May 2012
This is your time....





As we welcome some of our clients back from their winter getaways, it is a great time to be out and about in this fabulous city.   The festivals are lining up and social hours are popping up and it is a great time to spend a day with your family.  There are many great markets available where one can sample some of Toronto's diversity and a great park system in which to have a mid afternoon stroll.  You still have time to take in the Cherry Blossoms in High Park!


A day out can take some planning, much like your financial well being.  We are always here to catch up and review your objectives and look over your plans.  Enjoy the sun, be well and thank you for letting us be of service!



Peter, Richard, Claudio and Joanna

10 ideas on what to do with a tax refund this year 

 by Tim CestnickGlobe and Mail, May 2012


This week I put on a jacket that I haven't worn for quite a while, and when I reached into the pocket I found a $20 bill. What a great feeling. You gotta love found money.

A tax refund is a lot like that. If you're getting a refund, the money was always yours, but you're now being reacquainted with those dollars - and I know it feels pretty good. Setting aside the fact that you were actually lending the government your hard earned money, free of charge, have you given thought to what you're going to do with your tax refund this year? Consider these 10 possibilities:


1. Pay down bad debt. Bad debt is that incurred for personal consumption and where the interest rate is high (credit card debt is the most common). Paying down your bad debt with a tax refund provides a guaranteed, after-tax, rate of return equal to your interest rate on the debt. You'll be hard-pressed to find a better return than this elsewhere.


2. Contribute to your RRSP. If you have room to contribute to your registered retirement savings plan, then your tax refund can provide cash for this purpose, which will result in additional tax savings for the deduction you'll claim in the future. Next to paying down bad debt, setting aside money for retirement is your next best option if you haven't set aside enough yet.


3. Contribute to your TFSA. I won't debate the merits of contributing to a tax-free savings account over an RRSP since I've done that already. Suffice it to say that every Canadian over 18 should have a TFSA and a tax refund can provide cash to make investments in this tax-sheltered account.


4. Invest in alternatives. Whether you have enough set aside for your retirement or not, investing your tax refund is a prudent option. So, how should you invest those dollars? Consider "alternative" strategies. I'm talking about investments that are not particularly correlated to equity markets. "Alternatives" can include real estate, private business ownership, and strategies offered by money managers that are not simply long-only investments in stocks.


5. Invest in life insurance. There are many reasons to buy life insurance. Reasons include: Providing for dependants, covering taxes on death, paying off debts, equalizing an estate, or creating a tax-sheltered investment portfolio, among others. A tax refund can help to cover the cost of premiums on a policy.


6. Contribute to an RESP. Setting aside money for the education of a child or grandchild is a great use of your tax refund. These contributions can attract Canada Education Savings Grants (CESGs) from the government. Setting aside, say, $2,500 annually for a child can go a long way to paying for a post-secondary education and will attract the maximum in CESGs.


7. Donate to charity. Why not use your tax refund to not only create more tax savings, but help others at the same time? And if you insist on using your refund for other things, consider using just a portion of your refund to make donations. If you do this every year your philanthropy can become much more strategic, impactful and meaningful.


8. Lend the money. Consider lending your tax refund to your lower-income spouse for him or her to invest. If you charge the prescribed rate of interest on the loan (currently 1 per cent; a rate which can be locked-in indefinitely) then all income earned by your spouse will be taxable in his or her hands - otherwise known as income splitting. You might also lend the money to help your child buy a home, or start a business.


9. Give to your heirs. Making a gift to your heirs today can allow you to reduce the size of your estate at the time of your death, reducing taxes and probate fees at that time. It can also provide you with the opportunity to see that gift enjoyed by, or put to good use by, your heirs. Your tax refund can provide the cash for a gift this year.


10. Spend the money. When it comes to a tax refund, many people like this option most of all. Spending your tax refund may be just fine in situations where you have no bad debt and your retirement savings are in good shape.


Looking off the beaten path can reveal creative money-saving tips

by Preet Banerjee,  Globe and Mail, May 2012


While my work life revolves around money, I don't employ every money-saving tip I hear about.


There are thousands of tips and tricks to save a penny here and there, and some resonate with people more than others. I don't tend to skimp on my caffeine habit because I know I'd die without it. Others may refuse to give up a monthly manicure or a subscription to a favourite magazine.


