Thursday, June 7, 2018

Our Expectations Need to Be Realistic



A Facebook post caught my friends’ attention.  They reacted by sharing the message.

The post read:

Time for change..

The base rate for old age 

pension in Canada is $586.00 

Time to raise it to $2,000.00 

Share if you agree.


It’s true enough that the base rate isn’t sufficient to pay anyone’s monthly bills but is it the responsibility of the Government of Canada to do so? 

When the first old-age pension was implemented in 1927, the government’s intent was to provide some financial relief for the elderly. What started then as a monthly benefit of $20 per month has now increased to a benefit of $589.59.  

In the early years, many deprived Canadians had to verify their need for financial support by undergoing a means test revealing their income and assets.  Even children had to prove they were unable to provide financial support for their elderly parents. History has shaped and changed the rules since 1927.

In 1951, The Old Age Pension of 1927 evolved into the Old Age Security Act.  At the height of Canada’s prosperity following World War II, the government passed legislation for a universal monthly pension benefit of $40 for all men and women who were 70 years old and older.  The best outcome was seniors did not have to undergo a means test to prove their eligibility.  However, one requirement was they must have lived in Canada for twenty years.  Eventually this condition was reduced to 10 years along with further changes.

The most notable change to the Old Age Security (OAS) benefit was when the legislation of the Canada Pension Plan was passed in 1965.  The qualifying age was changed from 70 years of age to 65 and continues to remain as such unless you chose to defer your Old Age Security benefit to age 70.   

It’s difficult to fathom the total cost to finance Canada’s largest pension plan until we have a grasp of the number of Canadians entitled to the OAS benefits.    The latest quarterly report, published by Employment and Social Development Canada, indicates the number of benefits paid in January is 6,062,989.  The amount paid in millions is $3,364.9.  No one contributes directly to the Old Age Security program; the benefits are paid from the Government of Canada’s general revenue accumulated from personal, corporate and sales taxes. Of course, the cost escalates even higher when the other social security programs, Guaranteed Income Supplement, the Allowance, and the Allowance for the Survivor are included.  

The off-handed comment made on social media to increase the Old Age Security benefit was probably done with minimal consideration.  Currently, the federal and provincial governments fund many programs, including major ones like health care and education. Prior to the federal government’s recent acquisition of the Trans Mountain pipeline, their current spending continues to increase the deficit; the promise to return to a balanced budget in 2019 is unlikely to occur.

The lesson on budgeting is to work with what we have.  We should try and operate with a balanced budget. The magic formula is:
There is no negative sign in front of the zero value.  Everything balances.  The after-tax income stretches over our day-to-day spending including debt repayment and savings.  From time to time, we find borrowing money necessary because we do not have sufficient cash on hand for major purchases. 

The pledge to yourself is to prepare for the future. The plain and simple fact is one day we will be old and will not be able to work.  The stark reality in 1867 was that most Canadians did not “retire”.  We are told, “Canada was then a largely pre-industrial, agricultural society.  Most people lived and worked on farms well into their old age.  When they were physically unable to work, they were supported by their families on the farm.Those without family support had few options.”

Today, we have more options if we are unable to work due to disability or injury.  However, the intention is not to rely on the government to fund our “dream retirement.”  If we do, we can’t expect much. They will and can only afford to pay a minimum amount.  The combined Old Age Security and Canada Pension Plan generally equal 25% of a typical retirement income.

Our expectations need to be realistic.  Expecting the government to support us would be like our children asking us to support them for their lifetime.  This may sound like a good plan for them but for parents not so much.  We need to step up and share in the responsibility to create our desired income for the future with the resources we are given today.     

Thursday, May 24, 2018

Does Mediation Work?






If you can’t resolve your family conflicts respectfully, does mediation work?  That is the question I asked Robert (Bob) Stocksa business consultant and coach.  Our usual chit-chat eventually turned to a conversation about mediation, Bob’s area of expertise. 

Networking is learning.  Learning is networking.  When anyone attends a Canadian Association of Farm Advisors (CAFA) meeting, they are privy to a wealth of knowledge offered by other advisors in attendance.  This is exactly what I received, a first-hand glimpse into the role of a mediator when families stop talking about important matters.   

Many years ago, Bob made the decision to take courses in Conflict Resolution through a college in Boulder, Colorado.  Today, he vows that his old school mentality has helped him serve his clients effectively both in the past and present.

