vehicle accident;
  • most lottery winnings (Income earned on any of the above amounts, such as interest you earn when you invest lottery winnings is taxable);
  • most gifts and inheritances;
  • amounts paid by Canada or an ally (if the amount is not taxable in that country) for disability or death due to war service;
  • most amounts received from a life insurance policy following someone's death;
  • most payments of the type commonly referred to as strike pay you received from your union, even if you perform picketing duties as a requirement of membership;
  • Elementary and secondary school scholarships and bursaries;
  • Post-secondary school scholarships, fellowships, and bursaries are not taxable if you received them in 2016 for
    your enrollment in a program that entitles you to claim the full-time education amount in 2015 or 2016, or if you
    will be considered a full-time qualifying student for 2017; and

Deductions

The amount and type of deductions will also determine your balance owing. The more deductions you can come up with, legitimate ones of course, the lower your amount owing will be. The first one most people think about is RRSPs as that’s a straight deduction off your income as is support payments, union dues, company pension contributions, employment expenses, childcare expenses, moving expenses, and more. The more of these kinds of deductions the lower your taxable income. The other kind of deductions are actually tax credits and include, working income tax benefit, medical expenses, donations, political contributions, CPP and EI premiums, disability tax credit, and others.

The more deductions the better off you are tax wise, however, make sure you have all your receipts for anything you’re claiming. Canada Revenue Agency (CRA) is checking a lot of these deductions now, especially if they are large amounts. Keep your receipts by deduction and year, and you should have no issue when it comes to a review of said deduction.

There are also various provincial deductions you can claim. British Columbia has the home renovation tax credit, sales tax credit (PST), training tax credit. Ontario has the children’s activity credit, co-operative education tax credit, healthy homes renovation tax credit, to name just a few. Check with the CRA website here for a complete list of provincial credits.

What your tax bill will be come April 30th, can be somewhat estimated earlier based on your income and deductions, and isn’t it better to be prepared for that than find out on the 29th what you actually owe.

Understanding Perceived Value for Retail Small Business Success

By Randall Orser | Small Business

Consider two scenarios. In the first a customer strolls into your shop. After having looked around she walks up to the most appealing product in the store, has a quick look over it and then picks up the price tag. She drops it like it was on fire and moves along. In the second scenario things are different. Instead of dropping the tag she holds on to it for a moment continuing to look over the product. A few minutes later you or your sales staff are working with a new customer discussing the products features and benefits and are on your way to a possible sale.

As store owners we all wish for the second scenario, but can we really do anything to control this response? After all we have costs for our goods and our supplier won’t negotiate. Add this to operating costs and apply a fair margin and there you have it. But in fact, you almost certainly have some control over how the customer feels about the price of your product.

The answer lies in understanding the relationship between Anticipated Value and Actual Value. Anticipated Value is the value expected by the customer whether consciously or unconsciously. As it implies the Actual Value is just that. The price they see when they look at the tag. Taking steps to keep Anticipated Value lower than Actual Value is the goal of the manager or store owner.

A great deal of it has to do with the context within which you place your product. Let’s say the product is a beautiful, large, cut crystal bowl. You place it in an enclosed showcase built into the wall with a small, brushed steel spotlight shining on it. A tag of superior design stands beside it in a small, steel frame, which matches the finish of the lighting. It explains the origin of the bowl, how it was made and the name of the person who did the cutting. As the customer approaches it they begin to anticipate what price it will be. Given the setting, the security which it is afforded and the effect the lighting has in bringing out its best features the customers Anticipated Value is likely to be greater than the Actual Value.

In the second scenario the bowl has been placed on top of the counter near some other items of lower value, without accent lighting and is, perhaps gathering a little dust. In this scenario the Anticipated Value is almost guaranteed to be less than the Actual Value. Yet it is exactly the same bowl.

You want customers have a perception of your store having “great” prices. What can be done? How are you able to have an effect on your customers’ perception of price?

One way to do this is to set a standard for the quality of your goods. Don’t surround a product with other items of inferior quality or appeal nor, in fact products of a superior quality. This doesn’t mean you have to be Tiffany’s but, rather that you must have a consistency within your product standards. Don’t mix goods of a wide variety of qualities or some of it is bound to come out looking bad. Let each product complement its neighbors.

As you’ve seen in the two scenarios merchandising the product effectively is one of the keys to higher anticipated price. Give the product some room. Keep it clean and present it as an item of value. If necessary, hire a merchandiser to come into your shop on a regular basis. Good merchandisers pay for themselves.

