Author: Oskar Malone

President Donald Trump’s address to the World Economic Forum in Davos has sent shockwaves throughout Canada’s economic and investment communities, further fueling the economic uncertainty that has been a defining feature of his return to the Oval Office.

Trump, who appeared via video conference, remarked how the US doesn’t need Canadian oil, gas, autos or lumber. These comments reignited concerns about the future of Canada/US trade relations — one of the world’s most interconnected and interdependent trade relationships.

Elsewhere in his speech, Trump suggested that the United States could impose sweeping tariffs on Canadian imports, raising the threat of economic disruption for industries that are reliant on cross-border trade, as well as the investors who support them.

Reigniting talks of Canada becoming the “51st state” of America

During his address, Trump delivered a bold critique of Canadian exports, asserting that the US could function without key commodities from its northern neighbour.

He went so far as to propose that Canada could avoid tariffs entirely by becoming a US state — a remark that sparked backlash and disbelief among Canadian leaders and the general public alike.

The administration has steadfastly levied the threat of implementing a sweeping 25% tariff on Canadian imports, which insiders say could come as soon as February 1, 2025.

“We’re going to be demanding respect from other nations,” Trump told the crowd of powerful business and political leaders in attendance. “Canada has been very tough to deal with over the years.”

Economic interdependence between Canada and the USA

The close economic ties between Canada and the US are underscored by staggering trade figures.

In 2023 alone, $3.6 billion worth of goods crossed the border, cementing Canada’s role as America’s top trading partners according to the Canadian government.

Additionally, Canadian exports of energy products such as oil, natural gas and power to the US amounted to nearly $170 billion, or almost one-third of total shipments in 2024, according to TD Economics.

These numbers highlight the mutual benefits of the trade relationship and the risks of potential tariffs.

Implications of a trade war: layoffs, closures and skyrocketing prices

The threat of a trade war raises the stakes for Canadian industries that depend on US markets.

Should the proposed tariffs take effect, the automotive manufacturing and natural resources sectors could face widespread layoffs and plant closures. The auto sector, already grappling with supply chain disruptions, would be particularly hard-hit.

The Vice President of the Business Council of Alberta, Scott Crockatt, told CTV News that 25% tariffs would be “devastating” for the country, while David Adams, CEO of Global Automakers of Canada, added how auto production facilities could face closures if the tariff environment becomes too challenging.

Meanwhile, US consumers could experience higher prices for goods as proposed Canadian counter-tariffs drive up costs.

The Canadian government plans retaliation

In response to Trump’s threat of taxation, Prime Minister Justin Trudeau, who recently stepped down as the leader of the Liberal Party and is awaiting a cessation of power to his successor, has vowed to retaliate decisively to any US tariff measures.

His administration is exploring retaliatory strategies, including tariffs on American goods that are strategically significant to key US industries and voter bases.

According to Trudeau, such measures would aim to pressure the US administration into reconsidering its protectionist policies while also shielding Canadian interests.

“If the president does choose to proceed with tariffs on Canada, Canada will respond and everything is on the table,” Trudeau told reporters during a news conference on Tuesday.

“I support the principle of dollar-for-dollar matching tariffs. It’s something that we are absolutely going to be looking at if that is how they move forward."

What investors should be concerned about

While Canada has already dealt with tariffs during Trump’s first presidential stint, this time things could get much, much worse.

“Proposed tariffs will be a very serious issue for the Canadian economy given its already very weak fundamentals versus Trump’s previous presidency,” explains Stephen Johnston, a private equity manager and director of Omnigence, a Canadian private equity firm, during a recent Money.ca interview.

“We can expect an increase in inflationary pressures, such as loss of purchasing power from Canadian dollar weakness, and recessionary pressures like increasing current account deficit and GDP contraction.”

This will increase the volatility of Canada’s current economic climate, which Johnston refers to as “stagflation,” which combines positive inflation with lower nominal gross domestic product (GDP) per capita growth, resulting in negative real GDP per capita.

Investment and market strategies: What’s next for investors

Amid these uncertainties, economic experts are urging Canadian investors to adopt a proactive approach.

Diversifying export markets could reduce reliance on the US., mitigating the impact of potential tariffs. Additionally, investors are advised to prepare for market volatility by reassessing their portfolios and exploring opportunities in sectors less vulnerable to trade disruptions.