The two styles of family conflict are matrimonial (between a husband and a wife) or inter-generational (between parents and children or siblings).  When a family is having disputes, bringing them together into a room to air their concerns and grievances doesn’t work.  Bob prefers to have the initial conversations with them individually.  You have an opportunity to hear everyone’s objectives in advance on a one-on-one basis.  You not only hear their objectives but you understand their objectives.  This is critical.  People need to feel they have a say if the issues are ever to be resolved.  They want to feel they are in control of their destiny if a deal is to be made.

Bob shared his father’s wisdom. His father combined a valid statement with a direct question, “You might be right and I hear you, but will it do you any good?”  It’s a question we probably should ask ourselves often when confronted with the choice of either winning the argument or winning the relationship.   Harboring resentment against family does not do any good for anyone.  When you do, you unknowingly cause more harm to yourself.  This phrase shines a new perspective on the subject: “Holding a grudge is like drinking the poison and waiting for the other person to die”.  We never want to be in a position where our thinking is clouded by our emotions.

The first step in resolving conflict always involves an important communication skill, listening.  When people feel they have been heard, then they are ready to move to the next step, finding a resolution.  So the probing begins.  Bob starts by asking:  “What deal do you need so you can move on from this place of being stuck?”  


Bob referenced a very insightful and popular book. Christopher W. Moore’s book, The Mediation Process, Practical Strategies for Resolving Conflict  is used by many conflict resolution practitioners, faculty, and students as the all-inclusive guide to the discipline of mediation and conflict resolution.  Here’s the logic behind this process.  Mediation is a better alternative compared to having matters settled in court.  The decisions made by the courts might not result in a desired outcome.  A mediator, like Bob, helps people decipher their own solutions. There are no easy answers but the important thing is to find a way to talk about the issues which have people feeling stuck.  The families are persuaded to push through their problems and hurt feelings and to think about how they can get to a better place than where they are presently.         

Another best-selling book, Getting to Yes, Negotiating Agreement Without Giving In written by Roger Fisher and William Ury, supports Bob’s belief that no one should cave into agreement.  “No one wants to feel forced to do something they do not want to do.  They should not be forced into a deal they do not like.”   All options needs to be considered.  The decision is to pick an option which is better than a worse one.  Reaching a Win-Win agreement far outweighs a Win-Lose or Lose-Lose agreement.  

Mediation always works.  The only time mediation doesn’t work is when the parties are not willing to pay the consultation fees to have the conflict resolved.  That’s the clincher. If people could see into a crystal ball the situation going from bad to worse, they might change their minds.  Do they want to pay a little now for a consultant or pay a lot later for a lawyer and court fees?  In the end, the result may not be pretty if they choose to wait by avoiding both the conversations and the fees.    






As I write this blog, I think of my family’s situation.  My father and his brother passed away without talking to each other.  I reflected on the question Bob poses to his clients, “What are we trying to accomplish so you don’t spit at each other when you pass on the street?”  I realize that my family’s situation is not an isolated case.  Many families find themselves in a similar dilemma.  Hurt feelings and unresolved conflicts cause relationships to blister with anger, grief, and sadness.  If there’s a slight chance you can mend the broken bridges in your relationship with mediation, you are encouraged to try regardless of the cost.  

Thursday, May 10, 2018

Where Do You Fit?



The information is hot off the press.  I am not picking through old data.  This week the Financial Planning Standards Council (FPSC) released its latest report on Financial Stress.  When asked, people will share their biggest fears and concerns but generally money isn’t something we discuss with our family and friends.  We might complain about the price of groceries and gasoline but we are reluctant to fully disclose every detail about our personal finances. 

If you were asked the same five basic questions about views on money that 1,106 Canadians were, where would you fit in the conversation?  Here’s your chance.  Below are the questions.  Once you have answered them, you can compare your results with those people surveyed.

Question #1

In general, what tends to cause you the most stress in your life?

  • Money
  • Personal Health
  • Work
  • Relationships


Question #2

How often, if ever, do you feel embarrassed about lacking control over your current financial situation?

  • Always
  • Sometimes
  • Rarely
  • Never
  • No Answer


Question #3

How much do you agree, or disagree, with the following statement:  I have lost sleep because of financial worries.

  • Strongly Agree
  • Somewhat Agree
  • Somewhat Disagree
  • Strongly Disagree
  • No Answer


Question #4

To what extent, if at all, do you feel pressure to keep up with your friends’ or colleagues’ financial status?

