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September 24, 2020

When the Canada Pension Plan was introduced in 1965, it was a relatively simple retirement savings model. Working Canadians started making contributions to the CPP when they turned 18 years of age and continued making those contributions throughout their working life. Those who had contributed could start receiving the CPP retirement benefit at any time between the ages of 60 and 65. Once an individual was receiving retirement benefits, he or she was not required (or allowed) to make further contributions to the CPP, even if that individual continued to work. The CPP retirement benefit for which that individual was eligible therefore could not increase (except for inflationary increases) after that point.


Between mid-February and mid-August of this year, the Canada Revenue Agency (CRA) received and processed just over 29 million individual income tax returns filed for the 2019 tax year. The sheer volume of returns and the processing turnaround timelines mean that the CRA does not (and cannot possibly) do a manual review of the information provided in a return prior to issuing the Notice of Assessment. Rather, all returns are scanned by the Agency’s computer system and a Notice of Assessment is then issued.


When the state of emergency was declared in March of this year, the federal government extended the usual deadlines for both the filing of individual tax returns and payment of taxes owed, for both 2019 and 2020. Sometimes those deadlines (like the deadline for filing of individual income tax returns for 2019) were put off until June, but most such deadlines were deferred until September 30. A summary of the federal individual income tax deadlines which will fall this year on September 30 is set out below.


Of all the many financial relief programs introduced by the federal government to address the economic impact of the pandemic, probably none has had a bigger impact than the Canada Emergency Relief Benefit (CERB). As of August 16, nearly 9 million Canadians had applied for and received payments under the CERB program, and the program had paid out just over $70 billion.


Most Canadians who participate in the paid work force do so as employees. Consequently, they receive a regular paycheque from their employer and they pay income taxes by means of amounts deducted from that paycheque and remitted to the federal government on their behalf.


It’s an acknowledged reality that times of crisis bring out both the best and the worst in people. While most Canadians would never consider using the current pandemic as a means of defrauding others, this is not, unfortunately, true of everyone.

This is a time when Canadians are particularly vulnerable to scammers and fraud artists, for a number of reasons. First, of course, is the financial dislocation which has resulted from the pandemic — many Canadians have lost income and may be in real financial difficulty, making them especially vulnerable to fraudulent communications indicating that there is money available to them. Second, the federal government has instituted a great number of programs to provide financial assistance to those hit hard by the pandemic. The sheer number of those programs, however, and the fact that they have had to be revised frequently to take account of changing conditions has resulted in an inevitable degree of confusion about just what is available, who is eligible for the different benefits, and how to claim them. That confusion makes it easier for fraud artists to convince their victims of the validity of what they are “offering”. It also makes taxpayers vulnerable to phone calls or voice mails in which they are, in effect, accused of receiving benefits to which they were not entitled and demanding that they send funds in repayment.


When states of emergency were being declared across the country in March of this year, thousands of businesses were forced to close their doors and, as a result, were faced with the necessity of laying off some or all of their employees.

The question of when, or even whether, those employees could and would be recalled to work was essentially unknown at that time. To address that reality the federal government established the Canada Emergency Wage Subsidy (CEWS) program. As the name implies, the program involved the payment of a subsidy to the employer, who would use those funds to keep employees on the payroll pending the re-opening of the business and the return to work.


For post-secondary students the upcoming academic year is going to be unlike anything they have previously experienced. Post-secondary institutions across the country are now determining whether, and to what extent, students should return to in-class learning or whether, at least for the fall semester of the 2020-21 academic year, programs should be delivered entirely through online or remote learning. While some institutions have already indicated that they will be only providing online learning, and a smaller group intends to continue entirely with the traditional in-class model, most universities and colleges have taken a “wait and see” approach, choosing to employ a “hybrid” model which combines in-class learning with online courses.


