Weekend Reading: Tax Changes and RRSPs Edition

I got my T4 this week and, with the 2015 RRSP contribution deadline just around the corner, my thoughts have turned to tax season and making sure I do everything I can (within reason) to reduce the amount of tax I pay this year.

A new government, both provincially here in Alberta and federally, means some tax changes are coming. The previous Harper government dangled all types of carrots last year, introducing measures like the Family Tax Cut and increasing the TFSA contribution limits to $10,000. Now those benefits have disappeared.

How will these changes affect your 2015 tax return? We’re excited to have chartered professional accountant Robin Taub here later this month to hopefully answer all of your burning questions. She’ll talk about the middle class tax cut, the new tax bracket for high income earners, and the reduced TFSA contribution limit, plus discuss the benefits of using CRAs new auto-fill my return feature.

Please leave a comment below if you have a question for Robin about the latest tax changes and how they might impact your return this year.

This week’s recap:

I was a guest on the Mo’ Money podcast with host Jessica Moorhouse. We talked about how Boomer & Echo started and also about side hustling to early retirement. Thanks for having me on the show, Jessica!

On the Lowest Rates blog, I wrote about car insurance and when to change your coverage.

Over on Rewards Cards Canada I looked at ways to maximize your travel rewards.

Here on Boomer & Echo this week I looked at some common rebuttals advisors use when their clients want to transfer funds to another institution.

On Wednesday Marie her “real cost” series with a look at the real cost of personal debt.

On Friday I reviewed BMO’s new SmartFolio online investing platform.

Financial resource of the week:

If you’re interested in learning more about online wealth management services – or robo-advisors – there’s a fantastic resource called the Canadian Online Investment Fee Calculator that looks at all of the robo-advisor services and compares their costs to the likes of other managed portfolio options such as Steadyhand and Tangerine.

The tool was developed by Sandi Martin and John Robertson and has been kept up to date with the latest robo-advisor additions and new bank platforms like SmartFolio, as well as Questrade’s Portfolio IQ.

I love the robo-advisor model for a couple of reasons. For one, it takes your emotions out of the investment process and instead uses a predefined asset allocation and mix to manage your portfolio. No more guess work on which fund to buy or sell, simply add new money and the robo-advisor will allocate it appropriately according to a set of rules.

Second, the entrance of robo-advisors onto the investment scene will dramatically lower fees for Canadian investors, which will lead to better outcomes. Suddenly a professionally managed portfolio is available to everyone for an annual fee of about 1% or less. That’s a far cry from the 2.0% – 2.5% that investors pay with their actively managed (or closet-index) mutual funds. BMO saw the writing on the wall, and TD is rolling out its own suite of low-cost ETFs later this year. This will undoubtedly lead to TD’s own robo-advisory platform.

Adam Mayers argues in his latest Toronto Star column, as the wealthy turn to robo investing, we’re sure to follow.

Weekend reading:

The biggest story of the week was this expose on “shadow flipping”, the real estate technique that’s fuelling the Vancouver housing market.

The CBC followed up with a story arguing that the practice was not limited to Vancouver but even more wide-spread than feared.

If you are flipping houses, as Jamie Golombek explains, expect to face tax on 100% of your profits.

Another unseemly practice in the mortgage industry is brokers who encourage prospective buyers to use a line of credit to fund their 5% minimum downpayment. Here are seven reasons why that’s a bad idea.

A blogger who previously bet on the collapse of Canada’s housing market (by shorting the banks) throws in the towel on trying to predict when or if the bubble will ever pop.

Tim Cestnick on why Valentine’s Day gifts should not include money for an RRSP.

Why the RRSP is the best retirement plan out there for the dual citizen living in Canada.

Morgan Housel describes the agony of high returns with this tale of Monster Beverage, the best performing stock from 1995 to 2015.

A Wealth of Common Sense blogger Ben Carlson offers a smart take on our behaviour in bull markets vs. bear markets.

The Blunt Bean Counter Mark Goodfield started an important series about what small business owners need to know. Check out the first post here and Mark is also offering small business owners a chance to join his mailing list.

Michael James says it’s a waste of time to wait for banks to grow a heart in this post about understanding bank profits.

Million Dollar Journey explains the ins and outs of capital gains tax when converting currency.

Finally, Barry Choi answers the question: how many mutual funds are too much?

Enjoy the long weekend, everyone, and thanks for reading!

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  1. Kyle on February 13, 2016 at 1:05 pm

    You mention that the Family Tax Cut is gone for this year, yet I have not seen that the legislation has been changed, and CBC reported that 2015 tax year would be the last year for it.


    I feel that with people already starting to prepare their taxes, and with the budget not coming out and the finance minister not making it offically repealled (that i have been able to find), the Family Tax Cut will not be pulled off the table for 2015.

  2. Elizabeth on February 13, 2016 at 4:09 pm

    I have a tax question! I started working on my taxes earlier this week and realized that I can claim amounts for my move this year (from Newfoundland to Ontario for work). I’m claiming the cost of my moving truck, as well as setting up my utilities, but I can’t figure out where I claim the amount for my flights and baggage! Can I claim it and what box does that go in?

    Also – I’ve made some fair-sized donations in the past couple of years and want to claim them on my 2015 taxes. How does the first time donor super credit work? It looks like if I claim mine this year, then my partner can’t claim one in the future?!


  3. The Blunt Bean Counter on February 13, 2016 at 4:56 pm

    Hey Robb

    Thx for the link. Ask Robin if I have income from the UK which has an April 5th reporting period, how should I file my tax return for the other 8 months and claim the foreign tax credit, when I became resident part way through the year 🙂

  4. Michael James on February 13, 2016 at 5:23 pm

    That shadow flipping story was a real eye-opener. I’ve learned that real estate agents often don’t come close to truly representing their clients’ interests, but this is another level. Thanks for the mention.

  5. J on February 14, 2016 at 10:06 am

    Hi I will be filling taxes jointly with my wife for the first time this year. We make a combined income under $180k, with me making about double what my wife does. I keep hearing about “family income splitting” but I can’t find anything that truly explains it, quick run down for my situation please?

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