  • Very Pressured
  • Somewhat Pressured
  • Not Very Pressured
  • Not At All Pressured
  • No Answer


The results are found in this Omni Report:Financial Stress.   We can determine whether or not our answers align with others. 

Money is the one thing we all have in common.  It’s certainly understandable not to share our money concerns with every person; however, when we struggle about doing the right thing with our finances, talking with a financial planner may give us peace of mind.  Doing so is no different than seeing a doctor about a health concern.

We are usually looking for something: where we buy our new car or home, where we spend our next exotic vacation or where we purchase something small like a camera or an appliance.  We tend to do homework in our endeavors to make the right choice. Therefore, we shouldn’t be reluctant to seek advice about money matters when we can’t figure things out on our own.  The main reason for doing so is to live your life without regrets.

Here’s the final survey question. 

Question #5

What is your greatest financial regret – that is, if you could go back in time and do things differently, what would that be?

  • I would have saved money/more money/saved earlier
  • I would have invested more/invested earlier
  • I would have bought a property/invested in real estate/land
  • I would have done more schooling/higher education/different stream
  • I would have avoided debts/not overspent on credit cards
  • I would have made the right decision when selling/buying property
  • I would have kept my job/worked longer/wouldn’t retired earlier
  • I would have been more responsible with money/budgeted earlier
  • I would have saved more for retirement/retirement plan
  • I would have spent less money on leisure/gambling
  • I would have tried to get a higher paying job
  • I wouldn’t have bought a car
  • I would have spent less money
  • I would have had a separate bank account with spouse/no divorce
  • I would have avoided bankruptcy/managed business better
  • Other
  • No regrets
  • No Answer


The survey reveals that more than eight-in-ten Canadians (83%) have at least one financial regret.  What’s yours, if any?

This article, Change Your Mindset If You Want to Succeeddoesn’t talk about money.  It simply talks about life.  My biggest takeaway was this quote from business coach, author, and speaker Ali Golds. She says, Celebrating triumphs can also help put self-doubt to flight and take the spotlight off setbacks. “Who cares about mistakes? I don’t,” adds Golds. “I celebrate every achievement, even tiny ones, because without them I’d never have gone on to bigger successes.”

After answering the above survey questions, we may want to change one way we handle money. Ali Golds’ reasoning can apply to our money concerns.  If we need to make changes to our financial circumstances, then we need to develop a strategy.  Ignoring the problems doesn’t help.  Action may or may not result in triumphs and successes every time but we can celebrate the strides we do make towards our financial goals.  Any change, big or small, to improve our financial well-being is a step worth taking. 

Thursday, April 26, 2018

Tax Time Again!



Preparing a tax return, even if your part is only gathering all the information for your accountant, can be an overwhelming and stressful chore. However, it’s a task which must be done every year. It ranks right up there with spring cleaning around the house and yard. 


Many have a tendency to procrastinate and push the deadline as far as midnight on April 30th.   If you step over this deadline, then you may face interest and penalties.  If you are a proprietor of an unincorporated small business, your deadline is June 15th.  However, tread cautiously.  If you owe taxes as a result of your business income, the tax bill is still due and payable on April 30th.  The most sensible thing to do is to file your tax return by the end of April.   You want to avoid adding more money to the government coffers with interest charges on the balance due. 
   
The best rule is to follow Thomas Huxley’s advice. “Do what you should do, when you should do it, whether you feel like it or not.”   This is the power of discipline. 


Why Should We File a Tax Return?


I believe we need to understand “why” we need to do something to motivate us into action.  Once we know “why” then we are apt to file our tax returns on time.  

1. One reason for filing a tax return is to take advantage of applicable tax credits to reduce the amount of taxes payable.   Your income information slips report only your income and the minimum required deductions but other eligible provisions may lower your taxable income further.  Specific examples are tax deductions like RRSP contributions or tax credits for a dependent child under the age of 18.  Ultimately, the result is the possibility of a “tax refund” once the calculations are completed. 

2. Another reason is you may be eligible for money through one of the government’s social benefit programs once your return is filed.  Without taking the initiative of reporting your income, you may be saying "No thank you" to money that rightfully belongs to you.  Depending on the level of your combined family income, you may be eligible for the GST/HST credit benefits or Child Tax Benefit.      

