Category Archives for "Personal Finances"

Recent and Outlandish Covid-19 Scams

By Randall Orser | Covid-19 , Personal Finances , Scams

During the pandemic fraudsters are endlessly devising new scams to trick us into parting with our money.  Jeff Thomson from the Canadian Anti-Fraud Centre says that " Fraudsters are always targeting Canada with new and old scams.  In 2019 the CAFC received more than 20,000 fraud reports involving more than $43 million in losses.  

Some of the most outlandish scams that have hit the news include: 

  • Homeland Security Agents intercepting a number of fake Covid-19 tests inside a parcel.  Toronto police tracked down the the sender and charged him with fraud and possession of a forgery device.  
  • A Toronto resident received a text message inviting her to click on a link to claim $1375.50 in emergency relief funds and her personal information was stolen.  
  • A California actor who promised a $300,000,00 return on investment to anyone who invested $1 million to back his fraudulent coronavirus cures.
  • An American company offering a coronavirus protocol kit containing tea and cannabinoid tinctures.  The FDA stopped this company from selling a product that claimed to prevent, treat or cure the virus.

Here are some of the latest scams to watch out for:

  1. Social Insurance Number scam - Getting a call from someone pretending to be from Service Canada who says that your SIN has been compromised.  This is the latest variation on the caller id scam when fraudsters disguise the ID display on a phone to trick victims into answering the phone.  Do not provide any personal information to this person as you could be at risk of identity fraud.  If you get such a call hang up then call the number on your account statement or government website to verify.  
  2. Email money transfer fraud - Often seen as a safe and secure way to transfer funds there were 371 million e transfers in 2019 worth more than $132 billion according to figures from Interac Corp.  However the method is not foolproof, the anti-fraud centre received 163 reports in 2018 of bank accounts being compromised and money e transferred out.  
    • To protect yourself from this make sure your password is strong and do not share it with anyone.  
    • Use one password per website and continually change them, choose security questions that are not easy to guess.
    • Use filters to protect from viruses and spyware.
    • Look for strange passwords such as $ being used after the amount.  
    • If you accidentally fill out personal information in a link from a phishing scam change your online banking password and inform your bank immediately.
  3. Bank Investigator Scam - There are many variations of this scam but generally victims receive a call from someone posing as a store employee inquiring about a recent purchase on a credit card and are asked to call the number on the back of their card to verify the the validity of the call.  When victims believe that they have hung up, the original caller who has not disconnected redirects the victims to imposters. To protect yourself from these type of scams.
    • As most of these calls occur early in the morning often when a victim is still sleeping so it is important that you always stay alert when dealing with your finances.
    • Do not assume that phone numbers on your call display are accurate, it easy for scammers to use call spoofing technology.
    • Financial institutions will never ask you to transfer funds to an external account for security.
    • Never give remote access to your computer systems to unknown callers.
  4. Scams targeting lawyers and trust funds - In these scams fraudsters pretend to be a client or someone authorized to give instructions on a client's behalf.  In one case a company was tricked into transferring almost half a million dollars held in trust to a different account than the original set up for the client.  In this case the email used by the trickster was identical to the one used by the client.  To protect yourself:
    • As any client or lawyer's account can be hacked, lawyers or other financial professionals should ensure that any changes to payment instructions should be confirmed by direct contact with the client.
    • Due diligence protocols should are established for transferring funds and it should be ensured that all staff receive training and adhere to the rules.
    • Be on high alert for scams during vacations.  Arrange for a competent staff member to supervise your practice and provide your contact information to your staff.

Identity theft and fraud are big concerns for Canadians so it is important that everyone is aware of ways that they can protect themselves.

From an article by Margaret Craig-Bourdin

Why the Pandemic is Open Season for Scammers

By Randall Orser | Covid-19 , Personal Finances , Scams , Technology

Did you find that during the first few months of the pandemic you got a lot less scammer phone calls?  Now the scammers are back in full force exploiting people's fears about the pandemic.  Everything from free masks (you just pay the shipping), fake testing kits, miracle cures and even cleaning services claiming to rid your air vents of the virus.  Between March 6 and April 23rd the Canadian Anti-Fraud Centre logged 643 fraud reports and 158 confirmed victims, though this is probably less than the true total as many people are too embarrassed to report that they have fallen for a scam.

