Tag Archives: Canada

More Older Canadians Will Strain Federal Finances

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Statistics Canada has some good news to report:

Canadians are now living longer according to Statistics Canada. For those born within the last two years, life expectancy has increased by more than two years, as compared to 10 years ago. The agency says much of the gains in Canadian life expectancy come from men, even though women still live the longest. Men’s life expectancy at birth rose by 2.9 years to 78.3 in 2005-2007. Among women it increased by 1.8 years to 83.0.

Life expectancy among seniors is also on an upward trend, as it has been for several years. The average man who has already made it to the age of 65 could expect to live an additional 18.1 years in 2005-2007. That’s an increase of two years from the previous decade. A 65-year-old woman can expect to live an additional 21.3 years, up by 1.3 years.

It may be good news, but it may create real problems for the total budget. The office of Parliamentary Budget Officer Kevin Page reports that the Aging population will soon strain federal finances.

The government faces a renewed battle with the provinces over health-care cash as Canada’s greying population puts an increasing strain on federal finances in the coming decades. … It is a battle that will also be fought along generational lines, as public services for Canadian seniors account for a growing proportion of federal spending, leaving working Canadians to pick up the tab even as their living standards shrink.

In the future, population aging will move an increasing share of the population out of their prime working-age years and into their retirement years. An older population puts increased spending pressures in areas such as health care and elderly benefits. In parallel, slower labour force growth will restrain growth in the economy and in the general tax base from which the government collects its revenue.

If health-care transfers are allowed to increase at the current rate, the federal government would have to raise taxes or cut spending by nearly $30 billion in the next budget to keep Canada’s debt in check.

Another factor is that the national fertility rate has fallen from a peak of 3.9 children per woman at the tail of the “baby boom,” to 1.5 children per woman now. Coupled with the longer life expectancy by 2019, individuals over the age of 65 are expected to account for more than a quarter of the population; and by 2029, more than a third.

This puts incredible pressure on the Federal parties as they consider the next federal budget.

The Conservatives are promising to “stay the course,” and will keep cutting corporate taxes. This will lead Canada into even deeper deficits. The NDP would prefer that Canada’s seniors are helped out of poverty with improvements to the Guaranteed Income Supplement (GIS). This is unlikely to get support from the major political parties. Since Liberal and Conservative governments started cutting corporate taxes 10 years ago, individuals are carrying 61 percent of the cost of government programs, while corporations now pay only 15 percent.

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Credit Card Jungle

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Credit Card Jungle was how Mike Hogan described the situation in a Barrons article earlier in the year. Even though there are some good business credit card deals to be found, it is very much a case of Buyer Beware.

If you’re among the two-thirds of credit-card holders who carry an outstanding balance, you might have noticed that your interest rate was hiked recently, or your billing cycle shortened. Failure to navigate card providers’ labyrinthine payment terms successfully can earn you one of several consumer-unfriendly fees.  These aren’t really new gambits. But they are being pursued with such gusto lately that they’ve generated a record number of consumer complaints.

That word jungle conjures up phrases like Nature Red In Tooth And Claw or Survival of the Fittest.  You have got to keep your wits about you, if you wish to stay ahead of those claws.  Hogan was describing the situation in the US but you will find similar discontent with the credit card suppliers in the UK and in Canada.

Consumers are often riled by two key hot button issues in most cases:

  1. The way the interest is calculated on their balance owing often creates lots of surprises for consumers
  2. The way any money that is paid is then applied to interest-bearing amounts owed is another cause for concern

It all comes down to the small print that is added to credit card contracts and it is not surprising that many feel there are hidden ‘gotchas’ in these contracts.

There is a popular wish for action so it is not surprising that you will find that politicians are now taking up this cause not only in the US but also in the UK and in Canada.

Even if tighter regulations are instituted they will never cover all problem issues. The wise user of credit cards will always do a detailed comparison of what the different credit cards are offering and what may be in the small print.