Other social benefit programs for people over the age of 65 are Old Age Security and Guaranteed Income Supplement.  The Allowance provides a benefit for those between the ages of 60 and 64.

3. Your tax returns keep you “in the know”.  If you are not a financial guru, your return may be the only document to tell how you are doing from an income vantage point. Are you descending or ascending the income ladder?

4. If you are still not totally convinced that you should file a tax return, my last resort is you have to do this because it is the law. There are late-filing and failure-to-file penalties in addition to the interest charges due on outstanding taxes.  Coming up with the money to pay taxes is difficult; we certainly don’t want to add additional charges to the balance.   If you choose to ignore Canada Revenue Agency (CRA), they will chase you for the money that rightfully belongs to them. 
   
5.  When you are self-employed and are applying for a loan, the one way for a lender to verify your income is your annual tax returns for the last three years. No verification of income means no loan.


Why Are We Reluctant to File Our Tax Returns?


The most likely reason for failing to file a tax return is quite often linked to fear.  We may be afraid we may have a tax bill and won’t have the money to pay CRA.

In the Toronto Sun news article, Failure to file taxes could bankrupt you, John Waters, head of tax and estate planning at BMO Nesbitt Burns, says, if you’re struggling to meet the deadline, even if you don’t have the money to pay, "at least file to stop the bleeding on that 5% penalty and just get hit with the interest charges on the unpaid taxes."

The truth is you don’t want to get on the wrong side of Canada Revenue Agency (CRA).  Even when you file your return and are unable to pay the taxes, you should explain your situation to CRA. If you don’t, CRA is a powerhouse with the ability to collect the money.  Funds can be garnished from your bank account to satisfy the debt.  Your financial institution will receive a “requirements-to-pay” order (also known as a Third Party Demand).  If the money is not in your account at the time, then your account will be frozen.   The Third Party Demand will only be lifted once the payment has been made or at the very least satisfactory financial arrangements are in place to have the order removed.  To read more, click here to read, CRA Garnishments: Requirement to Pay Tax—A Canadian Tax Lawyer Analysis.


How Can We Overcome the Obstacles?  


Once we understand that we can run but we can’t hide from CRA, we need to take a proactive approach and prepare for the yearly routine of submitting our tax returns. 

  • The first step to eliminate our feelings of frustration is to find a method to keep all our important documents in one place. With unlimited access to the Internet, we can always search for ways to organize our tax information. 


  • If you can’t do this yourself, the second step is to ask for help.  There are people, even friends, who are “number people”. They would love to help us get organized and stay organized.  


  •  Lastly, we can pay for the service of a professional tax accountant to prepare our tax returns. 



The completion of an onerous task results in the greatest feeling. This is especially true when our tax returns are filed on time and our relationship with Canada Revenue Agency is maintained.  There is a reward at the end for doing this.  If it’s not money, then it is peace of mind or if we are lucky, it might even be both.

If you need additional information, the Government of Canada has prepared a series of videos, Preparing your Income Tax and Benefit Return.  These videos may provide helpful information for you.     

Thursday, April 12, 2018

What We Know

How often have we heard, “It’s not what you know but who you know”?  In all honesty, the proper proclamation should be “It’s what you know and who you know”.  Our expertise and experience are just as valuable as those of “who you know”. 





The Parkland CAFA (Canadian Association of Farm Advisors) Chapter gathers monthly for their regular learning event.  It is a meeting of the minds to learn something we might know very little about.  The presenter on a given topic is the expert. We tap into their resources and access their authoritative wisdom and knowledge. At any given meeting, the two professionals or agri-business experts know something the rest don’t. Their willingness to share is an opportunity for us to learn.  When applicable, we even refer clients to the appropriate professional who can better help them.




I believe everyone understands you can’t know everything.  Having an expert in your network circle is a valuable “fill-in” for the information and experience you lack.  A fitting expression, “Mind the Gap”, heard when you travel the rail system in London, can also be applied to our knowledge gap.   A person can only know so much, has only so much brain capacity, and has only interest in a specific area of expertise.  There may be some logic to the statement “a jack-of-all-trades and a master of none!”  When we try to be everything, we have to ask ourselves, “Is this fitting for what I am trying to accomplish for my clients?” As a CERTIFIED FINANCIAL PLANNER®  professional, I know my limitations and rely extensively on other professionals.  I appreciate having them in my network; they’re my links to information and experience.    