Such industries include:

• Farmland
• Automotive maintenance
• Environmental services
• Building products distribution

It’s also crucial for investors to stay informed about policy developments and economic indicators. Monitoring updates from both American and Canadian governments can provide insights into the likelihood and timing of tariff implementation.

Bottom line

President Donald Trump’s remarks at Davos underscore the unpredictable nature of international trade policy in today’s erratic political climate.

For Canadians and Canadian investors, vigilance and adaptability are key to navigating this period of uncertainty. By diversifying markets and portfolios, businesses and individuals alike can bolster their resilience against potential trade disruptions and ensure a more stable financial future.

Sources

1. Government of Canada: You’ve been lied to, Ramit Sethis says, by Vishesh Raisinghani (Dec 8, 2023)

2. TD Economics: Setting the record straight on Canada-U.S. trade, by Marc Ercolao and Andrew Foran (Jan 21, 2025)

3. CTV News: Trump tells World Economic Forum U.S. doesn’t need Canadian oil, gas, autos or lumber, by Luca Caruso-Moro (Jan 23, 2025)

This article Trump says USA doesn’t need Canadian oil, gas, autos or lumber: How this stance could impact Canadian industries and investors originally appeared on Money.ca

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Canadian EV owners’ biggest challenge is a lack of convenient and reliable public charging options. This is according to a Canadian Automobile Association (CAA) survey of 16,000 EV drivers across the country.

"Our survey paints a picture of people happy they bought an EV, saying they are cheaper to operate and easier to maintain than their previous gas-powered vehicles," Ian Jack, CAA National’s vice-president of public affairs, said in a statement.

"But it also found the experience of EV owners mirrors some of what the general public thinks – public charging isn’t good enough, especially outside major urban centres, and they are concerned about being caught with a dead battery in the winter."

At the same time, the overwhelming majority (87%) said they would make their next purchase an EV.

Canadian EV driver experiences

More than 90% of EV owners said the cost of fueling their EV is much lower, and 79% said the cost of maintenance is much better than their previous gas-powered vehicles.

Despite the issues with public charging, EV owners also told CAA that the vast majority of their charging is done at home. In fact, respondents reported that most of their travel was within 100 km of their home, a distance significantly less than the average range of an EV, which is over 400 km.

CAA will be conducting an EV winter test from Ottawa to Mont Tremblant in February to measure their range in cold weather and how effectively they charge.

Polling the general populace

In a separate recent survey of the general population, including non-EV owners, CAA found more than half (52%) of Canadians said they won’t purchase an EV because public charging is not reliable enough, and more than two-thirds (68%) said they won’t purchase an EV because the driving range of an EV drops too much when driving in cold weather.

These findings were based on a poll of 2,880 Canadians carried out from September 13 to 21, 2024.

Survey methodology

For this report, PlugShare Research, a custom survey research company for the EV industry, surveyed their panel of Canadian EV drivers, as well as Canadian PlugShare app users, from October 3 to 22, 2024. A total of 16,041 EV drivers responded across all provinces.

This article Lack of fast and reliable charging is the top issue for Canadian EV owners

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

A mere 15% of Canadians have a plan for how their money and belongings will be distributed after they’re gone, according to a recent survey from RBC Insurance. This figure only increases to 24% for current retirees.

"We often hear people say, ‘I had no idea how hard it would be’," Selene Soo, RBC Insurance’s director of product management, said in a statement.

“This is followed quickly by: ‘If I had known, I would have helped to prepare their finances differently.’ It’s hard to hear because we know there are ways to make it easier."

Meanwhile, less than four in 10 (38%) retirees have set aside money or have life insurance to pay for final expenses.

Canadians’ plans for their estate

Retirees are also the least likely to be knowledgeable about various types of insurance policies, according to the RBC press release on the survey.

Even though most Canadians surveyed don’t have estate plans, the majority (82%) feel it is important to ensure their family receives money quickly to avoid paying out-of-pocket for a funeral or other end-of-life expenses. As many as 76% want to ensure their estate is taxed as little as possible so as to leave their family a larger inheritance, and 70% want to pass money to their family.

RBC also found that while just over half (53%) of Canadians confess they don’t want to be a burden on their families when they’re gone, they are surprised by the weight of the tasks involved with managing a loved one’s estate, whether they be financial or administrative.

Properly preparing for end-of-life costs

RBC suggests talking with your family and experts in advance can help them navigate complex paperwork, such as closing off bank accounts, paying debts, filing a last income tax return and maintaining property or other assets until they can be sold.

