Financial Goals for the New Year for Income

Do you have any financial goals for the new year?

One of mine has to do with where my income is coming from.

An approximation of my income from 2012 is:

• 79% from primary job.
• 12% from secondary job.
• 5% from self-employment.
• 4% from EI (I was on maternity leave for the month of January)

This is gross income from jobs, not including benefits and gross EI payments. Self employment is income after expenses (but not including cell phone, and before out of home expenses)...otherwise it would currently be registering at 0% because my cell phone and out of home expense deductions would wipe it all down to 0 taxable income!

I'd like to be able to have that first amount of income from primary job drop to about 70%.  My hope is that I can increase the self-employment amount from 5% of my income to about 15%.  Self-employment including cell phone expenses would be even better!

Tax Withheld on RRSP Withdrawals

If you are in Canada, and are at a point where you need or want to withdraw money from your RRSP, please ensure that you are familiar with the rules of withdrawing it.

I've had a few income tax clients over the last couple of years who have been surprised to owe money on their income tax.  The primary reason these particular clients owed money was because they withdrew money from their RRSP's but the bank/financial institution did not withhold enough tax on the withdrawal for their financial situation.

Minimum Tax Withheld on Withdrawals

The minimum tax that is withheld is dictated by Canada Revenue Agency.
If you take $5000 or less out, they withhold 10% in taxes.
If you take between $5000.01 and $15000 out, they withhold 20% in taxes.
If you take more than $15000 out, they withhold 30% in taxes.

(Note: These are the numbers for all of Canada, except Quebec, which withholds slightly more.)

Add to Income

The amount that is withdrawn gets added to your income tax as income.  If you have other income from other sources (employment, investments, etc.), it is quite possible you are will need to have more money withheld for taxes! Or, alternatively, ensure that you are saving the money that you will owe on taxes in something that is earning you a bit of interest in the meantime.

Be Aware. Know Your Circumstances.

As long as you are aware of your circumstances, there will be no problem! You will make sure that either the bank or yourself withholds enough taxes so that you are not surprised come income tax filing time.

The problem is if you are not aware, and all of a sudden you realize that you owe a bunch of money as a result of withdrawing money from your RRSP's and you weren't aware that this would happen.

No one likes finding out that they owe money to the government.

Have you been surprised to owe money when filing your taxes?

Have You Made the Most of Your Benefit Plan?

Have you thought about your benefit plan at work recently? Most benefit plans run on a calendar year, which means the benefits you can use in one year end on December 31.  Even though we are only at the end of October, the end of the year will come quickly!

I am extremely fortunate to work for an agency that still provides health benefits to their permanent employees who work more than 24 hours/week.  Ideally, I would love to work 16 or 20, but I work 25 hours a week with this employer in order to maintain access to the benefit plan.

I realize that not everyone has access to a benefit plan, but if you do, you should make sure you are using it!

By using your benefits, you could be using services like:

• Accupuncture
• Chiropractor
• Dentist
• Glasses or Contacts
• Massage
• Naturopathy
• Nutritionist
• Optical Services
• Orthodontist
• Orthotics
• Personal Counselling
• Prescription Drugs

If you pay into your benefit plan from your earnings, make sure to claim this amount as a medical expense on your income taxes.  Sometimes the amount is listed on your T4 slip, and sometimes it is on your last paystub for the year.  Also, for any services that are not 100% covered, the portion that you pay that is not covered can also be considered a medical expense. 

I've already booked monthly massages for November and December in order to make use of my benefit plan.  Take a look into the details of yours, and make sure you are using them!

Activia/DanActive Danone Class Action Lawsuit in Canada - Are You Eligible?

As you may have read, earlier this week I received a cheque as a result of the Mattel class action lawsuit.

On the same day, Monday September 24th, the Toronto Star had a large ad in it stating that there is a class action lawsuit against Danone regarding health claims in advertising for Activia Yogourt and DanActive probiotic drinks.  They had an article about it in the Toronto Star on Tuesday.  You can read it here. 

Numerous Canadians are eligible to be part of the settlement of the this lawsuit and will receive between $15 and $50.  However, in order to qualify, you must have purchased the products, and must submit a claim.

It all comes down to this:

• The advertising stated that the products could aid digestion and/or help colds. 

• A class action lawsuit for the same issue has already been won in the US for the same issues. 

• The settlement should be finalized in court on November 6, 2012. People will have up to three months after that date to claim, and the cheques are supposed to be sent out to claimants within 60 days after that. You are looking at a payment date of up to 5 months after November 6, 2012. 