This past month’s learning event highlighted two hot topics:  Trusts and the Need for Them, both from a tax and legal perspective; and TOSI (Tax-on-Split-Income), the new rules and the exceptions-to-the-rules.  Our professionals, Jason Heinmiller, a tax expert, with Collins Barrow and Shawn Patenaude, a lawyer, from his legal firm, Shawn Patenaude Legal Prof. Corp, are privy to the latest updated information.  Procedures and processes are constantly changing. This is especially true when there’s a change in government.  In 2017 the federal government implemented new rules regarding the way income is distributed to shareholders of private corporations. The experts, Jason Heinmiller and Shawn Patenaude, addressed the impact this new legislation has on tax vehicles such as trusts and corporations.

Our professionals discuss new legislation with their peers. They dissect and analyze the logistics of the information to fully understand the new proposals: how they apply, when they apply; what exceptions exist; and who they affect. They exchange thoughts, ideas, and ask each other, “If we can’t do this, can we do that?”

The best professionals work together in tandem with other professionals to decide on the ideal strategies for their mutual clients.  The collaboration is important especially with multiple generational and blended families. Family business situations are both complex and complicated. Because peoples’ intentions are different, a strategy which might work well for one family operation doesn’t mean it fits another.         

When we try to work in isolation and try to do it all, we do our clients a disservice.  When professionals work together as a smart team, their clients benefit from the best quality advice and service.  When the clients receive a wealth of information from all the angles, they are able to make the right decisions. I’ve said before, “Good information leads to good decisions.”  Good decisions avoid financial and costly errors.  Some strategies cannot be undone and are permanent arrangements with dire consequences.  

This is an example of a costly consequence.

A father included his son as a joint owner on a piece of real estate.  Their relationship became estranged.  When the father requested that his son relinquish his ownership to the property, the son refused.  The courts decided if the father wanted the son’s name off the title, the father was obligated to buy his son’s half-share interest at the current fair market value.  We don’t know if the father sought legal advice when he was deciding to make the real estate joint with his son.  However, if he had, all the possible outcomes would have been discussed. 




Advisors help farmers make informed decisions around management, finance, marketing, tax, or legal issues.  If necessary, they network with other CAFA members. This networking creates links to a wealth of knowledge and expertise. When a basketball or football team executes play after play, they work together to accomplish a goal. That goal is to secure a win.  Win after win create champions.  We are all champions when we work together as a team.  John Wooden said, “A player who makes a team great is more valuable than a great player.”  

Thursday, April 5, 2018

Resolve Money Arguments






Fighting over money isn’t unusual. In fact it’s more common than you think.  Surveys have attested to this fact.  Concocting the ideal recipe, to repair a couple’s relationship broken because of money, isn’t easy. Certain methods are required to create meaningful conversations in order to make any progress. The ultimate goal is to live in peace and harmony without money woes to disrupt the home. If you find yourself in a stressful relationship, hunt for the secret ingredient that helps resolve arguments about money.  Here are a few thoughts and ideas.       

1.  Schedule a meeting in advance.  You might scoff at this crazy idea but think about it.  If spontaneous conversations about money haven’t worked in the past, always ending in the same result -- an argument -- wouldn’t this crazy idea be worth a shot?  Isn’t it better that everyone is prepared?   Emotions erupt when people are caught off guard.  Imagine opening a credit card statement. Suddenly your eyes detect an unexpected transaction for $300 to a clothing store or an automotive shop.  Or imagine the shock when your bank phones to advise that your joint chequing account is overdrawn.  Most likely you “hit the roof”.  Having a rational discussion at this point would hardly be the time. You need time to calm down.  Seeking rather than demanding an explanation will be well received by the accused when your emotions are in control rather than out of control.  When a meeting is scheduled and the agenda is known, people are not as likely to be on the defensive.  Consider creating an agenda about the issues that are tormenting your finances.  The first meeting will feel somewhat awkward.  You need to keep ironing the creases, meeting after meeting, until they run smoothly.  Attempt to schedule a meeting once a month to discuss the cost of current expenses, review bank and credit statements, and plan future expenditures.   Is the dishwasher on the fritz?  Does the truck need new tires? What’s the synopsis for the children’s tuitions?  Like any organization meeting, the agenda includes both old and new business.  I am certain you will never run out of things to talk about but you will run out of time to discuss all the things. All the more reason to table items for the next month’s meeting.