While money may be available for your family, it is often tied up in probate – a legal process that can take several months or more than a year, while a court decides what happens to your financial assets and debts after you’re gone and who is authorized to act on your behalf.

However, insurance products like life insurance and segregated funds automatically bypass probate if you name a beneficiary. This means your loved ones will receive any inheritance quickly, so they can be ready for financial surprises that may come their way. It also means you can minimize potential probate-related fees, making sure more money gets to your loved ones.

RBC also stressed the importance of naming beneficiaries, even though it may be difficult or complex based on family dynamics or if there are businesses involved.

**Survey methodology ** The survey findings come from an Ipsos poll of 1,250 Canadians aged 18 and over conducted on behalf of RBC Insurance. The survey was conducted between July 26 to 29, 2024. Included within this sample is an oversample of 250 Canadians aged 45 to 75 years old with a reported household income of more than $150,000.

This article Most Canadians don’t have estate plans, survey finds

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Imagine you’ve got an extra $150K in your bank account. What are you going to do with it? Let it burn a hole in your pocket? Take yourself off to the mall for a shopping spree? Or do the responsible thing and invest it?

While not everyone will end up with such a large sum, for those facing this situation the pressure to make a decision can be overwhelming. In those circumstances, best answer is to get your money working for you — and you do that by investing the entire sum.

To help, here’s a few tips on what you can do with $150K — to make it work for you.

What to do with $150K — Option #1: Buy real estate

One idea is to buy a condo. Yes, it might sound CRAZY but consider the benefits. For instance, if the real estate market starts to depreciate and the condo starts to lose value, you can always generate income by renting out the condo. (Or, if your area lets you, furnish it and earn money through short-term rentals).

Unfortunately, there are a few downsides to buying real estate.

a) Condos tend to swing up and down in value far more dramatically then single-family homes. This could force you to hold onto the property for longer than anticipated, as you wait for the market to recover.

b) If you don’t find a tenant for the unit, you’ll need enough money in your monthly budget to pay the mortgage (a cost that should be paid by the rent a tenant pays).

Another real estate option is to skip a condo and buy a duplex or a triplex or something with suite potential. However, this option can be out of reach even with a $150,000 down payment in Canada’s largest cities.

What to do with $150K — Option #2: Invest $150K

Another option is to invest this money in the stock market or into index funds.

If your investing time horizon is shorter, you could consider investing into companies that pay dividends. For instance, you could earn $400 per month if you bought stock in a company with a reasonable 3.5% dividend payout rate.

Investing in stock that pays dividends also provides a better tax rate (on these dividend earnings), meaning you can also reduce tax owed on invested earnings.

What to do with $150K — Option #3: Do nothing

The most boring option — and not the safest since your buying power would erode due to inflation — is to leave this money in a savings or chequing account.

Instead, consider depositing the funds into a high-interest savings account at Tangerine. The high-interest savings account generates a monthly interest of 1.65%. which equates to about $200 a month.

How much you really take home with a salary of $150K?

Okay, so let’s just say that $150K doesn’t just magically appears in your bank account (boo, reality). That means you’re going to have to make it.

But where you live will also impact how much of that $150K salary you really get to keep. That’s because the after-tax take-home pay on a $150,000 salary will depend on the province or territory you live in. Each region in Canada sets it’s own tax rate and its own tax brackets and while all provinces and territories are similar at the end of that year those tax differences can add up to a few thousand (or more).

To help, here’s a rough estimate of your after-tax income (based on 2024 tax rates) for each province based on earning an annual salary of $150K:

• Alberta: $106,000
• British Columbia: $105,000
• Manitoba: $102,500
• New Brunswick: $102,000
• Newfoundland & Labrador: $101,500
• Northwest Territories: $111,000
• Nova Scotia: $99,500
• Nunavut: $115,000
• Ontario: $105,000
• Prince Edward Island: $100,000
• Quebec: $98,000
• Saskatchewan: $106,000
• Yukon: $110,000

How to maximize your after-tax dollars regardless of where you live

Regardless of how much you earn — and keep in after-tax income — the general rule of thumb for financial prosperity is to follow the 50/30/20 rule. Using this rule 50% of your after-tax income is used to pay for essential needs, such as housing, food, heat and hydro. Another 30% is spent on fun things, like vacations, new clothes and dining out. The remaining 20% goes towards your saving and investment goals.