Naturally it’s not just the products relationship to other products but the store environment itself. Are the fixtures professionally built or something homemade or well used? Are they consistent with the level of value you want to convey, neither overdone nor underdone? How about signage? Is it professionally designed, manufactured and installed or is designed by an amateur, part-time graphic artist painted on plywood?

Next don’t forget the most important element. The people. Are you and your staff well groomed, polite and articulate? Above all are they highly knowledgeable about the product you carry?

Another critical factor is location. Too often when shopping for lease space the focus revolves too much around what a new business owner perceives they can afford. Instead they should consider a premium location, which will bring in a quality and quantity of customers that will lead to high sales and business success. Choose a location with an attractive frontage in an area that will lend credibility to your business. The interior should be well finished and the fixtures fresh and clean rather than well used.

An old sales adage says, “Price first. Product second.” This means you don’t offer up the price before you have fully informed the customer of what they will receive for their money. You would never call up a car dealer and say, “I need a car. How much are they?” First you need adequate information to make a value decision. This concept should also be applied to your price signs and tags. When designing price tags make the price secondary. The price should be in a smaller font than the text. The text should be very concise, easy to read and contain the key benefits of the product. If it is difficult to read, they will simple jump ahead to find the price. Each listed benefit will help to push up the anticipated price.

Look at each of these factors when developing a business plan. Examine each detail keeping in mind how it will reflect on your product and how it will affect your customers Anticipated Value. Keep in mind that moment when the guest in your store turns over that tag. How can you push up the Anticipated Value? Adequate time and effort on this key aspect of business will take you a long way towards strong sales and a healthy, profitable enterprise.

Happy New Year!

By Randall Orser | Happy New Year

Wow, it’s hard to believe that 2017 is coming to a close already as it feels we just started it a few weeks ago. I do hope your 2017 has been a good one, and that 2018 is even better.

The Finns do it the weirdest

In Finland, each new year family and friends gather to burn metal in a pan for a ritual called "molybdomancy". The Finns inspect the shadows the metal casts by candlelight, as those shapes are supposed to predict the future. Although, this metal is customarily called “tin,” it’s actually sometimes lead, which, among other things, is known to spark severe mental illness... that might explain why this ritual has persisted for hundreds of years. And while that's all pretty well and weird, the Finns aren't alone: Ecuadorians burn paper-filled scarecrows, the Swiss drop ice cream on the floor, and people in Siberia plunge into frozen lakes while carrying a tree trunk -- all to ring in the new year.

The 8th most common New Year's resolution is to improve a relationship

Only around 40% of us will even make a resolution. While nearly all of those vows err on the side of improvement (e.g. start exercising, improve your finances, quit smoking), the 8th most common resolution is to get along better with someone else, according to a 2012 Harris poll. So what’s the number one New Year’s resolution? Weight loss (duh).

We celebrate on Jan. 1 because Julius Caesar said so

Why does the New Year begin on January 1st? Because our contemporary (Gregorian) calendar is based on the Julian one (named after none other than the Big Ceas) and he made January month numero uno (which is latin for "number one" btw).

But New Year's used to be on March 20th

The first indication of a new year’s celebrations crop up around 2000 BC in the Middle East. Or, as its known in 9th grade history class, “Mesopotamia". At that time (2000 BC, not 9th grade), each year began on March 20th, AKA the vernal (or Spring) equinox. That's the one where the sun crosses directly over the equator. Nowadays, celebrating New Year’s is illegal in much of the same region (e.g. Saudi Arabia). Fertile crescent? More like festive crescent!

January is named after a god with two faces

We have ancient Rome to thank for our year beginning in January. The Roman god the month is named after, Janus, was described as having two faces. That's not a catty put-down either. We mean he literally had double the mug. When depicted in ancient Roman art, one of Janus' faces looks forward, while the other looks back. You know, like how you do on New Year's. Mad metaphorical.

Southerners eat black-eyed peas on New Year's Day for good luck

Thought to have been derived from a Jewish New Year (Rosh Hashanah) custom, Americans in the South annually gobble black-eyed peas. Most Southerners (and many historians) maintain the tradition began to take hold stateside when the first Shepari Jews moved to Georgia in the 1730s. By the end of the Civil War, the Rosh Hashanah tradition had evolved into a widespread practice in the South, enjoyed by both Jews and gentiles.