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Tax deductible mortgages

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Any one in the US or the UK will wonder why such a post is necessary. They all automatically have their mortgage interest payments tax deductible. Not so in Canada. However with a little work, even in Canada you may find that Tax deductible mortgages are worth the hassle. According to Jonathan Chevreau, Financial Post, the Canada Revenue Agency is unlikely to challenge if they are done properly.

Why it should take such effort is unclear. It is accomplished by applying the so-called Smith Manoeuvre, popularized first in British Columbia by Fraser Smith in a book of the same name. It has now spread across the country, apart from Quebec. Smith developed and packaged a variation on the standard tax-permissible strategy of selling off non-registered securities; using the proceeds to pay off the mortgage; then reborrowing to repurchase the securities, thereby creating legally sanctioned tax-deductible debt.

A major competitor to Smith, TDMP or Tax Deductible Mortgage Plan, has been named one of Canada’s fastest-growing companies by Profit magazine. It ranked 88th on the 21st annual Profit 100 ranking.

TDMP has a $39 per month fee charged to homeowners, a fee which is itself tax deductible. For this, TDMP takes on all the back-office work and saves the homeowner the bother of having to move the money around every month in order to make their mortgage payments and purchase securities. The fee is considered a carrying charge for administration of income from investments.

Why Canada does not follow the lead of the UK and the US on tax deductible mortgages is unclear. Such an approach does help the residential housing construction market, which can create large numbers of jobs. However until it does, the TDMP approach seems a good way to proceed.

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Retirement Planning Faces A Perfect Storm – HSBC

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An HSBC Insurance study reveals that as far as pensions are concerned, a ‘Perfect Storm’ looms for an unprepared world.

A number of factors are in play:

  • Demographic, individual and financial elements are poised to derail people’s retirement plans unless they prepare properly now.
  • People’s short-term survival strategies in the midst of this recession are creating a serious long-term pensions ‘downturn deficit’.
  • This all is occurring even though people are aware that they are likely to live longer.
  • It is made worse by poor levels of financial understanding, education and access to advice
  • People are more concerned with protecting their possessions in the short-term than ensuring they can look forward to a financially secure retirement

Stephen Green, Group Chairman of HSBC, said: “The ‘preparedness gap’ reveals that families need greater support and guidance to effectively handle their finances, not simply in schools and colleges but through ‘trusted advisers’ providing professional financial guidance. The cost of procrastination is likely to be high.”

More specific advice can be found on the HSBC web page on Planning For Retirement.

As Jonathan Chevreau points out Canada is affected by the aging trend that is occurring worldwide. HSBC projects that between 2010 and 2015, the number of dependent adults in Canada will pass the number of dependent children for the first time, a crossover point which will arrive much earlier compared with emerging economies.

To better cope, 48% of Canadians and 55% of Americans would like to see further tax relief on savings. 16% of Canadians think the retirement age should be raised and more support be provided to those who choose to work longer.

28% of Canadians viewed debt as a key obstacle to saving more. Many are trying to create a “buffer” of savings by cutting back on both large and small purchases while also paying down debt.

Nevertheless it is clear that many people will struggle to make ends meet when they come to retire, unless they urgently review their priorities and planning and have the means to make adjustments..

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Alarming Debt For Canadians

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The latest findings on personal debt in Canada are very alarming as you can see from the headlines:

The CGA (Certified General Accountants) survey of 2,013 Canadians in November highlights the following situation:

Current household debt is at a "highly disturbing" level, especially considering the prospects are slim that financial security will improve in the recession. Canadian household debt is at an all-time high, reaching $1.3-trillion at the end of 2008, up dramatically from $1-trillion in 2007. That means household debt levels have climbed to $39,597 per Canadian from $23,885 in 2000 – an increase of 66 per cent in nine years.

A growing portion of household debt comes from credit cards and personal lines of credit, reflecting a rising use of credit for discretionary spending and non-durable goods. This means debt is increasingly used for consumption rather than for assets such as homes and vehicles. A CGA survey of 2,013 Canadians in November found that 58 per cent said their day-to-day living expenses are the main cause of their increasing debt, and that 21 per cent of people in debt said they can no longer manage the load.