Getting started: How to turn $150K into a retirement nest egg

When starting your savings and investment journey, focus on quick, accessible cash that can be used during downturns. Called an emergency fund, this type of savings account helps you to smooth out any disruptions in your cashflow should you experience an unforeseen set back, such as a job loss or medical situation.

The general rule of thumb is to save between three and six months’ of your annual salary in an emergency fund.

Based on a $150K salary (or windfall) that means setting aside $30,000 in an easily accessible account, such as a high interest savings account (HISA). Good options include:

• EQ Bank
• Wealthsimple Cash

Taking the next step: Saving for retirement

An emergency fund is great at preventing you from dipping into expensive debt, such as credit card cash advances or payday loans, but it’s not great at getting your money working for you. For that you’ll need to start investing. In most cases, this will start with contributions to your Tax-Free Savings Account (TFSA) and your registered retirement savings plan (RRSP).

Your TFSA will require after-tax dollars, while an RRSP contribution will give you a current tax-year tax deduction. Keep in mind, however, your maximum contribution for a RRSP is based on a percentage of your earned income. In 2024, the maximum you could contribute is 18% of your earned income. That means you could contribute $27,000 to your RRSP — 18% of $150K — for a tax refund of just under $11,800.

Hey! What would you do with $150K?

This article What would you do with $150K? originally appeared on Money.ca

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Canadians are clearly seeing the benefits of having a life insurance policy, with 57% of Canadian adults revealing they have life some form of insurance coverage, per a recent study by LIMRA, the largest trade association supporting the insurance and related financial services industry. This represents a three-point increase from a similar study conducted by LIMRA in 2019.

If you’re young and healthy, you may feel you have plenty of time before you have to worry about life insurance. Or, if your work offers a group life insurance plan, you may think the issue is done and dusted.

But, if something were to happen to you, the last thing you’d want your family to have to worry about is money — and employer group life insurance policies don’t provide the total peace of mind you may think they do.

Here, we’ll demystify how these plans work and why you may want to consider signing up for an individual life insurance policy.

What is employer life insurance and how does it work?

As part of their employee benefits packages, many workplaces offer a group life insurance plan.

These plans generally provide your family with a death benefit based on a low set coverage amount. Coverage amounts typically range from $25,000 to one or two times your annual salary.

The life insurance benefit is triggered only if you pass away while still a member of the plan, and the sum is bound to fall short when your family needs support the most.

A closer look at group insurance plans

That’s not to say you shouldn’t sign up for a group insurance plan when it’s offered to you. There are a number of benefits to this type of insurance plan, including:

• Affordability. Your plan sponsor would pay for most if not all of the costs associated with this type of plan, which makes it a pretty affordable option.

• Convenience. With a limited amount of paperwork involved, signing up for these plans is easy. Usually, you don’t have to think about making the payments, since they can be taken through payroll deductions.

• Guaranteed enrolment. With this type of plan, you’ll get to skip the medical underwriting part of the life insurance process. You’ll only need to go through that process if you’re rejoining the plan after declining coverage, or if you’re seeking additional coverage beyond the plan’s scope. This is a great option for those that have pre-existing health concerns that could trigger an insurance rating with traditional underwriting.

Downdalls of group life insurance

So what about the downsides? There are a few, including:

• Limited coverage. Generally, group benefit amounts won’t be enough to cover your household’s needs, especially if you have dependents.

• Lack of control. You don’t actually own the policy. Your plan sponsor or the insurance company can change the terms at any time or discontinue it without your input. And, group plans aren’t exactly tailored to your specific needs.

• Limited portability. If you ever change jobs, there’s no guarantee you can take your policy with you, and it may be quite costly if you are able to transfer ownership to yourself. Next, your new employer may not offer the same coverage as your current group plan. Once you retire, you may also lose your coverage or be forced to pay an elevated price to convert the policy to one you own outright. Lastly, if you end up having to purchase new life insurance coverage later in life because of having previous coverage through an employer, your premium price will be higher, simply due to the fact you’ve gotten older.

• Taxation. Depending on how your employer structures the premiums, your beneficiary may owe taxes on the payout.

Why you should get an individual life policy

By all means, if you have group life insurance offered to you, take it.

But, even if you have group coverage, there are many good reasons to have an individual life insurance policy as well.

If you know that a group insurance plan isn’t going to cover your family’s financial needs, why not ensure you have complete coverage with a policy that’s flexible enough to adapt to the various stages of your life and career?