2.  Identify your beliefs about money and their origin.  Some beliefs stem from childhood experiences. You repeatedly may have been told by your parents, “Do you think money grows on trees?” leading you to believe money is scarce.  If money was continually lavished upon you, the belief may be you can buy whatever you want when you want. Imagine your spouse growing up in a totally different home environment than yours.  Can you see how your views about money can differ? Resolve to develop joint beliefs, the ones worth keeping in your relationship.  A simple detail may be calling your “budget” a “spending plan” because you dislike the connotation of budget, causing you to feel restricted.  A more complicated notion may be that your belief is vacations are a waste of money yet both may agree that in exchange for a vacation a hot tub will provide endless enjoyment all year around.  You may also conclude that “stay-cations” could be as much fun.

    
3.  Discuss your money management to determine what works and doesn’t work.  When managing your monthly expenses, read the blog, Do Joint Expenses Require Joint Accounts?  Discuss whether a change is necessary to the way you presently handle your finances. Try a new approach; review the process in a few months. If it’s not working, change the process again.  Learn as you go.  If one spouse cannot be trusted to manage the finances, then don’t put yourselves in that predicament. Recognize each other’s strengths and weaknesses to benefit both of you.

4.  Learn to be assertive. Assertive means respecting yourself and other people.  It is the ability to clearly express your thoughts and feelings through open honest and direct communication. This means learning how to talk appropriately. I had to learn this new approach. Start your sentences with the unselfish “I” statements.
I feel afraid we won’t be able to handle an emergency.
I am worried we are not saving enough for our children’s educations.
I am thrilled we saved for the down payment on our new home.
I am angry because I feel money is spent on needless things.  
If you would like to learn more about Assertiveness Training, click here.

5.  Consider writing a letter to your spouse. If you can’t express yourself verbally, try writing your feelings. Men and women are created differently.  If you are sincere about learning how to express your feelings, John Gray has a unique way to deal with your emotions.  

In a Feeling Letter, you want to be able to express your feelings of anger, sadness, fear, regret, and then love. My format allows you to fully express and understand all your feelings, so you can communicate those to the other person in a loving focused way.

6.  Provide a mutually supportive and positive learning environment.  This advice is part of the Toastmasters’ mission statement where people come together to develop their communication and leadership skills. If we are instructed to create this unique setting with strangers, then the same should be true in relationships with our loved ones. Most times, building relationships with strangers is easier than with our spouses. We don’t live and communicate daily with the new people on our block the same way we do with our better halves.  We may have been disappointed, angered, or provoked by their foolishness.  These repeated events lingering in our memories are difficult to erase. Therefore, being supportive under these conditions is difficult.  If we feel like that, is there a chance our partners may feel the same? Maybe we could do ourselves a favor.   One of the steps in Twelve Steps Recovery Program is to make a searching and fearless moral inventory of ourselves.  Is there some housecleaning we need to do within ourselves?  Do we harbor any resentment? Why do we become so easily angered? Are we approachable about money matters?  In order to create a supportive environment, we need to begin with ourselves.

Communication involves expressing your views about money clearly, discussing without any hidden agendas, and understanding your differences could be the “recipe” to strengthening your relationship. Your significant person has thoughts about how life should be enjoyed and how money should be spent.  As long as you can agree on certain specific points, you may release the remaining points and agree to disagree about the way every last penny should be spent.  Striking a balance between keeping your finances and relationship in check (or is that “in cheque”) is important.  Don’t stop hunting for the secret ingredient until you find it. When you do, please share.    

Thursday, March 22, 2018

Why "Give"



The Power of Giving

Julia Wise and her husband, Jeff, typically give 30 to 50 per cent of their income away. One year their charitable donations totaled about $160,000. Julia says it’s a way to help make the world a better place and will help teach her children about the family’s values.  She says, “There’s always someone who needs the money more than I do.”

Do you faithfully carve out a percentage of your income to donate to charities? There are a number of compelling reasons why people do this.  Most would like to see a “better world”.  Sharing the wealth is one way to achieve this. Charitable giving is a very personal and private act of kindness.
 
Julia states she feels privileged to have acquired a good education which landed her a good job with a good salary.  Her interview on CBC Radio Show “Out in the Open” is fascinating as she addresses the questions and ponders others’ concerns about their extravagant generosity. You can click here and listen to this podcast.