The ball drop is over 100 years old

Before Times Square was the home of M&Ms, naked cowboys, and hard-haggling middle-aged men in Elmo costumes, it was a classy little bit of town, called One Times Square. Its first New Year’s ball dropping took place December 31, 1907. Since then, it’s tumbled down every year (save for a couple during World War II). Over a million-people flock to watch every December.

The New Year's kiss has been around since the Middle Ages

Historians reckon that the New Year’s kiss is derived from either German and English folklore (it was a tradition in both). Both customs contended this: the first person you encounter in a new year will set that year’s tone. So, if the person you encounter likes you enough to make out with you, things are looking pretty good. Or maybe you're just looking pretty good.

The only other people who still sing "Auld Lang Syne" are Boy Scouts

The lyrics of Auld Lang Syne (which we can't abbreviate because ice buckets) are from a 1788 poem by an old Scot called Robert Burns. Well, Burns attributed the lyrics to unwritten remarks by an unnamed old man. But a few graphs of it very closely (near verbatim) resemble a poem called "Old Long Syne" written in 1711 by a man called James Watson. It's assumed Burns at least wrote the rest of it. Things like: Is thy sweet Heart now grown so cold, that loving Breast on thine. Catchy. Apparently, the Boy Scouts of America sing it at the end of their jamborees. Now you want a "Things you didn't know about Boy Scouts", right!?

Nearly a quarter of you are gonna PTFO

About 22% of Americans cop to passing out before the clock strikes 12. Unless you’re Cinderella and you gotta buck before your whip turns pumpkin, then there's no excuse. Being conscious to recognize midnight is the whole reason there was even a party, man. That and eating all the pigs in a blanket.

Will I Have to File a Tax Return for This Year?

By Randall Orser | Personal Income Tax

2017 is pretty much done, and it’s time to start thinking about taxes (it comes sooner than you think). You’re wondering if you need to file a tax return, and more than likely you do. Here’s eighteen reasons to file a 2017 tax return come April 2018.

Do you have to file a return?

You must file a return for 2016 if:

  • You have to pay tax for 2016.
  • Canada Revenue Agency (CRA) sent you a request to file a return.
  • You received working income tax benefit advance payments in 2016.
  • You disposed of capital property in 2016 (for example, if you sold real estate, your principal residence, or shares) or you realized a taxable capital gain (for example, if a mutual fund or trust attributed income to you, or you are reporting a capital gains reserve you claimed on your 2015 return).
  • You have to repay any of your old age security or employment insurance benefits. See line 235.
  • You have to contribute to the Canada Pension Plan (CPP). This can apply if for 2016 the total of your net self-employment income and pensionable employment income is more than $3,500. See line 222.
  • You are paying employment insurance premiums on self-employment and other eligible earnings. See lines 317 and 430.

Even if none of these requirements apply, you should file a return if:

  • You want to claim a refund.
  • You want to claim the working income tax benefit for 2016.
  • You or your spouse or common-law partner want to begin or continue receiving Canada child benefit payments, including related provincial or territorial benefit payments.
  • You have incurred a non-capital loss (see line 236) in 2016 that you want to be able to apply in other years.
  • You want to carry forward or transfer the unused part of your tuition, education, and textbook amounts. See line 323.
  • You want to report income for which you could contribute to an RRSP and/or a pooled registered pension plan (PRPP) to keep your RRSP/PRPP deduction limit for future years current.
  • You want to carry forward the unused investment tax credit on expenditures you incurred during the current year See line 412.
  • You receive the guaranteed income supplement or allowance benefits under the old age security program. You can usually renew your benefit by filing your return by April 30. If you choose not to file a return, you will have to complete a renewal form. This form is available from Service Canada.

Really, there’s every good reason to file a tax return for 2017 even if you’re not working.

Merry Christmas!

By Randall Orser | Small Business

We’d like to take this time and wish you and yours a very Merry Christmas and a Happy New Year! I hope 2017 has been good to you and here’s to a prosperous 2018.

Here’s some interest facts about Christmas.

It wasn't always on December 25

Though Christmas celebrates the birth of Jesus Christ, there is no mention of December 25 in the Bible. (Most historians believe he was actually born in the spring.) It wasn't chosen as the official holiday until the 3rd Century. Some argue that the date was picked because it coincided with the pagan festival of Saturnalia, celebrating agricultural god Saturn with partying and gift-giving.

Thank Prince Albert for your tree

Another Christmas tradition stemming from Saturnalia was the Christmas tree: During the winter solstice, branches served as a reminder of spring — and became the root of our Christmas tree. The Germans are credited with first bringing evergreens into their homes and decorating them, a tradition which made its way to the United States in the 1830s. But it wasn't until Germany's Prince Albert introduced the tree to his new wife, England's Queen Victoria, that the tradition took off. The couple were sketched in front of a Christmas tree in 1848 — and royal fever did its work.