Given that Jim Flaherty, Minister of Finance, confirms that Canada is still in a deep recession this does not bode well for the coming months.

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Seniors Filing Taxes – Help From Canada Revenue Agency

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The Vancouver Sun gives some useful Help for income-tax filers discussing software programs for those filing their taxes online and listing volunteer services by phone for the paper filers.

The Canada Revenue Agency has a web page specifically for Canadian seniors. This lists the numerous credits and benefits on the income tax and benefit return to which seniors may be entitled. Various resources are available to help file the income tax return accurately and on time. This is the surest way to get all the tax savings and benefits to which you are entitled.

The article does point out that 2008 is a year in which not too much has changed so the completion of the tax return should not be too difficult. The biggest challenge this year may be dealing with investment losses, given what has happened in the stock market. 

Tax relief is available, as losses can be offset against capital gains earned in other years, including three years in the past and forward indefinitely.  There is no need to refile for prior years to claim losses against past gains. A loss carry-back form (T1-A) can be completed and sent in with this year’s income tax return.

The sooner you complete your income tax return, the sooner you will benefit from any refund due to you.  Electronic returns can be processed in two weeks,  so your income tax refund will be in your bank account sooner.

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Jobs For Seniors Information Websites

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The world is changing for all and particularly for seniors.  With the global recession, some seniors are seeing their retirement funds dwindling alarmingly.  At the same time, with improved health services, seniors can look forward to much longer lives than in the past.  Accordingly, seniors looking for jobs can be grouped in three categories:

  • There are those who are retired and would like to do something active that would give them monetary rewards.
  • There are those who would like to retire but must continue to work because it is tough taking ends meet in these recessionary times, and
  • There are those who do not consider themselves seniors but are healthy and looking for a second career as they pass fifty.

There are a number of information resources on the Web and here we will highlight four of them.

Retired Worker (Canada)
Retired Worker connects 50+ job-seekers to employers who are looking for the experience, broad skill base and value such workers deliver. It was launched in 2003 by Sarah Welstead and Max Stocker in Toronto and is now the largest employment website in Canada for 50+ job-seekers.
SeniorsForJobs.com (Canada)
SeniorsForJobs.com serves talented job seekers who wish to remain in the workforce and astute employers who are looking for skilled, experienced and reliable employees. Membership is free for job seekers who can access the jobs database and apply for jobs. There are also employment resources and career management tools that are tailored to mature and experienced workers.
Jobs For Seniors ( Canada)
Job4seniors.ca will help seniors meet the challenges of re-entering the workplace and find the right position either in a part-time or full-time environment. In hiring a senior, an employer can look forward to the benefit of a productive and reliable person with many years of experience and knowledge.
Seniors Info (Canada)
This website in Ontario is part of a national project, the Collaborative Seniors’ Portal Network, and provides important information. for seniors, their families, and service providers. It has been developed through and by all three orders of government, and numerous seniors groups and service providers. Information about Federal and Provincial services is now readily available and in the future a wealth of local information of particular interest to seniors will be added.

The other factor that influences job choices is that there are many More Active Seniors than in the past.  Many are using time and money to pursue lifelong interests or to take on a second career, quite unlike the stereotype of grandparents sitting on the porch in rocking chairs.  Retirement can be a time of personal growth and activity. 

That is the thinking behind CARP, Canada’s Association for the 50Plus, which brings a New Vision of Aging for Canada.

As the population ages and the “boomer” generation enters the “seniors” category, the more mature portion of our population become ever more important. Moses Znaimer, executive director of CARP, has coined the term ZOOMER to describe the highly motivated, energetic, well trained and non-retiring senior – a “boomer with ZIP”, as Moses puts it.

As part of that, there is a Canadian website, Seniors For Hire.ca, where progressive employers can connect with mature workers of 50 plus years.  The website is also known as ZoomerJobs.com.