• If you have receipts of products purchased between April 1, 2009 and November 6, 2012, in the amount of $15-$50, you will receive your money back. 

• If you have receipts of purchase of products in the same timeframe of less than $15, you will receive $15. 

• If you don't have receipts, but will sign an affidavit that you purchased the products, you will receive $15.

If you qualify and are interested in being a part of the settlement of this claim, remember to send in your claim form.

Here is a link to the form that you need to send in, either by mail, or electronically.

http://www.collectiva.ca/en/dossiers/documents/Claimform.pdf
http://www.collectiva.ca/en/dossiers/documents/Claim_Form_Dynamic.pdf

I personally have never bought these products, nor do I intend to over the remaining claim period, but thought many of my readers would be interested in this info.

Mattel Canadian Class Actions Settlement Received

When my daughter was younger she loved Polly Pockets. She's almost 11 now, so she's outgrown this stage. Sad, but true! As a result of her loving them, and being great playtoys we had many in the house.  There was a recall on a number of the sets back in 2006/2007 due to tiny magnets coming out of the toys.

I put together all the pieces from each set that was recalled (not an easy task if you know how small they are!) and ended up returning them, postage paid, and received a credit voucher to be used towards other Mattel products in the value of $53.00. 

A year ago, I received both an email and regular mail about a class action lawsuit that was happening regarding this recall against Mattel/Fisher Price.  Since my name was in the database from returning the toys, I was already a part of the lawsuit. (Who knew?)

I wrote about this last August, in a blogpost on my personal blog.

I'd pretty much forgotten about all of this, but today, 6 years after the initial recall, and one year after hearing about the class action lawsuit, I received a cheque for $26.50, which is 1/2 the value of the original credit.

Virtual Visa Debit from RBC

A month ago I received a new Virtual Visa Debit card in the mail from RBC.  I did not apply for it.  It just...arrived.

The card is meant to be used as a "new way to pay for online, telephone and mail order purchases.  Payments are debited directl from your RBC Royal Bank personal deposit account."

I put it aside, trying to figure out why it would have been sent to me.  You see, I have absolutely no reason or incentive to use this card!

Yes, I absolutely make online purchases. However, I already have a credit card that I'm comfortable using for online purchases.  I even get points on this credit card to redeem for stuff later.

Not everyone has a credit card.  I think this Virtual Visa Debit card is perfect for those who don't.

• For those who have chosen to not be tempted into debt and have stayed away from having a credit card.  
• For those who don't have a good enough credit rating to get a credit card.
• For those who are under 18 and are not old enough to have a credit card.

There are times when not having a credit card can be a real pain for those who don't.  Hotel and vacation booking is one, since you wouldn't be able to use any of the online booking companies (Hotwire, Priceline, Booking.com, Hotels.com etc), or even be able to book directly through a hotel website.

This new card fills a gap in the market for those looking to be able to buy online and don't want to bother their friends or family members to give them cash in order to have them purchase the desired item online.

I won't be using this card myself, and will not be activating it, but I do see value in the card for others.  

Can you think of any other groups of people this card would be good for?  Would you be interested in using it?

Canada Learning Bond - Are Your Children Eligible?

I wrote about The Canada Learning Bond once before, back in 2008.  It was pretty new back then, having started in 2006. In 2006, only 4.7% of those eligible applied for this FREE money for their children's RESP.  By 2008, it had increased slightly, to 16.3%, and by 2011 had increased to 24.4%. 

You can see the totals of the participation rates broken down by province here.

At less than 25% of those eligible participating in the program, the program is still highly unknown.

I think post secondary education is important, so as a tax preparer, this year I am going to try to emphasize this program to my clients who are eligible for it.

Directly from the HRSDC website, the Canada Learning Bond is:

Introduced in 2005, the Canada Learning Bond (CLB) targets low-income families and provides them with a financial incentive to save. Upon applying, the CLB is given to all children who have an RESP account and are eligible to receive the National Child Benefit Supplement (NCBS) in addition to the Canada Child Tax Benefit, commonly known as “family allowance.” The CLB does not require any contributions from parents and is deposited directly into the child’s RESP. Specifically, the Government of Canada provides an initial CLB of $500 to children born after December 31, 2003 plus an additional $100 per year until age 15 and up to a maximum of $2,000.

So...if you receive the National Child Benefit Supplement, your children are eligible for this! Head to your local bank and ask to open an RESP for your children and have them apply for the Canada Learning Bond for you.  The first year you do so, each child will receive $500, and each year after that you still qualify they will receive another $100.

Tell me:  Have you done this already? Are you planning to?  How can you go wrong!?