Category Archives for "Personal Finances"

Travel Booking Scams and how to Avoid Them

By Randall Orser | Personal Finances , Scams

Summer is here and it’s time to think about getting away from it all.  We all know how scammers are trying to trick us at home, but did you know that they are also busy trying to scam you out of your trip? In a report from the Association of British Travel Agents Fraudsters conned UK holidaymakers out of approx. $12 million Can in 2018 with an average financial loss of approx. $2800 Can per person. Fraudsters are using more and more sophisticated methods to target destinations and popular times of the year when demand is high, and availability is limited. People are looking for a good deal, and once they find out that they have been conned, it can be difficult and expensive to get a legitimate booking.

Here are five major booking scams to watch for and how to avoid them:

1. Fake Websites That Look Real

About 53% of travel scams are related to the sale of airline tickets.  This can include booking on a fake site, receiving an imitation ticket or paying for a ticket that you never get.  These types of scams are also common with accommodation and package deals.  Often people do not check that a site is authentic before booking and some don’t even know how to check.  

Before paying a deposit make sure the web address is legitimate.  Check the domain name, .net or .org are rarely used for shopping sites.   Also check for https:// (rather than http://) which should always be on the payment page showing that the site is secure.  Other clues to a fraudulent website are misspellings, wrong words or characters, fuzzy or low-resolution pictures of logos, trade associations and payment and card companies.

2. Being Directed Away from Trusted Sites for Payment

Fraudsters lure people away from trusted sites and request payment on a separate site, often offering a better price.  Alarm bells should also ring if you are asked for payment via an online bank transfer.

You should never pay by online bank transfer, always pay by credit card as you will get more protection from fraud.  If you are scammed, paying by credit card will give you a better chance of getting your money back.   Keep all communications on trusted websites.

3. Avoid Pop-ups Advertising “Amazing Deals”

Unsolicited promotional emails can often look legit but will sometimes click through to a fake website.  Watch out for the tell-tale signs of a fake website, and definitely avoid fake competition scams, like the current ones by phone for Westjet and Marriott Hotels.

Validate deals by logging on directly to trusted websites.  Once you know that the deal is valid use that trusted website to make your bookings.  

4. Fake Accommodation Listings

Accommodation bookings account for 25% of all reported scams.  These scams can include luxury villas at discounted rates. Sometimes the villas do not exist and other times they are offered without the owner’s knowledge.  These scams happen most often with accommodations in France and Spain.

It pays to do your research to make sure that this is a real listing, contact the owner or agent directly and again minimize risks by booking through a trusted platform. 

5. Using Unsecured Networks While Away

Booking travel when away from home can be a major security concern as your private data can be exposed via clouds and wi-fi.  The majority of vacationers use wi-fi during their trip and many do not check the security of their internet connection despite getting pop-up warnings. Public wi-fi includes both secured and unsecured networks.  Unsecured networks can be connected without the use of a password or login.  Secured networks require you to register for an account or password before connecting.   

Avoid sharing sensitive data or bank information over unsecured networks. Consider using a VPN that will encrypt your data and to help keep your connection secure.

From an article in The Guardian International Edition

How Do Credit Card Companies Make Money?

By Randall Orser | Personal Finances

If you think that because you pay off your credit card balance each month your credit card company is not making any money off of you….then think again.

Credit card companies make money in several different ways; from fees including annual fees, interest and transactions paid by businesses that accept credit cards.

Money from Interest:  

The majority of the money made by credit companies comes from interest payments that cardholders make.  If you pay your balance each month then you do not pay interest.  Look for credit cards that offer lower interest rates.

Money from Fees 

Annual Fees:  Annual fees are usually paid for cards with a high rewards rate and those for people with a less than good credit rating.  If you choose a rewards card you need to make sure that the rewards that you will receive each year are higher than the annual fee that you are paying, otherwise the card is probably not worth having and you should go for a card with no annual fee. 

Cash Advance Transaction Fees:  Unless it is an absolute emergency you should not use your credit card for cash advances.  This type of transaction comes with fees, very high interest rates and no grace period.  There is usually a fee if you are use an ATM to withdraw the money ranging from 2% to 5% or a flat fee amount such as $5.

Balance Transfer Fees:  If you transfer a balance from one card to another to get a lower interest rate, then you will usually be charged 3% - 5% of the amount transferred.  

Late Fees:  Not making at least your minimum payment by the due date will earn you a late fee.  If you are continually late it can also earn you a report at the credit bureau.

Foreign Exchange Fees:  If you use your credit card to pay for buy something abroad using your card you are charged a spot rate and an additional percentage usually 2.5%.  To avoid paying these extra fees look for a card that has no fees though they are few and far between.