The pandemic has created perfect conditions for con artists as people are alone, anxious, on-line, watching frightening news and worrying about their jobs, finances and relatives who are at high risk.  Jeffrey Thomson a CAFC criminal intelligence analyst says "It's prime time for fraudsters, an extortion scam is trying to create fear and anxiety in people to get them to react.  Now people are more likely to be constantly in that state."  

One of the most common scams is getting a text or email from someone claiming to be the government directing you to provide your SIN and banking information to claim the CERB.  As Thomson says successful scams are a game of numbers and as this one is going out in huge amounts it is taking more victims.

Phishing, extortion and emergency scams are also on the rise.  Most common are a brand offering you loyalty points in exchange for your banking information or someone impersonating a friend or relative stuck abroad and needing you to send money.  Here are some of the warning signs that you should be looking for to avoid getting scammed.

  • Be suspicious if you did not initiate contact and don't respond to unsolicited messages that sound a bit fishy.
  • Think twice before clicking any links in a text or an email from an unknown source.
  • If a friend messages via social media for financial help call them to confirm.
  • Verify any websites claiming to be the government.
  • Make sure the seller is reputable when shopping on line.
  • If a deal on Covid-19 products seems too good to be true, it probably is.

If you do fall victim to a scam collect all the details and events in chronological order and report them to the police, the CAFC, the credit bureau and your bank and credit card providers.  Even if you cannot recover your own money you may help other Canadians to avoid losing theirs.

From an article by Sinead Mulhern

Benefits and Impacts of Deferring your Mortgage Payments

By Randall Orser | Budget , Covid-19 , Personal Finances

The impacts of Covid-19 have been felt by everyone in Canada, and many are struggling financially due to loss of work or decreased hours.  For those needing help there are financial relief programs that can offer much needed breathing room.

The ability to defer a mortgage payment is an option that has been offered by most lenders. It enables people to free up cash for the short term by deferring a significant financial obligation but it is not the right decision for everyone.   Here are some of the pros and cons of deferring your mortgage payments:

1. Being able to defer your mortgage payments can provide much needed peace of mind in these difficult times.  It will improve your monthly cash flow which will cover your urgent life expenses if you are experiencing a reduction of income .

2.  Don't just miss a payment as this comes with negative consequences such as your mortgage becoming delinquent causing a negative impact to your credit rating and risking potential foreclosure.  It is important to seek advice sooner rather than later to explore your options and make informed decisions.  Work with your mortgage lender to set up the deferral if you decide that this the best action for you to take.

3. When making the decision to defer your mortgage payments it is important to understand that the unpaid interest accrued during the skipping period will be added to the outstanding principal on your mortgage, which means that you will owe more on your mortgage in the long run than if you did not defer any payments.  Reducing your monthly payments will also lead to a longer repayment period and payment of more interest over time.

4. There are other ways to free up funds if you don't think that deferring mortgage payments is a good idea for you:

  • Refinancing your Mortgage - if you have equity built up in your property you may be able to access it to pay out other debts or create some cash flow.
  • Increasing your Mortgage Amortization - this will help you to lower your monthly payments but you will be spreading out your payments over a longer period of time.
  • Adjusting your Monthly Budget - staying at home will probably have decreased your monthly spending so it is a good idea to identify where you are saving money and make sure you allocate it to necessities rather than things that you don't need.
  • Look at other deferral options - you may be able to defer your property taxes, utility payments and payments on credit cards and loans these might be better options than deferring mortgage payments.

Deferring your mortgage payments can help your immediate financial situation but you need to carefully consider the potential future financial impacts.  You should speak with your financial advisor to determine if this is the best thing for you to do or if there are better options for you to free up cash to tide you over.

