Childcare Trends: Statistics Influencing Universal Funding Proposals

The federal government has pledged to put $7 Billion in funding into childcare support, and some provinces intend to add more. Do you think this is a good idea? Statistics Canada released data in October 2014 focusing on who uses childcare in Canada, which may impact your opinion. Weigh in and share your thoughts before this month’s poll closes.

The General Social Survey reported the following statistics for 2011:

  • Almost half of parents (46 percent) used childcare of some variety for children under the age of 14. Fifty-four percent of these children were age 4 and under.
  • The majority of parents who used childcare did so regularly.
  • There were three primary types of childcare arrangements used for children 4 and under, and the arrangements varied by province:
    • 33 percent used daycare centres
    • 31 percent used home daycare
    • 28 percent used private arrangements

The top choice for parents from the Prairie provinces was private childcare. Before and after school programs were the most common type of childcare arrangement for school-aged children in Quebec, Ontario and Eastern Canada.

Outside of the province of Quebec, very young children were usually placed in the care of relatives, nannies and other private arrangements. In Quebec, however, home daycares and daycare centres were used almost exclusively. In fact, parents from Quebec reported the highest rates of childcare use—a result of the fact that it is the only province that has a universal child daycare program.

What did parents consider when weighing their childcare options? Location was the most important influencer for 33 percent, with trust in the care provided coming in second at 18 percent.

Sixty-nine percent of parents reported that they were very satisfied with the quality of their childcare arrangements, while 29 percent claimed to be satisfied.

Do the trends pertaining to childcare use in Canada influence how you feel about the new funding proposals? Should governments spend more on universal childcare? Cast your vote and share your thoughts in our April poll!

Additional educational resources:

For more information on the provisions of the 2018 federal budget, check out our Budget Report. Also attend the Spring CE Summits in one of four Canadian cities, focusing on post-budget action strategies.


Retirement Planning: Four Tax-Efficient Income Options

Have you explored all of the tax-efficient income options available to generate consistent income that will provide for your retirement needs and wants? If you’re a Boomer challenged to find tax-efficient options, discuss these four alternative sources with your tax advisor today.

Many tax advisors will have these resources available in their retirement toolkit, in addition to the government benefits and private savings options that are more commonly used by Canadian investors. Taking advantage of these alternatives is especially important if you’re self-employed.

Pooled Retirement Pension Plans (PRPP).This new type of pension plan was passed into law by the federal government in 2012 and provincial legislation has since followed for most provinces. The plan provides a voluntary and affordable alternative for small businesses to offer an employer-sponsored pension plan at work, with contribution levels that will mirror those available under the Registered Pension Plan (RPP) defined contribution or money purchase rules. Pre-retirees should discuss the opportunity to initiate such a plan for their smaller business enterprise.

Individual Pension Plans (IPP). Individual Pension Plans are established for an owner-manager who is an employee of his or her own corporation. Annual minimum amounts are required to be withdrawn from the IPP once the plan member is 72, similar to the rules under the Registered Retirement Income Fund (RRIF). Also, contributions related to past years of employment must come from RRSP or RPP assets or by reducing RRSP contribution room, before deductible contributions to an IPP can be made.

Registered Disability Savings Plan (RDSP) Rule Changes. First established in 2008, the RDSP is used to accumulate private pension funds for the benefit of a disabled person. RDSPs function in a similar fashion to RESPs, in that contributions are not tax deductible, earnings accumulate on a tax-deferred basis and the government contributes grants and bonds to enhance savings. Any person eligible to claim the Disability Amount can be the beneficiary of an RDSP and the plan can be established by them or by an authorized representative. Until the end of 2023, a family member may be the plan holder for the beneficiary if the beneficiary’s capacity to enter into a contract is diminished.

German and other Foreign Pensions. If you receive German social security pension, it’s reportable in Canada, but you will qualify to claim a partial exempt portion; the exemption depends on when you started receiving the pension benefits. Ex-pats who receive any German pension benefits will also have filing obligations in Germany. Taxpayers may claim foreign tax credits on any income that is taxed both in Canada and Germany. To determine the proper credit, you’ll have to file returns in both countries rather than relying on taxes withheld at source which may be fully or partially refunded by filing a tax return. For other taxpayers with offshore pension income sources, don’t forget to report world income in Canadian funds; claiming a foreign tax credit if there are any foreign tax withholdings. Offshore assets require the filing of Form T1135 Foreign Income Verification Statement if the cost of assets exceeds $100,000 Canadian. This form must be filed by April 30.

Additional educational resources:

For further information and specialized training in retirement income planning, become a designate in Knowledge Bureau’s Master Financial Advisor – Retirement and Estate Services Specialist program, or the Tax Efficient Retirement Income Planning course. As a taxpayer, looking for an advisor with these credentials and consulting Evelyn Jacks’ latest book – Essential Tax Facts – can help you focus on tax-efficiency for every stage of life.





Found Money: How Filing an Accurate T1 Pays Off

For many Canadians filing a tax return is the most important financial transaction of the year. Getting the best tax refund is important: not only will it put more or the money you previously earned back in your own pocket, your refund can make at least some of your cash flow and retirement worries go away. Here’s how:

The average tax refund last year was $1,735 or about $145 a month. If that money was going into an RRSP, over a 40-year period at an average return of 5 percent, that tax refund would grow to $220,067. That’s a solid nest egg!

The tax return is also your avenue to refundable tax credits – tax free money – which include the following:

The GST/HST Credit of $284 per adult and $149 per child, offered by government to offset the cost of paying tax at the till.

  1. The Canada Child Benefit of up to $6,496 per child under six (that’s $541.33 per month) and $5,481 for each child between six and seven (that’s $456.75 per month).
  2. The Working Income Tax Benefit of up to $1,028 for those who have a minimum earned income of $3,000 (full-time students who don’t have an eligible dependant are amongst those who don’t qualify).
  3. The Eligible Educator School Supply Tax Credit of up to $1,000 in qualifying expenses – 15 percent is then refundable.
  4. Various Provincial refundable tax credits

The money moral: filing a timely, accurate T1 is about how much of your hard-earned dollars you get to keep – for now and for peace of mind in your financial future.

Additional educational resources: Interested in learning more about how to help others prepare accurate T1 and get a jump on retirement planning? Try Knowledge Bureau’s Distinguished Financial Advisor – Tax Services Specialist or Master Financial Advisor – Retirement and Estate Service Specialist designations. Register before June 15 to save on tuition for the summer session. Courses are available online 24/7 with continuous intake, so you can start anytime!

Evelyn Jacks is President of Knowledge Bureau, Canada’s leading educator in the tax and financial services, and author of 53 books on family tax preparation and planning.