Coca-Cola came up with the red suit

Well, Santa wore a variety of colorful suits through the years — including red, blue, white, and green — but legend has it that the popular image of his red coat came from a 1930s ad by Coca Cola.

St. Nick was more generous than jolly

Sure, you probably knew that Santa Claus came from St. Nicholas, a Christian bishop living in the fourth century AD. St. Nicholas gave away his abundant inheritance to help the needy. He also was known for good deeds like rescuing sisters from prostitution. As his legend spread, he was eventually known by names like as Sinter Klaas in Dutch — which morphed into Santa Claus. He's not just the protector of children, either: St. Nicholas is also the patron saint of unmarried women, prisoners, thieves and pawnbrokers. How's that for a naughty list?

Stockings have a funny root

Gift-giving also came from Holland. There, St. Nicholas' feast day is celebrated December 6 by children leaving out shoes overnight and finding little gifts from St. Nicolas in the morning. According to legend, hanging stockings came from the take of a poor man who couldn't afford his three daughters dowries: St. Nick dropped a bag of gold down their chimney one night so that the eldest could wed — but it fell into a stocking that was drying by the fire!

Rudolph was almost named Reginald

A copywriter named Robert L. May first invented the oddball reindeer in 1939 as a marketing gimmick for Montgomery Ward's holiday coloring books. (May considered naming the beloved misfit Reginald and Rollo.) And his nose wasn't originally going to be red: A red nose was viewed as a sign of sign of chronic alcoholism, and Montgomery Ward didn't want him to seem like a drunkard. Good thing they changed it. "Reginald, the blue-nosed reindeer" doesn't have quite the same ring … or charm.

Jingle Bells was originally a Thanksgiving song

James Lord Pierpont, an organist from Savannah, Georgia, first performed a song he wrote, "The One Horse Open Sleigh," at his church's Thanksgiving concert. The song was re-published in 1857 and given the title of today. Bonus fact: It's also the first song broadcast from space. On December 16, 1965, the Gemini 6 crew serenaded Mission Control after they reported seeing a "red-suited" astronaut.

Christmas sends at least 15,000 people to the ER

From hanging lights on ladders to taking roast out of the oven, making merry can prove hazardous. In fact, the Consumer Product Safety Commission estimates that an average of 15,000 Americans visit hospital emergency rooms each November and December from holiday-related decorating accidents. To top it off, dried Christmas trees spark hundreds of fires, an average of 17 deaths, and $13 million in property damage annually.

Merrymaking used to be illegal

Though the first American batch of eggnog was created by the Jamestown settlers, by the time the Puritans settled Boston, Christmas was illegal. (The word nog comes from the word grog; that is, any drink made with rum.) From 1659 to 1681, celebrating the once-pagan day could cost you a fine of as much as five shillings. And after the Revolutionary War, the new Congress found the day so unimportant that they held the first session on Christmas Day, 1789. It wasn't proclaimed a federal holiday for nearly another century.

Washington Irving created Santa's sweet ride

He's best known for The Legend of Sleepy Hollow's headless horseman, but the author also came up with the idea of Santa's flying sleigh. In The Sketch Book of Geoffrey Crayon, an 1819 series of short stories, Irving recounted a dream where St. Nicholas flew across the sky in a wagon. According to legend, his stories were so popular that they sparked a Christmas fervor in the United States and even England, so much so that Charles Dickens reportedly was inspired by Irving when making his own holiday classic, A Christmas Carol.

The Grinch stole the box office

It's hard to decide which holiday classic to watch first — or which one will be most popular with the whole family. But when it comes to the box office, the highest-grossing Christmas movie of all time is How the Grinch Stole Christmas starring Jim Carrey.

Santa has his own zip code

Every year, letters to Santa Claus flood post offices across the world. Some Canadian Post Office workers even started answering them — but as more letters arrived, they set up a special zip code for Santa as part of a "Santa Letter-Writing Program" literacy initiative. The postal code? H0H 0H0.

Favorite carols have complicated histories

The original lyrics to "Hark! The Herald Angel Sings" were "Hark! How the Welkin rings!" Pretty catchy, right? (Welkin was an old English term for heaven.) And though "Silent Night" was rumored to be a Christmas miracle by Father Joseph Mohr of Oberndorf, Austria, whose organ was broken, the truth was less dramatic: A Catholic priest wrote the poem "Stille Nacht! Heilige Nacht!" in Mariapfarr, Austria. Two years later, he transferred to Mohr's St. Nicholas Church and asked Franz Gruber to put it to music, which they performed on Christmas Eve 1818.