From an article by Diane Amato

Bubble Friendly Ways to Vacation

By Randall Orser | Covid-19 , Personal Finances

Industry watchers have called this summer "the summer fun forgot" and even though the economy is slowly coming to life again people are still being cautious when it comes to vacations and travel.  Even though countries in Europe and the Caribbean have opened their borders and there are some flight deals the federal travel advisory to avoid non-essential international travel is keeping people from travelling.  A recent Travel Week survey found that 42.7% pf respondents would travel within Canada even if global travel resumed tomorrow.

Frederic Dimanche director of the Ted Rogers School of Hospitality and Tourism Management at Ryerson University say that "trust" is the operative word this year.  "Vacationers will want to travel with p people that they know well, are likely to stick to small groups and their own bubble.  Many people will do road trips instead of flying and return to family camping trips or drives to the lake, back to holidays they experienced in the past."

Here are someways to make your vacations memorable:

1.  Head to Cottage Country - many will be looking to rent a cottage if they don't own one and will plan to visit people who do have a cottage.  

2.  Those who want to stay inside their bubble are travelling the open road in an RV or by car but most are not travelling too far from home usually remaining in their own province.

3.  Finding adventure close to home - those who love adventure think they need to look offshore to find it but this year they are exploring their own backyard.  Companies are ready to provide private and custom trips including backpacking tours in the Coast Mountains.

4. Communing with Nature - Camping has become very popular as a vacation option but campers are advised to still keep their groups small and not mix with other households.  All campgrounds have cautions and protections in place and advise people to prepare to be self sufficient and bring extra hygiene supplies, hand sanitizer, wipes, water and food.

5. Volunteering - Transfer your vacation into a learning experience by volunteering.WWOOF is an organization that provides opportunities to work on organic farms and learn about organic food and agriculture.

6 Hop on your Bike - Biking has become the number 1 pastime during the pandemic and is a good vacation choice for many as it allows you to keep fit while enjoying the scenery.  There are plenty of places to explore by bike especially on Vancouver Island.

7. Make it a sporting holiday while still physical distancing - two sports that are ideal for this are golf and tennis.  You could also consider fishing, or rock climbing or canoeing.

8 Find new entertainment while Staycationing - there are many activities that promote family bonding such as working on your family tree or writing your family history.  You can take a variety of classes including the ever popular on-line cooking classes.  Think about that project that you have been putting off for so long, now might be the time to tackle it that might include DIY home repairs or furniture restoration both of which help increase business at your local building supply centre.

Whatever type of vacation you choose this year, there is a good chance that you will save some money which is good for your budget.

From an article by Margaret Craig-Bourdin

Will Covid-19 Relief Measures Affect my Taxes?

By Randall Orser | Business Income Taxes , Employees , Personal Finances , Personal Income Tax , Small Business

Accountants are not completely certain how the various government benefits being received by individuals and businesses during the pandemic will affect their tax bill next year.  However what will be certain is that if the benefit is a taxable benefit then you need to be prepared to pay tax on it in 2021 when you file your 2020 tax return.

As of April 2020 here is the information available from the CRA website and current legislation.

1. For Individuals

  • Any CERB payments are taxable, any payments that you have received will have to entered onto your tax return and an information slip will be available to you next year in MyAccount under Information slips so that you can enter your income in the correct boxes on your tax return.
  • One time additional payments for the Canada Child Benefit and the GST/HST tax credit are tax free and it is not expected that this will change in 2020.  The GST payment is also tax free and it is not expected that this will change.
  • If your student loan payments have been suspended then you will probably not have as much allowable student loan interest to claim on your income tax return as long as it is a qualifying student loan per CRA guidelines.
  • Deferred payments under mortgage support are added to the outstanding principal balance and are repaid over the life of the mortgage.  The mortgage support system is managed specifically by your lender and any deferral of payments is an arrangement between you and them.  The only impact on your taxes might be experienced by those who are self-employed who are able to claim business use or use of home expenses on their tax return.
  • The minimum withdrawal limit under the RRIF has been reduced by 25% for 2020 which means that if you take out less money you will pay less tax as money in your RRIF is only taxable when it is withdrawn.  

