Archive for December, 2013

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Wishing You the Very Best of the Holidays

It has been a pleasure to serve the close to 22,000 subscribers to Knowledge Bureau Report this year and to feature up-to-the minute commentary on tax and economic affairs from our stable of contributors including our researchers, course writers, in-class instructors, guest writers, editors and technical distributors of the information. They have each done a phenomenal job.

We hope that you have benefited from this extensive effort to bring interpretation to what’s going on in financial news each week. If you are in the tax or financial services industry, we salute you – you do very important work and it’s not easy. You need to be up-to-date, exact, and have a crystal ball on your shoulder, too. . .a task that’s not for the faint of heart.

If you are joining us as a concerned taxpayer, investor, or retiree, we salute you, too. You have taken an important step in consolidating your tax and financial literacy in order to shore up your knowledge and skills and make responsible financial decisions for your family.

Now, it is time to enjoy the holidays and reflect on how 2014 will develop for you. Don’t forget to fill up the car on December 31 and purchase those extra office or medical supplies to ensure these costs are deductible on the 2013 tax return rather than waiting 12 to 16 months for the return of your 2014 refund. There is also still plenty of time to top up your donations for 2013 and to consider whether your tax instalments for the year were high enough.

And if you’re a last minute shopper – remember, the January credit card bills are just around the corner. It may be much more prudent and satisfying to give the gift of time to your family and friends. It’s as valuable as money or gifts; in fact, it’s priceless.

It’s Your Money. Your Life. May all the warmth of the holiday season wrap itself around you; may the simple goodness of humanity prevail around your family life and may you share new and special memories that will strengthen your faith in our beautiful world.

Evelyn Jacks is president of Knowledge Bureau and author of 51 books on tax and personal wealth management. Her newest book Jacks on Tax: 2014 Edition is now available. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of the 2014 three day think tank in Horseshoe Bay, Texas Nov 9-12 will be “Think BIG: Find the Sweet Spots in Wealth Management”  Follow Evelyn on Twitter at @EvelynJacks.


Apply Promptly for Refund of Over-Deducted CPP Premiums

It was a pleasure to participate in a live tax chat with Canadians from coast to coast before the holidays in an event hosted by MoneySense magazine. One of the interesting questions asked concerned the length of time contributors have to recover overpaid Canada Pension Plan premiums.

The taxpayer discovered he had overpaid premiums when a retroactive CPP disability pension was granted over a 7 year period.

To his dismay, he discovered that the maximum recovery time for such premium over-payments is no later than four years from the end of the year in which the overpayment occurred. (In the case of Employment Insurance over-payments, the maximum recovery time is even less – no later than three years from the end of the year in which the overpayment occurred.)

For the current year, any contribution above the required contribution for the year will be computed on the tax return using Form T2204 (on paper-filed returns, CRA will do this calculation for the taxpayer). In certain cases, the employee will not be required to contribute. This can include the following:

  • The employee was under 18 or over 70
  • The employee was 65 to 70 years of age and receiving a retirement pension from the CPP or QPP and has elected to stop contributing to those plans by filing form CPT30
  • The employee was considered disabled under the CPP or QPP
  • The employee died during the year
  • The employee was not engaged in pensionable employment

Employers too may recover such over-payments for their portion of the premiums. This is done annually when the T4 remittances are made for the current calendar year. Otherwise use Form PD24 E.

For our tax chat participant, unnecessary premiums were paid during the period when he was disabled because the disability was not recognized by CPP until seven years later. Because of the statute of limitation on CPP premium recovery he is not able to recover much of those overpaid premiums. On a positive note, lump sum averaging will be applied to his prior year returns to average out the tax on the CPP disability payments; those amounts will also create unused RRSP contribution room.

It’s Your Money. Your Life. Time to process T4 slips is just around the corner.  Overpaying deductions at source can be very expensive for taxpayers. Whether it’s income taxes, Canada Pension Plan or Employment Insurance, it’s important to watch out for circumstances that can lead to over-payments and to apply for them promptly, as varying deadlines exist for retroactive recovery.  And remember – if you catch any errors or omissions on prior filed tax returns, make adjustments before December 31. Such corrections will no longer be allowed for the 2003 tax year in 2014.

Evelyn Jacks is president of Knowledge Bureau and author of 51 books on tax and personal wealth management. Her newest book Jacks on Tax: 2014 Edition will be available in December. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of the 2014 three day think tank in Horseshoe Bay, Texas Nov 9-12 will be “Think BIG: Find the Sweet Spots in Wealth Management”  Follow Evelyn on Twitter at @EvelynJacks.


Thoughts for Year End: Wealth is a State of Mind

Are you wealthy? How do you measure your answer? Many people don’t believe that word belongs to their situation until they sit down and actually map out their personal and family net worth – total assets less total debt. But wealth has a lot to do with your state of mind around financial decisions.

According to a monthly survey from Spectrem Group’s Millionaire Corner[1], the notions of wealth are highly subjective. Retail investors – those with a net worth of less than $100,000, not including primary residence – most commonly believe it takes $1 million to be rich. Ultra High Net Worth (UHNW) individuals are most likely to say it takes a minimum of $5 million to $10 million to be wealthy.

Apparently, there are millionaires walking around the world today, who don’t feel they are wealthy enough. What’s missing for them? It turns out that the notions of wealth are also influenced by the factors that contributed to an individual’s net worth. UHNW inheritors of wealth tend to see themselves as less wealthy. Those who say their success is based on hard work, education, running a business, and luck tend believe they are more wealthy.

I like to think of the notion of wealth as “having enough”. For me, this is the tangible result of increased financial literacy:

  • Independence, resulting from the use of financial skills
  • Peace of mind, resulting from use of financial knowledge
  • Confident and purposeful decision-making, enabling individuals to live and retire with dignity, and with enough resources to cover both needs and wants

It’s Your Money, Your Life. The two walk hand in hand. It goes without saying that when financial concerns overtake the quality of your life, a life deficit exists. The peace of mind that comes with understanding your true wealth often comes from financial literacy and the tax and financial planning processes that can help you plan for the future. Including a tax and wealth manager who can act as a financial educator, an advocate and a steward of your precious capital is a good first step to peace of mind. That’s the mandate of designates of the Master Financial Advisor program.

Evelyn Jacks is president of Knowledge Bureau and author of 51 books on tax and personal wealth management. Her newest book Jacks on Tax: 2014 Edition will be available in December. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of the 2014 three day think tank in Horseshoe Bay, Texas Nov 9-12 will be “Think BIG: Find the Sweet Spots in Wealth Management”  Follow Evelyn on Twitter at @EvelynJacks.


[1]Rich in America” series of articles. (January/February 2013)