Interchange Fees:  This is the amount that the merchant pays as a processing fee and it is equal to a percentage of the transaction.  This is called “interchange” and usually accounts for 1% - 3% of the transaction.  The fees are set by the payment network and are usually based on volume and value of transactions.

How you can limit the amount of money that credit card companies make from you:

  • Pay your balance in full each month to avoid interest charges.
  • Make sure you pay your bill on time to avoid late charges
  • Don’t use your credit card for cash advances.
  • Choose a credit card without balance transfer fees.
  • Pay an annual fee only if the rewards are greater than the cost.

Credit Card Terms That You Should Know

By Randall Orser | Personal Finances , Small Business

If you are thinking about applying for a credit card it pays to shop around to find the best one for you taking your lifestyle into consideration.  Things to consider are the interest rate, the annual fee (or no annual fee) and cards which offer rewards and cash back.  It is also important to know the basic credit card terms and definitions so that you know exactly what you are signing up for.

Annual Fee:  This is the yearly charge you pay to use the card and its benefits.  If you want travel points and cash back, you usually have to pay a yearly fee.  If you are not wanting the rewards or other benefits, there are cards with no annual fee.

Annual Percentage Rate:  This is the annual cost of borrowing money on your credit card.  Cards have a variety of APR rates, for purchases, balance transfers, cash advances and penalties for not paying on time.  The APR on purchases is charged after the grace period ends.

Credit Limit:  The credit limit is the most that you can spend on your card.  If you have a short credit history, then your credit limit will probably be small.  As gain more credit history your limit will increase as long as you make your payments on time.  It is important not to go over your limit, though that is difficult to do as the credit card company will usually decline transactions over your limit.   If you do go over your limit you will incur charges.

Credit Score:  Your credit score tells the lender how likely you are to pay back the money loaned to you on your card.  Everything about credit cards affects your credit score including the number of cards that you have, your entire payment history, and other factors associated with your debt history.  Your credit score can also affect other areas such as getting a loan for a house or car.

Due Date:  This is the date when your minimum payment is due, usually by 5pm on that day.  If you do not make your payment by the due date you will incur a late fee and perhaps an increased APR and a report will be sent to the credit bureau.

Grace Period:  This is the time period when interest is not assessed after a purchase is made.  With some cards there is only a grace period if you do not have a balance on your card.   

Late Payment Fee:  If you don’t make at least your minimum payment by the due date, you will be assessed a late payment fee.  The late payment fee is based on the size of your balance.

Minimum Payment:  Your minimum payment is the lowest amount that you can pay each month and still remain in good standing with your credit card company.  It will usually be between 1% and 3% of your outstanding card balance.  Paying only your minimum payment each month is not good for your credit score and it will take you a long time to pay off your debt.  

Revolving Balance:  A revolving balance on your credit card is the amount of your credit limit that you have used and not repaid.  This is the part of your credit limit on which you pay interest every day because you did not pay it off at the end of the previous month.  If you pay your balance in full each month you will not have a revolving balance.

Security Code (CVV):  The security code or Card Verification Value (CVV) on your credit card is mostly used when you make online purchases.  It keeps your card safe from credit card skimmers as the CVV code is not included in the magnetic strip on your card.

For more information about credit cards go to:                                          https://www.canada.ca/en/financial-consumer-agency/services/credit-cards.html 

Places Where it Can be Risky to Swipe Your Debit Card

By Randall Orser | Personal Finances , Scams

Canada is among the biggest per capita users of debit cards in the world and more than 99% of transactions occur without incident every year.  We are lucky in Canada that we are protected by the Canadian Code of Practice for Consumer Debit Card Services and Interac policies.  This means that your financial institution must reimburse you in full if you are a victim of debit card fraud as long as you took reasonable care to keep your account and PIN safe.   

Financial institutions are continually upgrading card security to foil would be thieves, and the introduction of chip technology means that the store terminal and your card communicate with each other during the transaction and carry out security checks to ensure that the card is valid.  This technology is very difficult to duplicate, and it means that debit card fraud losses have dropped by 92%.  Despite this protection from your bank, you should still be extra vigilant when using your card in the following places.

Non-bank ATM’s - A favourite method of stealing debit card details is through card skimming.  This happens when you swipe your card through a skimming device in what you think is a legitimate transaction.  The skimmer retrieves your debit card information which the thief will get when he picks up the skimmer.  These devices are often placed on ATM’s which are not attached to a bank, especially those in gas stations, hotel lobbies, small stores, or any outdoor locations.  As the ATM’s are not owned by a bank, they are not always well monitored so become a target for thieves. 