A Job-seeker can browse jobs and post resumes for free. An Employer can have immediate access to hundreds of job-seekers and post job vacancies, which will be accessible to almost 100,000 viewers each month for a small fee.

“Mature workers – employees of 50 + years up to “seniors” (wherever that starts) are a tremendous boon to the workplace”, says Darryl Wall, Vice President of SeniorsForHire.ca . “Progressive employers throughout Canada are hiring seniors to supplement their workforce and provide a positive role model for new employees”.

 

This changed view of the 50+ threshold is also reflected in a similar US website, SeniorJobBank. which is a meeting place for over-50 job seekers and the employers seeking their services. Originally established in 1975, the SeniorJobBank claims to be  the most recognized name on the Internet serving this audience. The average age of visitors to the website is 57.

Such individuals are not ready to be put out to the proverbial pasture. They’re vibrant, dedicated, and knowledgeable. An employer can tap into this valuable and increasing segment of the population and benefit from the talent, experience and work ethic that they bring to any company or organization.

For those who do not think of themselves as seniors at 50, there is a sister website, Workforce50. designed for employers who wish to advertise to more mature job seekers for their job openings.

Many jobs will be better filled by mature workers, with skills, knowledge and experience who are wise in the ways of the world.  A win/win situation is certainly very likely for both employer and employee.

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Tax Tips And Tax Deductions for Seniors

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Tax Return time is upon us and reminders on this are coming up almost every day.  Although the specifics depend on which country you live in, there is often merit in looking over lists to see whether it sparks ideas on tax deductions that may be overlooked. 


One US article that offered Tax Tips for Senior Citizens  pointed out that if anyone needs a little extra tax know how, it’s retired senior citizens, more and more of whom are just trying to make ends meet.  You should not forgo completing your tax returns since there may be benefits to which you are entitled.

Another US post today mentions 25 Easily Overlooked Tax Deductions.  As is pointed out, if you are one of the millions of Americans who throws all their receipts, credit card and bank statements into a box, you are likely to overlook hundreds of dollars in tax deductions when preparing your tax filings. Here is their list of deductible expenses:

  1. Medical transportation expenses including tolls, parking, and mileage for trips to doctor’s, health facilities, laboratories.
  2. Prescribed medical aids such as crutches, canes, and orthopedic shoes
  3. Hearing aids, eye glasses, and contact lenses
  4. The cost of alcohol and drug abuse programs, and certain smoking-cessation treatments
  5. Education expenses you paid to maintain or improve job skills (including professional books)
  6. Professional journals, magazines, and newspapers that are job-related
  7. Cost of safe deposit box used for to store investments or investment information
  8. Required uniforms and work clothes not suitable for street wear
  9. Union dues.
  10. Job-seeking expenses within your present field of employment – from printing resumes to phone charges.
  11. Dues to professional organizations and business gifts up to $25 per customer or client
  12. Cellular phones required for business
  13. If you are self-employed, half of the self-employment tax paid
  14. Self-employed health insurance premiums and long-term care insurance premiums up to the annual limits.
  15. Fees for tax preparation or advice, including software like TurboTax if you meet limits
  16. Services of a housekeeper, maid, or cook needed to run your home for the benefit of a qualifying dependent while you work
  17. Penalties paid on early withdrawal of savings
  18. State income taxes owed from a prior year and paid in the tax year-with your last return
  19. Mileage incurred in performing charitable activities
  20. Gambling losses to the extent of your gambling winnings – but be prepared to document this
  21. The cost of employment agency fees or commissions in certain cases
  22. Home office expenses, if your home is your primary place of business
  23. Cash and non-cash contributions to qualified charities
  24. Reservist and National Guard overnight travel expenses
  25. Worthless stock or securities – but you must follow the prescribed rules.