Once your policy is approved, you’ll have peace of mind knowing a guaranteed, tax-free cash benefit will go to your beneficiaries should anything happen to you during the coverage period. Unlike a one-size-fits-all group policy, individually-owned coverage can be customized to your unique needs.

You can also add additional illness or disability benefits to individual policies to create a more holistic coverage plan.

As of 2023, 64% of total life insurance policies currently in force are individually owned, according to PolicyMe. For most Canadians, a term life insurance policy — whether for 10, 20, 30 years or beyond — is the best and most affordable option to see them through their working years until retirement.

So what’s holding you back?

According to the PolicyMe study, 80% of Canadians say life insurance rates are too expensive, with 37% say a perceived lack of affordability has prevented them from purchasing it.

However, an online insurance brokerage like PolicyMe or PolicyAdvisor can help alleviate some of the headwinds when trying to get coverage by providing fully comprehensive online platforms that allow you to find the policy that suits your specific needs.

Sources

1. LIMRA: Nearly one third of Canadian adults report living with a life insurance coverage gap (Jul. 11, 2024)

2. PolicyMe: Key Canadian life insurance statistics, by Cristina DaPonte (Apr. 28, 2023)

This article Think that a group life insurance plan through your job is all the coverage you need? Think again originally appeared on Money.ca

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

The Canadian economy is expected to grow moderately in the first quarter of 2025, according to the latest Main Street Quarterly report from the Canadian Federation of Independent Business (CFIB). The report forecasts growth of 2.5% in the first quarter, following an increase of 3.2% in the final quarter of 2024.

“While the Canadian economy is projected to remain healthy at the start of the year, several uncertainties cloud the outlook, including potential US tariffs, the GST/HST tax break, and capital gains policy concerns,” CFIB chief economist and vice-president of research Simon Gaudreault said in a statement.

A potential 25% tariff on Canadian exports to the US could have widespread consequences for Canadian businesses. According to the report, 82% of businesses that trade with the US anticipate operational challenges if tariffs are imposed. These challenges could include higher inflation, increased prices, and a loss of customers.

Inflation stabilizing, business confidence rising

The report also showed signs of economic stability, with inflation expected to align with the Bank of Canada’s target of 2% year-over-year in the first quarter of 2025. This is a slight drop from 2.1% in the final quarter of 2024.

Private investment is also rebounding, supported by an increase in long-term business confidence. This marks a turnaround after weaker performance earlier in 2024. Job vacancies in the private sector remained steady, with 378,300 unfilled positions in the fourth quarter of 2024, representing a job vacancy rate of 2.7%.

Canadian businesses face tariff concerns

The looming US tariff threat has cast uncertainty over Canada’s economic outlook. Gaudreault noted that given the strong trade ties between Canada and the US, new tariffs could lead to rising inflation and additional struggles for small- and medium-sized businesses already grappling with weak demand.

“It’s critical to create conditions where small businesses can thrive as we navigate these challenges,” he said.

Optimism varies across sectors

The report revealed that while professional, business, and financial services sectors remain above the all-industry optimism average, they have become less optimistic in the past two years.

CFIB, which represents 100,000 small and medium-sized businesses across Canada, continues to advocate for policies that encourage economic growth and support small business success.

This article Canadian economy expected to slowly grow in 2025, despite Donald Trump tariff risks originally appeared on Money.ca

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

According to a new survey from TD Bank Group, 49% of Canadians surveyed still foresee inflation and cost of living as their biggest financial challenge this year. This is down 9% from last year.

"As 2024 came to a close with a fifth consecutive interest rate cut from the Bank of Canada, Canadians have responded with increased optimism," Emily Ross, TD’s vice-president of everyday advice journey, said in a statement.

"Although the cost of living is still clearly a concern for many Canadians and again tops their list of financial challenges for 2025, the survey results indicate that things are moving in the right direction, and Canadians are starting to feel more positive about achieving their financial goals."

Additionally, 24% of Canadians have stated that they are feeling more confident about their finances in 2025, up 4% from last year.

Canadians’ financial priorities

According to TD, 56% of Canadians surveyed indicated that their main priority for 2025 was their day-to-day expenses, down 3% from last year, followed by saving and investing for the future (47%) and paying down debt (30%).

Millennial Canadians were most likely to place a precedence on paying down their debt as a priority (38%), compared to only 21% of Boomers.