Mobile Vendors - Thieves can pose as legitimate street vendors swiping your card through mobile card terminals when they are actually swiping your card through a skimming device.  You should be especially careful when using your card at events, street markets and other places where small businesses process card payments remotely.

Gas Stations - Skimmers are often found here as the readers are not always well monitored.  Before you swipe your card, give the terminal a slight tug and if it does not feel secure do not swipe your card.  You should pay for your gas inside or go to another gas station.  It is better to suffer the inconvenience rather than having to deal with debit card fraud.

Self-Checkout Lines - Self-checkout lines in major retailers are also a prime target.  Skimming devices are placed over the card readers often by a team of thieves one watching the camera while one places the skimmer over the card reader.  Your information can also be stolen remotely using Bluetooth technology.  Once they have your information it can be used to create clone cards, or scan be sold on old to others for fraudulent purchases.

How you can find out quickly if your debit card has been compromised

Your bank will usually investigate if they see any unusual activity on your card and you will often be reimbursed before you even know it has happened. However, it is a good idea to continually (at least once a week) monitor your bank account so that you can report anything suspicious immediately.  Your current bank card can then be cancelled and a new one issued with a new number and PIN number.  

To try and minimize your losses consider regularly changing your PIN number, keeping only a small amount of money in your checking account and turning off any overdraft protection.  You are not liable for any fraudulent charges, but it can be a hassle dealing with debit card fraud. 

Tips to Keep Your Credit Card Safe

By Randall Orser | Personal Finances , Scams

Today, more than ever it is crucial to keep your credit card information safe.  How often do you think about the safety of your credit card transactions and what you can do to guard against theft?            

Here are some precautions to consider:

  1. As soon as you receive a new card sign the back for more protection should your card ever be stolen.
  2. Make sure that you don’t let anyone see your PIN (personal identification number) when you put it into a card reader or ATM. Always choose a number that you will remember.  Do not use birthdays, phone numbers, social insurance numbers or family names, and NEVER write the number down and save it in your wallet.
  3. Do not give out your credit card information to a caller.  Make sure that you initiate the call and know that you are dealing with a legitimate business. Never give out your number over a cordless phone as these can be scanned easily and cheaply by radio scanners.
  4. Make sure that you always get your card back after you use it and that you watch the sales person as they are processing your purchase.
  5. Always check your monthly statement and make sure that the charges are all yours.
  6. Destroy any voided or cancelled sales receipts yourself and cut up expired credit cards.
  7. Keep a list of your credit card numbers and toll-free numbers and keep it in a safe place so that you have it should you need to contact the credit card company to report a lost or stolen card.
  8. If your credit card is lost or stolen report it immediately to limit your liability.

If you are using your credit card for online purchases, follow these guidelines to avoid credit card fraud and identity theft.

  1. Only use websites that you trust. Don’t click on links in unsolicited emails as they could lead you to a fake website which has been set up to steal your information.  The safest way is to go directly to the website by typing the URL in in your web browser.
  2. Don’t make online credit card purchases from public places.  As public computers are less secure there is more chance of your information being stolen.  You are not safe even if you are using your own computer in a coffee shop, hackers have access to the same wi-fi signal and can intercept your information. 
  3. Make sure that your home computer is protected by the latest up to date anti-virus and anti-spyware from a reputable company.  Do not use anti-virus software advertised in a pop-up ad or from a link in an email.
  4. Check the reputation of a business with the Better Business Bureau if you have never bought from them before.  Do not use your credit card at any website with a poor customer service record.   
  5. Never give out more than the normally required personal information such as your address and phone number. Do not give out your social insurance number. If the site seems to be asking for more than the normal amount of information log out and don’t use it.  
  6. Make sure that the credit card entry page that you are using is secure.  To do this, check the URL in your browser bar. Secure sites have addresses starting with https:// and there should be a lock or a seal in the bottom right corner. 
  7. Avoid leaving your credit card information on the website for future purchases.  Although this is more convenient, if the site is hacked then your information could be compromised.  
  8. Always print your online purchase receipts and make sure that the amount that you are billed matches the amount on your credit card statement.
  9. Think about using a credit card with a a small credit limit to buy online.  If your account is compromised criminals will not have access to thousands of dollars.

Online shopping can be a treasure trove for fraudsters as the securities that are present when you buy at a brick and mortar store are not present online, such as using your pin number to verify your purchase.   So, it is best to take precautions to avoid the hassle of fraudulent charges and your account being compromised.