 
A Different Perspective


A change in our perspectives about the things that really matter was mentioned in a previous blog, When We Have So Much.  Terry Aberhart, CEO of Aberhart Farms Inc. and Sure Growth Technologies Inc. (an agronomic consulting company), shared his experience on a trip to Ethiopia.   I asked you then to imagine going without food, clean water to drink or bathe, and medication to treat a curable ailment.  I believe most would find this unbearable because we have never lived in this kind of environment.

Sometimes role playing isn’t a bad thing when we get too comfortable in our day-to-day lives. I often think about what would happen if my life drastically changed, and I was living in poverty, and looking to the food bank for my daily meal.  What if I had no shoes to wear? What if I had to sleep on a park bench?  These role-playing scenarios sound like a bad dream but there are people who live this daily.



Compelling Reasons


We can empathize with other people who are less fortunate than we are from a health perspective.  Every year, the first weekend in March, the Kinsmen Telemiracle Foundation hosts a 20-hour telethon to raise money for people who require special needs equipment and access to medical treatments. The generosity tugs at your heart strings and brings tears to your eyes as you watch the dollars roll in and the words echo the message, “Which way are we going?”  The only answer is “Higher”.  This year was no exception. The Regina Leader Post headlines Telemiracle Smashes Record with more than $7.1 million in donations.  The sum is an accumulation of both small and large donations.  The largest donation ever was a bequest of $1.5 million from the late Dr. Philip Thacker, Professor Emeritus of the University of Saskatchewan and a Kinsmen member.  Peoples’ compelling stories inspire others to donate and raise money in countless ways.

Philanthropists have their personal reasons for giving. In a rare interview for the magazine, Farming for Tomorrow, Mr. Jimmy Pattison said “The best thing that ever happened to me was that I had no money.”  Today Mr. Pattison is patriarch to one of the country’s largest private companies – the Jim Pattison Group (JPG).  Reading through the article, you learn quickly that he attributes his success to good values, honesty, integrity, and hard work. He has lived and strived through challenges and opportunities which make him grateful for the success he has achieved.  Now he lavishly donates his money primarily to the health-care sector.  The new Children’s Hospital of Saskatchewan in Saskatoon is one of the fortunate recipients of Mr. Pattison’s generosity.  Last May, he presented a donation of $50 million towards the facility.  



The Monetary Incentive


I am not entirely convinced that people donate money primarily to receive tax credits. From a financial perspective, this is certainly an incentive.    Canada Revenue Agency rewards you for your generosity.   If you have taxes owing, your tax credits are like gift certificates to offset your tax bill.  The higher the amount of donations, the greater the tax incentive will be when you file your tax return.   If you are limited to the amount you can donate in any given year, then you might choose to claim your donations together in one year.  You are allowed to carry forward any donations in any of the next five years.

A lower tax rate is applied for donations of $200 and less; and a higher rate for donations over $200 for any given year.  Here is the link to the federal and individual provincial donation tax credits.

Using this donation tax credit calculator is one way to determine your tax credit entitlement for your province of residency.  The following math illustrates the credit for a Saskatchewan resident who has contributed $1,000 in donations.

Federal charitable donation tax credit
            $ 30 (15% on the first $200)
            $232 (29% on the remaining $800)
            $262 is their total federal tax credit.

Provincial charitable donation tax credit
            $  22 (11% on the first $200)
            $120 (15% on the remaining $800)
            $142 is their total provincial tax credit

This Saskatchewan resident has a combined federal and provincial tax credit for 2017 of $404 ($262 + $142).


Never Too Small or Too Large


I believe that the majority feel a tug on their hearts to be generous with their money.  No one can make someone do this. We have often heard a child use this phrase, “You can’t make me!”  A small child may refuse to participate in a game or eat their veggies.  But once they have had the experience, they are more willing to experience more of the same.  I associate this with charitable giving or philanthropic giving.  The ultimate payoff is witnessing the benefits of the donations. People find this rewarding and desire to do more good in the world.  Philanthropists are financial helpers willing to promote the welfare of others, “especially by the generous donation of money to good causes which meets basic needs.”
 
Regardless of the amount of any donation, it’s the contribution that matters. Donations are not limited to size; they are not measured as too small or too large.  In the end, the accumulated dollars create and impact a better world.  Let’s all keep on giving whatever amount we can to a beneficial cause.