Use Capital Gains Instead of Dividends

If you are planning large cash withdrawals from your company, consider taking the cash as capital gains rather than dividends. Only one half of the capital gains is subject to tax.

Set Up Corporate Health Plan

You can get 45% discount on your medical expenses by setting up your own Private Health Services Plan. It allows your corporation to deduct dental and medical expenses for yourself and family members without any corresponding taxable benefit to you.

Split Income With Family Members

The corporate tax rate is around 10% (depending on your province), compared to the highest personal tax bracket of around 40%. Tax saving can be enormous by channelling corporate income to family members in a lower tax bracket, instead of paying all the income to you alone.

Maximize Deductible Pension Contributions

Consider swithing your retirement savings to an Individual Pension Plan (IPP), instead of the RRSP. You can make larger contributions to an IPP than to the RRSP, especially if you are over 50 and you are also entitled to a large tax deduction for past service contribution.

Deduct Mortgage Interest

If you have a sizable house mortgage, you should look for creative ways to write off the mortgage interest.

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Canada ranks No. 9. Not bad, not bad.

Well, it’s not a big deal anyway. Only 0.01 point difference. Next year USA will probably resume its No. 1 spot.

GENEVA (Reuters) – Switzerland knocked the United States off the position as the world’s most competitive economy as the crash of the U.S. banking system left it more exposed to some long-standing weaknesses, a report said on Tuesday.

The World Economic Forum’s global competitiveness report 2009/2010 showed economies with a large focus on financial services such as the U.S., Britain or Iceland were the losers of the crisis.

The U.S. as the world’s largest economy lost last year’s strong lead, slipping to number two for the first time since the introduction of the index in its current form in 2004.

*** *** ***

The WEF bases its assessment on a range of factors, key for any country to prosper. The index includes economic data such as growth but also health data or the number of internet users.

The study also factors in a survey among business leaders, assessing for example the government’s efficiency or the flexibility of the labor market.

The WEF applauded Switzerland for its capacity to innovate, sophisticated business culture, effective public services, excellent infrastructure and well-functioning goods markets.

The Swiss economy dipped into recession last year, too and had to bail out its largest bank UBS. But its economy is holding up better than many peers and most banks are relatively unscathed by the crisis, which drove U.S. banks into bankruptcy.

*** *** ***

Leading emerging markets Brazil, India and China improved their competitiveness despite the crisis, the report showed.

But Russia saw one of the steepest declines among the 133 countries assessed, falling back 12 places to 63, as worries about government efficiency and judicial independence rose, the WEF said.

After years of rapid improvement, which took it to place 29, China now had to tackle shortcomings in areas such as financial markets, technological readiness and education as it could no longer rely on cheap labor alone to generate growth.

India, ranked 49th, was in turn well positioned in complex fields such as innovation but had still to catch up on basics such as health or infrastructure, the WEF said.

Brazil leapt by 8 ranks to 56th, as measures to improve fiscal sustainability and to liberalize and open the economy showed effects, the report said.

Among the top-ten, Singapore moved up to third from fifth, swapping positions with Denmark, which fell behind fellow-Nordic country Sweden. Finland as 6th and Germany as 7th stayed put while Japan and Canada overtook the Netherlands.

The WEF study named African countries Zimbabwe and Burundi as the world’s least competitive economies.

In the case of Zimbabwe, the WEF noted the complete absence of property rights, corruption, basic government inefficiency as well as macroeconomic instability as fundamental flaws.

For the full report click on: www.weforum.org/gcr
Read full article: yahoo.com

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No!

I don’t think it will get better. As you can see, my income tax and CPP tax combined are already $52,000 as of today (not even counting the income for Sept to Dec). Is this normal??? [Compare to the national average.]

Overall

Assets: +8.5% (down from +11%)
Liabilities: +8.7% (up from +2%)
Equity: +8.4% (down from +19%)

Goals Accomplished To Date

1. My max RRSP contribution for year 2009 is reached.
2. Set aside $5000 for year 2010 TFSA.

Financial Statement

Financial goal: first million networth in 7 years
Time lapse: 2 years 4 month
Time remaining: 4 years 8 months

Assets	$161,400
RRSP (mainly GICs)	$19,600
RRSP for First HBP	$21,000
TFSA Year 2009	$5,000
TFSA Year 2010	$5,000
High Interest Savings	$89,400
Cash	$2,300
Car Worth (minus 30% depreciation rate for year 2008 & 2009)	$19,100
Liabilities	($74,800)
Income Tax & CPP Tax (estimated for tax year 2009)	($52,000)
Car Loan	($22,800)
Equity
Networth	$86,600
Others (not included above)
Money to parents each month	$5,000

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• My Networth: July 2009
• My Networth: June 2009
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• RRSP vs TFSA

When I got the reply from BMO, the financial officer told me that if I would like to apply for an LOC $20,000, I had to show them a statement of $40,000 I currently had in my RRSP account. I guess they want to use that as a guaurantee for the creditline. That was no problem for me. However when I asked about the interest rate, the answer shocked me. The rate would be 7.5%!!! Of course, you will probably know the next question I asked—how is the line of credit interest rate calculated?

In summery, for a $20,000 line of credit:

1. Proof of $40,000 RRSP asset
2. Interest rate 7.5% = 2.25% prime rate + 2.5% base rate + 2.75% variable rate

The way BMO calculates their rate puzzles me a lot. I did online search many times, and all I could find is that the rate for LOC is calculated as prime + variable rate. I couldn’t find any site that says LOC rate = prime + base + variable.

I really wish someone shed some light on this rate matter for me!!! Anyone has the same situation as me with BMO???

Perhaps BMO is not a good bank for borrowing money. They will probably lose many clients for that weird rate formula.

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Back To School Shopping

The following states allows tax free shopping on school supplies, computers, and clothing:
• Alabama
• Georgia
• Louisiana
• Missouri
• New Mexico
• North Carolina
• South Carolina
• Tennessee
• Texas
• Vermont
• Virginia

The following states allows tax free shopping on clothing only:
• Connecticut
• Iowa
• Mississippi
• Oklahoma

What Others Are Reading…

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