The Personal Tax Filing Deadline is April 30th – Some Last Minute Reminders

By Randall Orser | Personal Finances , Personal Income Tax

The deadline for filing your personal taxes April 30th is almost here.  Here are some things to remember before you start the filing process.

1.  Most Canadian residents need to file an income tax return for the previous year to pay the correct amount of income tax owed, pay back overpayment of benefits or to claim benefits.

2.  If you file late and owe money the CRA will charge you interest and penalties on the unpaid amount.  So even if you know that you will have to pay, help yourself by at least filing on time.

3.  Before you tackle your income-tax return be sure that you have all the following information on hand.

  • Information from the CRA including your notice of assessment from the previous year.
  • All your tax information slips such as T4’s from employers, as well as your investment information slips and RRSP contribution receipts from your bank.
  • Information on other income such as self-employment income.
  • Receipts for tax deductions such as medical expenses and donations.

4.  Decide how you are going to file your taxes either a paper copy or online using NETFILE, and make sure that you have the correct tax package for your province. The advantage of using NETFILE is that you get immediate confirmation that your return has been received and if you are owed a refund you will get it much faster, sometimes within two weeks of filing.

5.  If your taxes are complicated for example if you run a small business it is often better to use a tax professional to prepare and file your return, however to save yourself some money you should still spend time sorting your receipts and getting everything ready for your accountant.

6.  There are a few different ways to pay any income tax due; by mailing a cheque to the CRA, using online or telephone banking, using the CRA’s My Payment Service or making a payment at your bank.  If you have to pay your taxes by installments you can set up a payment arrangement with the CRA.

7.  Set up a direct deposit with the CRA so that your tax refund and any benefit payments are deposited directly to your bank account.

Need Help With Your Return? Where to Get Answers to Your Income Tax Questions

By Randall Orser | Investments , Personal Finances , Personal Income Tax

The April 30th deadline is rapidly approaching.  If you are in a panic about your tax return and need answers to some questions, here are some places you can go for help.

1.  If your tax return is complicated it is always best to get a tax professional such as Number Crunchers® to complete it for you. We know all the ins and outs of tax returns and we can answer your questions and make sense of the chaos.

2. If you still want to go it alone, get a Canadian Income Tax Package.  This used to be mailed out but can now be downloaded and printed from the CRA Website.  The package includes line by line instructions to help you to fill out your return.

3. Head to the CRA website at http://www.cra-arc.gc.ca/formspubs/tpcs/menu-eng.html to find forms and publications by topic.

4. The CRA has an automated Tax Information Phone Service (TIPS) for personal and general tax information.  To find out more go to http://www.cra-arc.gc.ca/esrvc-srvce/tps/menu-eng.html.  Before calling you need to make sure that you have the following information on hand: your social insurance number, your month and year of birth and the total income that you recorded on line 150 of your 2017 return.

5. Tax information for individuals, businesses, charities and trusts can be found at http://www.cra-arc.gc.ca/ndvdls-fmls/menu-eng.html

6. Phone Inquiries – you can reach a CRA representative by calling 1-800-959-8281 but expect to wait a while to talk to someone, they are extremely busy at this time of year.  They do have extended evening and weekend hours up to April 30th, (9am to 9pm local time during the week and 9am to 5pm Saturdays local time) and they do suggest calling Thursday or Friday when the phones are usually less busy.

7. For help with CRA online services you can go to their E-Service Help Desk at http://www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/menu-eng.html.

8. If you need help with a very basic return that does not include bankruptcy, deceased individuals, capital gains or losses, employment expenses or business or rental income and expenses there are Volunteer Income Tax Preparation Clinics offered by the CRA.  These are only to help people who meet their basic eligibility requirements such as maximum income levels.  For more information about locations go to http://www.cra-arc.gc.ca/tx/ndvdls/vlntr/menu-eng.html

How Far Back can a CRA Reassessment go?

By Randall Orser | Personal Finances , Personal Income Tax

After you file your taxes you will receive a Notice of Assessment which details the amount of tax that you owe or the refund you will receive.  Sometimes you will be asked to do a preassessment review in a situation where the CRA will ask you for additional information or documentation. The CRA can reassess your taxes after they have sent out your Notice of Assessment.  This usually happens later in the same year.  You should respond to the CRA by the deadline (usually 30 days from the date of the letter) with the information requested. 

A CRA reassessment or audit can be very worrying for most taxpayers and a common question is “How far back can the CRA reassess me?”  There are limits as to how far back the CRA can go to reassess someone’s taxes returns and the usual time limit is three years from the date your return was filed.  However, they can extend the reassessment period if they believe that you may have carelessly or willfully misrepresented your tax situation, or if they suspect fraud. In order to reassess the CRA must prove that fraud, neglect or willful fault occurred. This does not mean that you made a simple mistake on your return but that you made a serious misrepresentation such as in reporting your income.  

