Thursday, October 19, 2017

Power and Control From Learning

Think of a time when you tried something new.

Do you remember how awkward it felt?  Do you remember feeling intimidated, even afraid you wouldn’t get it?  Working through a math problem. Fixing a lawn mower. Roasting a Thanksgiving turkey. Learning to dance.  Mastering a computer program.

Then there’s the subject of money.  You may have been daunted by opening your first bank account.  Learning the ins and outs of money matters didn’t stop here.  You needed to create a budget, pay for essential expenses, save for the things you wanted, and so much more.

Now you may be at the point where you’ve tried stretching your monthly income and discovered your way isn’t working.  You’re overwhelmed. You’ve stopped learning new ways to make “everything” fit into a neat and tidy worksheet.   

This is probably the ideal time for a new commitment.   Most students return to school in the fall. Whether they attend high school, college, or university, they walk the Halls of Learning in pursuit of a higher education. You, too, can do the same. Managing your money means finding new ways to achieve your financial goals.  

Plenty of information on money management is found at this website and in the Internet world to provide education. The choice is always ours whether to move forward with what we are given.  

As your financial planner, I could suggest you consider spending money on one less thing, invite you to create your dream list of things you want in life, or recommend you set up an emergency savings account for those unwanted and expected life events.

With all sincerity, often the best intended advice can be likened to the proverbial saying, “You can lead a horse to water, you can’t make him drink.”   Can this apply to us?   Let’s reframe the question.  When we know what we should do but choose not to do it, who are we hurting most? Ourselves, of course!

Some advice is common knowledge.  We know we need to exercise and eat well to carry on an active and healthy lifestyle.  The same principle is true for being financially healthy. We need to create a balance between spending and saving to lead an active and healthy financial lifestyle.

I am a firm believer that knowledge is at the heart of power and control.  When you choose to learn new skills, you are in a “control position”.  You are taking charge to make a change in your life.  In other words, it’s the perfect way to get yourself out of a “stuck position”.  Whenever we feel like we are drowning in debt, wanting to purchase a home, or planning to retire, we to learn more.  Seeking information from reputable websites and the advice from a CERTIFIED FINANCIAL PLANNER® professional will broaden your knowledge and deepen your understanding.  

Even though implementing changes can be intimidating, and at its worse, frightening, you don’t have to stay stuck in any situation. 

Typically we ask ourselves, “If there was one thing we could change about our financial circumstances what would that be?” Getting control over one only thing boosts our confidence and lead us to conquer other obstacles.

Putting ourselves in a control position generates a sense of power over our situation.  This happens because we choose to learn.  Not only will our learning lead us to be better money managers, but it can also help us find better jobs which pay better wages and give us the opportunity to achieve the things we set out to do in the first place.

To keep the task simple, let’s try implementing only one “Do” and “Don’t” strategy rather than create an endless list.

If you catch yourself in a stuck position:


Embrace learning new skills as an adventure.  Start where you choose to make the small changes in your life.  Keep the adventure ongoing.  Once you master one skill, move onto the next one.


Avoid the negative self-talk such as telling yourself you are not smart enough.  You can’t do this because it’s too difficult.  Turn negative statements into positive ones.   

The key message is to never stop learning.  There are a number of quotes written with this thought in mind.  One of my favorite is “The more that you read, the more things you will know.  The more that you learn, the more places you’ll go.” (Dr. Seuss).   With your dream list in hand, you will want to keep this quote in mind. 

As a CERTIFIED FINANCIAL PLANNER® professional, I am steering you to this website, Financial Planning for Canadians. Many less-than-a-minute-to-read articles are written to help you navigate through money matters.  There’s also an exclusive section, Life Happens--Financial Issues in Each Life Stage, to advise on the unexpected. These Life-Happens are real.  This great resource provides information on issues which can apply to your situation.

You have permission to ask for help.  Sometimes the obstacle is not knowing what to ask.  Knowledge can be derived from reading. You can experience a light-bulb moment when you connect the information with your situation. These articles then trigger the question, “Does this apply to me?”  If the answer is “Yes”, you are on the right path to gaining power and control. 

Thursday, October 5, 2017

How Do The New Proposed Tax Changes Affect You

Oh Canada! The True North strong and free!

Do you remember writing a research report for a school assignment?  

  • What were the lasting effects of World War II? 
  • How did the bombing of Hiroshima change the way the world feels about nuclear weapons?

Here’s a new topic we could add:  How do the new proposed tax changes affect you?
If you are a shareholder of a small business or farm corporation, you may be affected by the proposed tax changes brought forth by the Liberal government on July 18th. 
The 75-day consultation period, which ended as of October 2nd, permitted Canadians to share their views on the proposed changes. This excerpt from Bill Morneau, the Federal Finance Minister, appeared in an Open Forum letter published in the Western Producer:
Although the Liberal government received countless requests to extend the consultation period on the tax changes, the request fell on deaf ears. This motion was defeated Tuesday, October 3rd.  
The Government of Canada’s 63-page document, Tax Planning Using Private Corporations, specifically addresses three primary issues: income sprinkling, holding passive investments inside a corporation, and converting income into capital gains.     
Today as I composed my report on the proposed tax changes, I had a knot in my stomach.  As I read through news articles and media posts, I witnessed first-hand the controversy created over the Liberal’s proposed tax changes framed in their words as “tax fairness”.  Many across the country beg to differ, calling the changes anything but “fair”.  
The clients who I have worked with are shareholders in private corporations for both personal and business reasons.  Setting up a corporation was in their best interest in order to have more after-tax income to upgrade or purchase additional equipment and land, fund operating expenses, and save for emergencies and unexpected business problems. In some cases, the cash within their corporate accounts was to fund their retirement, the same way a pension plan would serve a salaried employee.
In the future, my clients would pay their share of personal taxes when funds were withdrawn from their corporation into their personal accounts.  The integration between corporation and personal tax filings assures that income earned through a corporation and paid out as dividends is subject to the same income tax as that earned by salary.
Kevyn Nightingale, CPA, CA (ON), CPA (IL), TEP is a Partner and Business Advisor at MNP, LLP.  In his two articles, Private Company Income Splitting Part 1 and Part 2, he clearly defines the current tax law and the proposed law regarding the income splitting proposals.  As a tax professional who understands the proposed legislation, Kevyn makes an astounding comment, “The legislation is conceptually simple, but the devil is in the details, and they are exceedingly complex.  There are 27 pages of new legislation.”
The Income Tax Act has always been complicated and complex. When I checked, the document, amended as of July 1st, 2017, is 3,128 pages.  And the number of pages is about to increase.  Once the new legislation is passed, owners of small business and farm corporations are encouraged to talk with their tax advisors to fully understand how the new changes will impact them.   An expert who understands and interprets tax laws can educate and provide us with wise tax planning advice.