The Internal Revenue Service of the United States Department of the Treasury has a useful tutorial giving Tips for Seniors in Preparing their Taxes.  As it explains:

Current research indicates that individuals are likely to make errors when preparing their tax returns. The tax tips included were developed to help you avoid some of the common errors dealing with the standard deduction for seniors, the taxable amount of Social Security benefits, and the Credit for the Elderly and Disabled. In addition, you’ll find links to helpful publications as well as information on how to obtain free tax assistance.

One Canadian website, TaxTips.ca, provides Canadian Tax and Financial Information with links to a large number of resources on Income tax information items such as:

  • Pension splitting
  • Attendant care expenses
  • Attendant care expenses paid to a retirement home
  • Disability supports deduction
  • Amount for an eligible dependent – A single person can claim a tax credit for a dependent child, grandchild, sibling, parent or grandparent.
  • Caregiver amount tax credit may be available if (dependent or non-dependent) parent or grandparent (over 65) lives with you, or if a dependent relative lives with you.
  • See non-refundable tax credits on the Filing Your Return page for tax credits available for seniors.
  • Do you qualify for the Service for Seniors Telefile to file your tax return?
  • Access your Old Age Security (OAS) and Canada Pension Plan (CPP) tax slips online.
  • You might save tax by sharing your CPP retirement pension with your spouse.

The Canada Revenue Agency of the Canadian Government also has a website offering Tax and benefit information for seniors:

As a senior, you may be entitled to claim numerous credits and benefits on your income tax and benefit return. You have specific information needs when it comes to completing your return, and various resources are available to help you file your return accurately and on time. Here you will find much of the information you need to make filing easy, and to get all the tax savings and benefits to which you are entitled.

If you wish to complete your tax returns yourself or are looking for assistance in getting someone else to assist you, then the above links will give you the necessary information. Remember too that the government offers a free IRS efile service that will save you a few more dollars in addition to the deductions listed above. Since you may possibly be receiving a check for tax credits owed to you, it is better to complete your tax return earlier rather than later. We hope you appreciate this additional reminder.

If there are other sources of assistance for seniors on their tax returns that you have found useful, then why not add these in the comments.  You may make someone extremely grateful.

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Building Customer Loyalty – the old-fashioned way

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It is interesting to compare the advice you will find on Building Customer Loyalty.  Here are two current lists:

Eight Key Ingredients to Build Customer Loyalty

  1. Be Reliable
  2. Be Credible
  3. Be Responsive
  4. Show Empathy
  5. Hire Good Employees
  6. Train Employees Constantly
  7. Create a Sense of Employee Belonging
  8. Make Things Easier for Customers

Ten Tips to Build Customer Loyalty

  1. Communicate.
  2. Customer Service.
  3. Employee Loyalty.
  4. Employee Training.
  5. Customer Incentives.
  6. Product Awareness.
  7. Reliability.
  8. Be Flexible.
  9. People over Technology.
  10. Know Their Names

The central issue in both lists is the involvement of all the employees.  If they are treated right, then they will in turn treat the customers right. That is one message that is typified by a  77-year-old Canadian icon.  He is a  customer service dynamo.  If you have not guessed, we are talking about Harry Rosen who has built his menswear empire on personal relationships.

harry rosen

Harry Rosen has forged a name as one of Canada’s most respected and revered men’s fashion brands famous for tailored suits of exceptional quality, with 40 per cent of the market share in Toronto and more than 15 stores across Canada — including stores in Ottawa, Vancouver, Calgary, Edmonton and Montreal.

Rosen made it his mission to have as many customers come back to shop with him personally. “I realized that building relationships was crucial in this business. Customers came back to me even though I was a part-timer.”

Harry Rosen always treated every customer as an individual.

While keeping tabs on customers’ buying habits and preferences is considered mandatory business practice nowadays, back in the 1950s Rosen’s diligence in starting individual files for each customer and updating it regularly was innovative and ground-breaking. The importance of nurturing repeat buyers by providing them with unparalleled service is something Rosen encourages directly in his stores — in fact, he pays his staff on retention of customers, not on commission.

It is another most successful example of the valuable asset that is created when you build customer loyalty.

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