2. For Businesses

  • Tax credits and other benefits provided by the government still apply so any money received as a wage subsidy is considered government assistance and is included in the employers taxable income.  If you apply for the CEWS benefit you need to understand the tax implications of receiving this benefit.  The subsidy must be noted in your bookkeeping records and will become part of your business income that you report on your T2125.  
  • The TEWS or Temporary Wage Subsidy will be recorded in the same way.  The subsidies are a reduction in the amount that you send to the government for income taxes that you withheld from your employees and it becomes income for your business.  

It is paramount that you keep accurate accounting records throughout 2020 as they will be very important when you do your tax return in 2021.

From an article by Susan Watkin

How to Manage your Personal Finances During the Pandemic

By Randall Orser | Budget , Covid-19 , Personal Finances

The Covid-19 pandemic is causing financial stress for most Canadians as they are seeing their income reduced or eliminated and they are wondering how they will be able to pay their bills.

All levels of government have implemented emergency response plans including financial support and many financial institutions have stepped up to help by allowing people to defer payments and avoid penalties.  Here are some ways that you can reduce the financial impact of Covid-19.

The federal government started the $107 billion Covid-19 Emergency Economic Response Plan, with $52 billion direct support for employers and workers and $55 billion in tax deferrals for workers and businesses. Other financial assistance to families include:

  1.  A one-time increase to the GST tax benefit and increases to the Canada Child Benefit.
  2. A six-month interest free moratorium on the repayment of student loans'
  3. A 25% reduction in minimum withdrawals from a RRIF and variable benefit payments under a RRSP to help reduce the impact of volatile markets on senior's retirement savings.
  4. There are additional benefits to Canadians available from their province and municipality and they should visit the relevant websites for more details.
  5. Financial institutions are offering deferrals of mortgages up to six months for some customers as well as loans and relief on credit card payments and interest.

What can Canadians do to help themselves financially during the pandemic?

  • If you need to borrow money make sure that you consider the interest rates and how you will repay the loan, do not dig yourself too far into debt that it will be difficult to get out of once the pandemic is over.
  • If you have to tap into your emergency funds do it strategically, maximize all income sources first, create a more stringent budget and spending plan then consider tapping into your savings if you need to.  Always start with cash funds and TFSA's as you will not have to pay tax on that income and withdraw RRSP's on non-registered tax investments as a last resort.
  • If you are still working making saving money a priority after you have covered your necessary expenses this will help you should your job become affected.
  • Maximize help programs from utility companies that can include lower rates, deferred payments and flexible payment plans to assist residents and companies.  Many cell phone providers have removed data caps on internet and data plans and waived countrywide long distance fees.  They are also offering flexible payment plans.
  • Consider which bills you can eliminate such as subscriptions to digital services or retailers, and monthly donations.

It is important to continually assess your financial situation and if you can make changes that will help you to be more prepared for the future.

From an article by Sophie Nichols Jones 

Covid-19 Now is the Time to get Serious About Your Financial Wellness

By Randall Orser | Budget , Personal Finances , Personal Income Tax , Retirement

A survey done for the MNP Consumer Debt Index when the Covid-19 pandemic started showed that 49% of Canadians asked were $200 or less away from being able to settle their bills and 25% of these people said they were already behind on their payments. In this uncertain economic environment are many are unable to realize their life goals and some even face bankruptcy.  

Lack of financial security is a big cause of stress, lack of sleep and tension in relationships as people and couples are unsure about what their future will look like.  In fact 41% of Canadians say that money concerns are the biggest cause of stress in their life  The fear of the financial impact of the pandemic is a greater contributor to mental health than getting sick or losing a loved one.