It is important that you keep all your tax information and documents for six years in case they are requested by the CRA.  Should you be subject to a reassessment or audit it would be difficult to prove your case without supporting receipts.  The CRA must have proof of your financial and tax situation and if you are unable to provide the documentation then you could end up dealing with a lengthy audit.  

If you are being audited there is nothing that you can do to stop it, and the worst thing that you can do is to ignore communications from the CRA.  The best thing you can do is to get organized with your paperwork and receipts and to be as cooperative as possible.  Also, it is advisable to get professional help as soon as you get your audit letter so that you can prepare a better case. 

An audit can be a “desk audit” which is common if you have business income and declared losses, or, if you have real estate transactions reported on your return.  In a “field audit”, the taxman will show up at your home or place of work. 

For more information on CRA Tax Audits visit: 

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4188.html

Who are the Canadians Most Likely to be Audited by the CRA?

By Randall Orser | Personal Finances , Personal Income Tax

Every taxpayer’s nightmare is to get a notice from the CRA that you are going to be audited.  Around 30,000 such letters were sent out in 2018 (according to tax lawyer David Rotfleisch) so we are right to be afraid!  

So, who are the people most likely to be audited?

  • Those who are self-employed.  Tax returns for self-employed people are usually more complicated as there is no paperwork like a T4 for the CRA to confirm the income that you have declared.
  • You work in construction, retail or the restaurant industry.  These industries have been singled out by the CRA as they are often heavily cash based and there are high rates of tax evasion.
  • You keep reporting rental and/or business losses. The CRA will wonder if you are really losing all this money or if you are stashing it away in a tax haven.
  • You report drastic swings in income especially if you are self-employed.
  • Your income does not match your postal code. If you are making less than your neighbours, the CRA might begin to wonder how you can afford to live where you do.
  • You have offshore assets.  Owning assets offshore can lead to unwanted scrutiny.
  • You receive wire transfers from abroad of $10,000 or more.  Since 2015 all financial institutions must report to the CRA all international funds transfers of $10,000 or more. 

It is important to really understand the letter that you get from the CRA if it wants to review your taxes.  A tax review notice is not an audit letter.  

Tax reviews are quite common, and it means that the taxman wants to check the records and receipts that you used to report income and to claim expenses.  Reassessments can be done randomly or because the numbers received from other sources does not match with your numbers.  Usually you show them the paperwork and the matter will be over.  However, if you do not respond to the CRA or they do not like your responses to their questions then your review may turn into a full-on audit.

From an article by Erica Alini on www.globalnews.ca

 

Can you Amend Your Tax Return After Filing?

By Randall Orser | Personal Finances , Personal Income Tax

There are many things in life that you cannot change, but luckily your tax return is not one of them.   If you have made an error, it is quite easy for you to correct it, but the most important thing is to not file another tax return for the same year.

You should wait for your Notice of Assessment before requesting any changes to be made and you can only request changes as far back as 10 years.   

There are two ways to request amendments to your return: it can either be online or by mail, and both have their own rules and limitations.

Online:

This is usually the easier option all you have to do is to log into your CRA My Account and click “change my return”, however you cannot make changes to any of the following:

  • A bankruptcy return
  • A tax return where there are 9 reassessments for a particular tax year
  • A tax return that has not been assessed
  • A tax return prior to the year of bankruptcy
  • Carry back amounts such as capital or non-capital losses
  • An elected split pension amount
  • A return of an international or non-resident person (including residents of Canada, newcomers to Canada and individuals who left Canada during the year).
  • A return where you have income from a business which is permanently established outside your province or territory of residence

The processing time for an online request is usually two weeks unless it is sent in spring or early summer, or if it needs further review, or the CRA has to contact you for more information or documentation.

By Mail:

You will have to complete a T1-ADJ T1 Adjustment Request. You can download a copy of it from the CRA website.  Alternatively, you can submit a signed letter with the following details:

  • The years of the returns to be changed
  • Your social insurance number
  • Your full address
  • A telephone number where you can be reached during the day

The processing time for a mailed in request is usually eight weeks unless the same conditions apply as with an online request. 

Once your review is complete you will receive either a Notice of Reassessment from the CRA or a letter explaining why the changes that you asked for were not applied. 

So, you don’t need to worry if you have made a mistake on your tax return, it is relatively easy to make any changes.

 

 

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