When the Canada Pension Plan was put in place on January 1,1966, it was a relatively simple retirement savings model. Working Canadians started making contributions to the CPP when they turned 18 years of age and continued making those contributions throughout their working life. Those who had contributed could start receiving CPP on retirement, usually at the age of 65. Once an individual was receiving retirement benefits, he or she was not required (or allowed) to make further contributions to the CPP. The CPP retirement benefit for which that individual was eligible therefore could not increase (except for inflationary increases) after that point.


Just over a decade ago, it was possible to buy a home in Canada with no down payment — financing 100% of the purchase price — and extending the repayment period for that borrowing over a 40-year period.


While Canadians had an extended time this year to file their income tax returns for the 2019 tax year, the extended filing deadlines (June 1 for the majority of Canadians, and June 15 for self-employed individuals and their spouses) have passed and returns should be filed.


While the standard (and accurate) advice is that tax and financial planning are best approached as activities to be carried on throughout the year, it’s also the case that a mid-year tax and financial checkup makes good sense, and that’s especially the case this year.


Once daily weather reports begin to include wind chill factors or frost warnings, the thoughts of many Canadian turn to the idea of spending part of the Canadian winter somewhere much warmer – most often, in one of the southern U.S. states. And, while the anemic state of the Canadian dollar has required Canadians to downsize some of those plans, it is still the case that thousands of Canadian “snowbirds” fly south every winter.


During the financial crisis that took place in 2008 and 2009, the Canadian mortgage and real estate market didn’t experience the kind of meltdown which occurred south of the border. That result was attributable, in many respects, to the fact that Canadian lending practices, and the rules governing those practices, were much more conservative and stringent than the corresponding rules in place in the United States.


Canada Pension Plan (CPP) retirement benefits are available to virtually any Canadian who has participated in the work force and made contributions to the CPP and for most retirees, that monthly CPP benefit represents a substantial percentage of their income. Consequently, knowing what to expect in the way of CPP retirement benefits is crucial to an individual’s retirement income planning.


At the Canada Revenue Agency (CRA), taxes are a year-round business. During the spring and early summer, the CRA is busy processing the millions of individual tax returns filed by Canadians for the previous tax year. The volume of returns filed and the Agency’s self-imposed processing turnaround goals mean that the CRA cannot possibly do an in-depth review of each return filed. Once the season of processing and assessing tax returns is for the most part complete, however, the CRA moves to the next phase of its activities – specifically, the start of its annual post-assessment tax return review process.


Having access to mobile communication is useful and practical for any number of reasons and Canadians who don’t have a cell or smart phone are likely now the exception rather than the rule. It’s also the case, however, that cell phone rates payable by Canadians are among the highest in the world, and so having an employer provide that cell phone (and pay the associated costs) is consequently a valued employment benefit. That said, Canadians who enjoy such an employment benefit should be aware that, while they may not have to pay a monthly cell phone bill, there still can be a cost in the form of a taxable benefit which must be reported on the annual return. 


Home renovations are big business right now in Canada, as many homeowners opt to make changes and/or additions to their current residences rather than try to find a new home in the current real estate market. And, while the cost of renovating one’s home is usually considered a personal expense which doesn’t qualify for any tax credit or deduction, starting this year there is an exception to that rule.


By the time this summer reached the halfway mark, most Canadian taxpayers had filed a tax return for 2015, received a Notice of Assessment with respect to that return, and considered that their income tax obligations for this year were complete. For a significant number of those taxpayers, however, the filing of that return will trigger the issuance of a 2016 Tax Instalment Reminder from the Canada Revenue Agency (CRA), and that reminder will show up in their mailboxes sometime during the month of August. On that form, the CRA will suggest to the recipient that he or she should make instalment payments of income tax on September 15 and December 15, 2016, and will identify the amount which should be paid on each date.


As the summer starts to wind down, both students returning this fall to their post-secondary institutions and those just starting post-secondary education must focus on the details of the upcoming school year: finding a place to live, choosing courses, and — perhaps most important — arranging payment of tuition and other education-related bills.


Day trading remains alive and well in Canada notwithstanding the roller-coaster markets. Indeed, it is the very volatility of markets that attracts day traders who think they can reap profits by quick "in and out" forays.