This information begs the question "Why are people finding themselves in this financial predicament? There are a number of answers to this question including costs rising faster than wages which has caused many to incur debt, but the big reason has to be ignoring the necessity of financial planning.  Financial planning includes saving for the future, retirement and making informed financial decisions and living within one's means and building a emergency fund. The pandemic brings to the forefront this long avoided issue, it is time to become responsible for your financial health. 

Many use the lack of financial knowledge as a reason for not planning. This is no excuse for avoiding the issue as financial literacy can be gained from books, seminars, blogs, websites and from working with a financial planner, there is lots of help out there.  Here are some tips that may help your immediate financial situation:

  • Make a new financial plan, your income may have been reduced and you need to revise your budget and priorities accordingly.  If you are not able to pay your bills, you should not be contributing to your child's college fund making contributions to your RRSP.   
  • Don't worry about paying down debts quickly, make minimum payments and put the rest into an emergency fund.  Your emergency fund should be enough to cover three to six months of  expenses should your income be severely reduced.
  • Take advantage of the help that your bank may be offering such as reduced interest rates on credit cards, deferred mortgage payments and low interest loans or lines of credit to pay off higher interest debts.
  • Instead of making plans for the next 10 or 20 years make your financial plans cover a shorter period of time. 

Making the decision to start taking control of your finances or making your financial goals more realistic will help you to deal with the stress that the pandemic is causing.

See our previous articles for more information:

​Financial Skills you Should Have Learned in High School

Reasons why you Should Budget your Money

What does your CRA Notice of Assessment Mean?

By Randall Orser | Personal Finances , Personal Income Tax

You can look at your CRA Notice of Assessment as a receipt for filing your tax return and an annual statement that tells you how much income tax you owe, how much you can expect for a tax refund, what income tax you already paid and any tax credits that you are eligible for. 

The NOA is calculated from the information that you submit on your tax return and contains a lot of information that you may need to make future financial decisions.  If you have a RRSP then the NOA is particularly helpful as it tells you the maximum contribution that you can make to your RRSP in the following year.  It is important to know how much room you have so that you do not over contribute and have to pay penalties.  If you participated in the Home Buyer's Plan or the Lifelong Learning Plan and withdrew from your RRSP for those purposes then your NOA will tell you when future payments are due and how much you need to pay. 

You should always keep your notice of assessment in a file along with your receipts for that tax year.  If you see anything in your Notice of Assessment that does not seem correct to you, you have 90 days to formally object or make amendments to any of the information on the document.  A NOA will also inform you if you happen to be the subject of an audit from the CRA.  If you do not agree with the reasons for an audit you have 90 days to make a formal objection.

You can get your NOA in two ways, in the mail from the CRA or when the CRA notifies you that your assessment is available for you to view via CRA Online Mail.  You can register for CRA Online Mail through your CRA MyAccount.  If you lose your paper copy you can use MyAccount to view and print your notices of assessment or reassessment, this includes any notices issued since Feb 9th 2015, and summaries of notices issued after 2004.  If you filed your taxes using NETFILE it can take up two weeks to see your Notice of Assessment. 

From an article by Wealth Simple

What you Should do with your 2019 Tax Refund

By Randall Orser | Personal Finances , Personal Income Tax

Around 19 million Canadians can expect a tax refund in 2020, the average refund is $1400.  In a normal year you might be tempted to go out and splurge with your refund but this year during the pandemic you might want to consider doing something else with your refund.

