Year End Planning: Cambodia in My Thoughts This Year

Year end tax planning, for me, always begins around Thanksgiving and involves my favorite charities.    This year, I will be allocating resources to Canada, as usual, but in addition, I will be contributing to a very special award-winning sanitation project in Cambodia. I must disclose up front, quite proudly, that this pilot project is headed by my son, Cordell Jacks and his partner Tamara Baker.   It brings portable latrines to the poor in rural Cambodia in a cutting edge way:  through low cost product and service design, marketing strategies and unique delivery mechanisms that create income opportunities for poor rural households in Cambodia.  Its bigger impact, however, is to attempt to solve a global problem that is the most lagging Millenuuium Development Goal—the fact that 2.5 Billion people lack access to hygienic sanitation. 
Imagine the opportunity—to save billions of lives, particularly those of young children, who fight disease and death due to a lack of sanitation solutions.  Cordell and Tamara will be in Canada next month speaking at the Rotman School of Management (information below) and at the Winnipeg IDE Annual Fall Banquet, which my company, The Knowledge Bureau will proudly sponsor.  I hope if you are in either of those two cities at that time, you will take this in.  Information appears below.
From an individual point of view, there are lots of ways to contribute to wonderful causes and receive lucrative tax benefits.  On the personal tax return, charitable donations made to a registered charity qualify for a 15% federal credit on the first $200 given; 29% on amounts over this.   When provincial tax benefits are included an average credit of 25% to 45% can result.  Each individual can give up to 75% of net income for the year, that rises to 100% in the year of death.  Gifts made in the current year or in any of the immediately preceding five years are claimable on the 2010 tax return.  Qualified gifts include cash, capital property such as publicly traded shares, mutual fund units, life insurance policies, personal-Use property
I like to review my portfolio to see where I have accrued gains.  When I have transferred shares from publicly-listed securities directly (it’s also possible to do so with employee stock options) for the purposes of a donation on or after May 2, 2006, resulting capital gains are not subject to any tax. Gains on similar gifts after March 18, 2007 to private foundations will equally be free of tax.   
It’s Your Money.  Your Life.  Make a difference, if you can.  And, if you are interest please attend the following:
IN TORONTO:  October 21: Social Change Experts Speaker Series @ Rotman.  Our guest speaker is Cordell Jacks, Water and Sanitation Program Manager, International Development Enterprises (IDE). He’ll present a session titled “Business and Marketing Models for Social Change: A Case Study of an IDE Project”. In this case study of IDE's portable latrine project in Cambodia, Cordell will share how product and service design, marketing strategies and unique delivery mechanisms combine to create income opportunities for poor rural households in Cambodia. Cordell has been asked to present this case study to the meeting of South East Asian Ministers, the World Bank and the Harvard Social Enterprise Conference.
Note:  Free presentation at Rotman School of Management:  Thursday, October 21, 2010 – 105 St. George Street, Toronto (Fleck Atrium, ground floor)  Registration check-in 4:30 to 5:00; Session begins at 5:00
TO REGISTER: Pre-registration is required to attend. Please sign uponline at by noon on October 21.
IN WINNIPEG:  October 22 at the IDE Annual Banquet at the Fort Garry Hotel, 6:00 Reception, 7:00 Dinner.  See Announcement  Sponsors
BLOG Next Time:  Giving Thanks by Sharing More of Our Good Fortune

Canada’s Banking System Soundest in the World

Good for Canada! For the third consecutive year the World Economic Forum has ranked Canada's banking system as the soundest in the world. That's quite an accomplishment when you think about it in the context of a global recovery from the most severe financial crisis since the Great Depression. But will our future continue to be as bright? It appears it certainly can be, if we enthusiastically embrace the opportunities before us.

In his September 15 remarks to the St. John's Board of Trade, Deputy Governor of the Bank of Canada, Timothy Lane, reported that Canada's economic downturn during the crisis was less severe than other countries for three key reasons: a strong banking system, strong household and business balance sheets and a timely response by government to the crisis that enveloped us.

The good news is that recovery from the crisis is continuing in Canada, as our GDP growth is at pre-recession levels today. And there are other promising indicators:

  • Total and core inflation are projected to return to 2% by the third quarter of 2011, when the Canadian economy is expected to return to full capacity
  • The Canadian economy is projected to grow by 3.5% in 2010 and 2.9% in 2011, after a contraction of 2.5% in 2009
  • Lending conditions for non-financial firms are improving.

However, there is some dampening news as well. Our prospects for long term growth apparently will not be as strong as in previous decades, reflecting other factors facing our economy today.

Not surprisingly, there is the reality of an aging work force, which has been targeted as presenting challenges of change by other department of government include the Finance Department. But in addition, Canadian workers are competing in a global economy with others who are more technically savvy and working on higher tech processes and machinery than we are.

How is this possible in our electronic-obsessed, internet-addicted world? For me, our sound financial leadership is a natural springboard to a myriad of global business opportunities. Yet we need to find more innovative ways to keep up with global workers to compete.

It's Your Money. Your Life. Are you and your family poised to take advantage of economic recovery in a new global marketplace?

WILL YOU OVERPAY YOUR TAX INSTALMENT ON SEPTEMBER 15? Reconsider. . .pay only the correct amount.

The third quarterly tax instalment of the year is due on September 15; the 4th on December 15. (Farmers and fishers are required to make one advance payment on taxes owing for 2010, on December 31).

Many people withdraw money from their savings to overpay their tax quarterly instalments, just to be sure they get a refund next spring. In these market conditions that just makes no sense to me.

I ran across an interesting quote by Author Shauna Carter, who makes a great point, succinctly describing why it is so important for you to use the time value of money to your advantage:

"Why would any rational person defer receiving payment into the future when he or she could have the same amount of money now? For most of us, taking the money in the present is just plain instinctive. So at the most basic level, the time value of money demonstrates that, all things being equal, it is better to have money now rather than later. . . time literally is money – the value of the money you have now is not the same as it will be in the future and vice versa."

So why do intelligent, hard working people willingly fork over 30%, 40%, and even 50% of their gross receipts to the tax department every year with little complaint or fanfare, other than perhaps some frustration and resignation at the whole process?

Why are they so willing to overpay those tax withholdings or quarterly instalment payments, just to get a refund at the end of the year, with no interest for the use of their money in the meantime?

That's just not smart these days, when you could instead be investing in a Tax Free Savings Account, or an RRSP, which could help you win back more of those tax withholdings.

Why not take maximum advantage of the time value of money with astute tax and investment planning? It's Your Money. Your Life.

You Bet – Education Pays!

It's certainly distressing to hear about the large numbers of Canadian high school students dropping out.  If you had any doubt that this has big financial implications for future families, tax bases and community supports, check this out: One in five teens quit education in the Globe and Mail.

The Net Worth of those households where the person with the highest income hadno high school diploma was $42,700 in 2005 (latest stats available from Statistics Canada) while those with increased education did much, much better – total net worth for those with a university education was close to $600,000 by comparison.

Education Level Net Worth
Less than high school $ 42,700
High school grads $369,000
Post Secondary school grads (non-university) $445,400
Post Secondary school‒university $573,012


 It's your money, your life. Getting an education, at least statistically, equates with more money, more choice in life. It's imperative our high school students know that.

What's the best way to help them experience the peace of mind of future security an education can bring? Your thoughts are welcome!