While a simple Google search about saving money will target these more obvious luxuries, if you dig a bit deeper, you'll find creative ways to save money a bit off the beaten path.


Take renting a car. You can save big bucks by reserving it through a travel agent based in Britain. Most people wouldn't think to call another country to book a car rental in Canada, but a friend of mine temporarily working in Britain a few years ago uncovered this surprising savings when he was booking a week's vacation in Western Canada.


The best price he was quoted from local rental agencies to pick up a car in Vancouver and drop it off in Calgary was $648.51 after tax. You pay a premium to pick up and drop off cars at airport locations, and another larger premium for dropping them off in a different province. Through an Internet forum for Canadian expatriates in Britain looking to book travel in Canada, he discovered a website called They provided him a quote of $304.63 after all taxes and currency exchange fees. That's more than $340 in savings and they booked him through a large international car-rental service.


I tried to retrace his steps, and found an even greater savings. Using the same Vancouver-to-Calgary itinerary, I called While I asked to book the smallest and cheapest car, they told me that they offered a free upgrade to an intermediate-sized car with a free tank of gas, unlimited mileage, a loss damage waiver, and $1-million in third-party liability coverage. The total cost after taxes and currency exchange was $415.03.


I then went on to and priced out the exact same rental. The quote: $1,515.49.


Some people will find that the extra time and effort required to creatively save money is not for them. But thinking outside the box can deliver big results.

Taxes, by the numbers


Tax season is a time for facts, figures and number crunching, as millions of Canadians sit down to calculate how much they owe - or are owed by - the Canada Revenue Agency.


To mark tax season in all its numeric splendour, CBC News has compiled tax numbers and statistics detailing things such as how many people file returns, what the average refund is and how many offences against the Income Tax Act are recorded. (All the numbers are from Statistics Canada unless specifically noted.)

23.4% - Percentage of tax filers who claimed a charitable donation in 2010 tax year.

$260 - Median charitable donation claimed by Canadian taxpayers in 2010 tax year.

$1,900 - Median federal &provincial income tax for senior families in 2009 tax year.

24,512,273 - Number of 2010 personal income tax returns received by May 31/11.

15,589,164 - Number of returns filed electronically (2010 tax year)

8,569,627 - Number of paper returns received (2010 tax year).

353,482 - Number of returns received via Telefile (2010 tax year).

16,816,779 - Number of taxpayers who received a refund for 2010 year

$1,586.87 - Average refund amount for the 2010 tax year.

$189.2 billion - The amount of personal income taxes collected by federal, provincial and territorial governments in 2009.

$63,800 - Median after-tax income for a Canadian family of two+ in 2009.

$500 - Amount families can claim annually in sports and fitness activity fees per child under the age of 16.

$9,400 - Median federal and provincial income tax for non-senior families in 2009.

$11,747 - Total income tax a person with an annual income of $50,000 will pay in Quebec for 2011, the highest regional amount in Canada. (Ernst/Young tax calculator).

$8,349 - Total income tax that same person would pay in Nunavut, the lowest regional amount in Canada. (Ernst and Young tax calculator).

$50.3 billion - Total amount of corporate income taxes collected by federal, provincial and territorial governments in 2009.

8.2 million - Number of Canadians reporting income from non-tax sheltered investments.

$50.9 billion - Total value of income from non-tax sheltered investments in 2009.

$8.3 billion - Total amount of charitable donations reported in 2010, an increase of 6.5 per cent from 2009.

$20,000 - Amount of principal each Canadian could have in tax-free savings accounts (TFSAs) in 2012 without paying a penalty.

$39.2 billion - The total value of TFSA holdings in Canada at the end of 2010.

$54.4 billion - The amount of money held by Canadians in tax-free savings accounts (TFSAs) in mid-2011.

$6,354 - The average TFSA account holding as of June 2011.

8.56 million - The number of tax free savings accounts in Canada as of June 2011.

562 - Number of offences against the Income Tax Act in fiscal year 2008/2009.

87 - Percentage of those offences that resulted in a guilty verdict.

Issue: 17
Financial Markets
In This Issue
10 ideas on what to do with a tax refund this year
Looking off the beaten path can reveal creative money-saving tips
Taxes, by the numbers...
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Peter Bailey
Worldsource Financial Management
272 Lawrence Avenue West, Suite 203
Toronto, Ontario M5M 4M1