  • Spend some of it – this might be the last thing that many people might be thinking of doing with their refund as they are out of work or struggling financially.  If this is the case with you, you might consider spending part of it especially in small businesses which are struggling to survive. If you are still working, have a stable income, your debt load is under control and your retirement savings are on track then you might consider spending some or all of your refund.  Consumer spending is necessary to help businesses get back on their feet and help us to get out of the current recession.
  • Use your refund to pay down your debt – especially on those high interest credit cards.  If your bank is allowing you to defer your mortgage payments take advantage of that if you can and redirect your payments to your credit cards or other high interest debt along with your tax refund.
  • Invest for the future – some good financial planning advice is to have at least three months of spending available as an emergency fund.  If you have done this in the past you are probably very thankful for that nest egg right now.  If you have never done this, now might be the time to start your emergency fund, start saving for retirement or add some extra money to your RRSP.  If you are not at your limit investing extra this year should help your tax situation for 2020.  As the investment market has taken a hit this year, you might consider saving your refund to invest in the market when securities may be “on-sale”.
  • Give some away – Charities are hurting as much as if not more than businesses at this time.  Canadians are not donating their money or time as much to help with the important services that charities provide.  If you don’t need all your refund, consider giving some to your favorite charity.
  • Upgrade your skills – if you have lost your job due to Covid-19, think about upgrading your skills to make yourself more marketable when looking for a new job.  This is a good time to consider how you can upgrade your skills and you can use your tax refund to help pay for that training.
  • Finally, many things have changed in 2020 due to Covid-19.  Millions of people have received government support most of which is taxable, but no tax has been withheld from payments such as the Canada Emergency Response Benefit.   You might be surprised next year to find that you owe taxes on your 2020 return so it would be a good idea to put your refund in a savings account so that you have some money set aside if instead of getting a refund you have to pay. 
  • From an article by Tim Cestnick in the Globe and Mail 

What you Need to Know About Filing Coupled Tax Returns

By Randall Orser | Personal Finances , Personal Income Tax

The Canada Revenue Agency has specific requirements in place for married and common-law Canadians as they file their personal tax returns.

Married and common-law spouses do not file "joint" tax returns as is an option in the USA.  Each Canadian files their own return and indicates their marital status on it, and the identity of that person.  You do not get to decide whether not you claim your marital status on your tax return.  Once you are married you must include your spouse.  Once you are common-law which means you have been living together in a conjugal relationship for 12 months or immediately if you have a child then you must file as common-law you do not have a choice.

The CRA knows your true marital status based on information that you file, credits and deductions that you apply for and other information sent to them which relates to you. Since your marital status has a significant impact on your return - family incomes are combined for calculating income-tested benefits  such as the GST/HST credit or the Canada Child Benefit.  Couples also benefit from combining charitable donations and medical expenses.   If you have received benefits that you are not entitled to you will be asked to repay them with a penalty and interest and failing to indicate your correct marital status is fraud.

If you were married in the tax for which you are filing, you must note your status as married in the "information about you" section of your return, including information about your spouse including their name, social insurance number, net income and employment status.  If your spouse claims credits such as the CCB or GST/HST or if they owe any payments you must report that as well.  This is the same for common-law couples.  

Advantages and Disadvantages of Filing as Married

1.  If you both sold homes to buy tone together only one of the sold properties may be immune from taxes.  You may have to pay capital gains on one of the sales.

2.  If you are a married student with extra tuition to deduct, you may transfer your unused deductions to your spouse.  If your partner's income is below a certain threshold you may be able to claim an additional tax credit.  You can pool your medical expenses and apply the deduction to the partner who can use it best to pay down their taxes similarly with donations.

Filing Coupled Returns

Filing your spouse or partner's information on your return is pretty simple, however when it comes to deciding which expenses or credits to claim on each return it is more difficult and confusing.  It might be in the best interest of both you to have your returns done by a professional who knows all the ins and outs of filing tax returns for couples, so as to avoid mistakes resulting in extra charges and penalties.

Breaking Up

You also need to inform the CRA if your relationship ends as it may change the benefits due to you or the payments that you owe.  If you receive the CCB or GST/HST benefit payments, notify the CRA the month after your relationship has ended.  If you separate, you do not have to inform the CRA until the separation has lasted 90 days.   You can inform the CRA by logging into your MyAccount and completing CRA form RC65, Marital Status Change, or by contacting the CRA directly by phone.

If you live apart for reasons other than the ending of your relationship you still have to file as married for example if you live apart for work, education or medical reasons you are still considered to be married by the CRA.  Once you are married or divorced you will never be able to file again as single.

From an article by Turbo Tax November 2019

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