And the holiday classic "Santa Claus Is Coming to Town" has a less jovial history. Songwriter James "Haven" Gillespie was asked to write a Christmas song. At the time, he was broke, jobless, and mourning his brother's recent death. Despite being overcome with grief, he found inspiration in the holiday memories he and his brother had shared.

Xmas doesn't remove Christ from Christmas

It's quite the opposite, in fact. According to From Adam's Apple to Xmas: An Essential Vocabulary Guide for the Politically Correct, the word "Christianity" was spelled "Xianity" as far back as 1100. X, or Chi, in Greek is the first letter of "Christ" and served as a symbolic stand-in. In 1551, the holiday was "Xtemmas" but eventually shortened to "Xmas."

Americans ship an unbelievable amount of gifts

Last year, on December 22, the U.S. Postal Service delivered a staggering 28.2 million packages — breaking its own record for most parcels ever delivered in a single day in its 237-year history. That's just ONE day of the entire holiday season, too!

Mistletoe was believed to be an aphrodisiac

Stealing kisses used to be just the beginning. The holiday flora is an ancient symbol of fertility and virility — and the Druids believed it was an actual aphrodisiac. (So thank them at the next awkward holiday function.) And the name even has a funny meaning: The mistle thrush bird eats the berries, digests seeds, and the droppings eventually grow into new plants. So, the Germanic word for mistletoe literally means "dung on a twig."

Ham, not turkey, is the festive favorite

The dinner debate rages on. Searches for "ham" and "turkey" both spike during the month of December, according to Google Trends data. (Though it's nowhere near how frequently "turkey" is hunted for online in November!) But despite the popularity of both festive entrees, spiral-cut ham remains the more popular choice for a Christmas table. In 2013, Americans bought 318 million pounds of ham during November and December, or 50% of their annual total consumption.

And the most popular Christmas song is...

The Irish Rovers "Grandma got run over by a reindeer,” naturally. (Fun trivia, is the biggest selling novelty Christmas single of all time in the U.S.) But the best-selling tune of all time is Irving Berlin's standard, "White Christmas."

What Does the Tax Rate Really Mean?

By Randall Orser | Personal Income Tax

Many people get confused over what tax rate they’re actually paying. We hear about tax brackets and the rates within, but what rate are you actually paying? The Canadian tax system is based on marginal rates in tax brackets, and you’re taxed based on the income and the rate in that bracket.


What is a 'Marginal Tax Rate'

A marginal tax rate is the amount of tax paid on an additional dollar of income. The marginal tax rate for an individual will increase as income rises. This method of taxation aims to fairly tax individuals based upon their earnings, with low-income earners being taxed at a lower rate than higher income earners. You’re taxed on each additional dollar of income

Your marginal tax rate has important implications for financial planning. You need to know your marginal tax rate to calculate what amount of your raise or bonus you’ll get to keep after taxes or whether it is worthwhile to contribute more to your RRSPs.

What is an ‘Average Tax Rate’

The average tax rate is pretty simple as it’s the total tax paid divided by your total income. The average tax rate reflects the total tax you are paying to the government.

The current federal rates are below (provincial rates are different for each province, so we won’t go into those right now).

Federal tax rates for 2017

  • 15% on the first $45,916 of taxable income, +
  • 20.5% on the next $45,915 of taxable income (on the portion of taxable income over $45,916 up to $91,831), +
  • 26% on the next $50,522 of taxable income (on the portion of taxable income over $91,831 up to $142,353), +
  • 29% on the next $60,447 of taxable income (on the portion of taxable income over $142,353 up to $202,800), +
  • 33% of taxable income over $202,800.

For example, James has an income of $75,500 for the 2017 tax year. His total federal tax would be $12,952.12. He’s taxed on the first $45,916 at 15% = $6,887.40 and the next $29,584 at $20.5% = 6,064.72. His average rate would be $17.15% which is the federal tax divided by total income ($12,952.12 ÷ $75,500.00).

Your total income is not taxed at the marginal rate but each dollar is taxed at the rate that your income fits as in the above example.

Of course, the above doesn’t reflect the actual tax paid, this is just an example, as your total tax bill will be depending on many factors such as RRSP contributions, donations, medical and more.

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