The survey had additional insights regarding Canadians’ spending:

• Just over half (51%) are willing to cut back on spending, down 4% from last year
• Among those not planning to, 42% say it’s because they have already cut back as much as they can
• Gen Z and Millennials (49% each) are more likely to say they have cut back as much as they can, compared to Boomers (35%)

While some Canadians will avoid limiting their spending out of pure necessity, 12% reveal they won’t be cutting back simply because they don’t want to.

For those who are willing to make a sacrifice, 63% plan to do so by making fewer retail purchases of items like clothing and electronics.

Another 56% plan to eat out or order food less often, 52% say they will shop around to save more on purchases, while 41% say they will cut back on entertainment like concerts and sporting events.

Many Canadians lack a financial plan

TD also found that 61% don’t have a financial plan in place for 2025.

What’s more, 63% of Canadians surveyed don’t currently work with a qualified financial professional and 70% don’t use budgeting tools to help with their finances.

Interestingly, 61% noted they had a financial New Year’s resolution in mind:

• 18% said it was to build up their savings as much as they are able to
• 15% said it was to pay off their credit card or pay down debt
• 13% said it was to cut back on spending

This article Inflation, cost of living still top of mind for Canadians, despite a lack of financial planning originally appeared on Money.ca

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

In the spring federal budget, Prime Minister Justin Trudeau proposed an amendment to the capital gains tax, to take effect in the summer. But, with the announcement that Trudeau is stepping aside before the amendment receives Royal Ascent, Canadians are left questioning who their next leader will be, and, for many, what this will all mean for the proposed amendment.

On January 6, Prime Minister Trudeau announced his intention to resign as leader of the Liberal Party and as Prime Minister, once his successor is chosen. The Liberal Party has set March 9 as the date to vote for the new leader and they will be sworn in as Canada’s next Prime Minister shortly afterwards.

Also on January 6, the Governor General granted the Prime Minister’s request to prorogue Parliament until March 24th, 2025. Parliament had been scheduled to resume on January 27th.

The suspension of Parliament by prorogation means the termination of the current session of the 44th Parliament, which was summoned following the 2021 federal election, and resulted in a Liberal minority government.

With this announcement, all business is terminated, meaning any bills that have not already received Royal Assent are said to “die” on the Order Paper. In order to proceed with the bill in a new session, it must be reintroduced.

Capital gains explained

A capital gain is the profit made on the sale of an asset, such as stocks, bonds, real estate or other investments. In other words, when the selling price exceeds how much the asset was originally paid for, that profit is considered a captial gain. Capital gains tax is applied to that profit.

Unlike in some countries, capital gains tax in Canada is generally not based on the entire profit, but on only half of the capital gain, meaning that only 50% of your capital gain is subject to taxation.

The proposed capital gain amendment was to increase the inclusion rate from 50% to 66.67% for tax calculated on the portion of capital gains in excess of $250,000. The proposal was included in the federal budget of April 16, 2024, to take effect June 25. Taxpayers had two months to determine if affected assets ought to be sold before June 25 in order to lock in the full amount of the capital gain at the lower rate.

The change in the capital gain inclusion rate must be implemented by way of amendments to the Income Tax Act.

Amendment stalled

On September 23, 2024, the government tabled a Notice of Ways and Means Motion (NWMM) to introduce the relevant bill to amend the Income Tax Act and Regulations. This motion is a form of official notice that a financial or tax-related law is coming soon and signals the begining of a legal process to make those changes.

The tabled legislation did not reach First Reading in the House of Commons. Both the NWMM and the proposed amendments to the Income Tax Act have now been terminated by prorogation.

Typically, the Canada Revenue Agency (CRA) begins to administer tax changes once they are proposed, on the assumption that the proposals will ultimately be passed into law, so to provide certainty to taxpayers. This is grounded in parliamentary convention, and retroactive legislation to enact announced proposals has long been supported by the courts.

There are also practical reasons to begin to administer proposed changes once they are announced, such as easing compliance burdens on taxpayers and the CRA.

Capital gains tax in 2025

In line with past practice, the CRA has confirmed that it will continue to administer the proposed capital gain inclusion rate and issue relevant tax forms up to January 31 of this year, reflecting the proposed increase for gains realized after June 25th, 2024.

Parliament is scheduled to resume on March 24, with the new Prime Minister leading the federal government.

When Parliament is back in session, it is conceivable that the Speech from the Throne could indicate an intention to reintroduce the proposed capital gain amendments to the Income Tax Act.

However, the leaders of all major opposition parties have said they intend to vote non-confidence in the Liberal government once Parliament resumes, which would result in the dissolution of the 44th Parliament and the scheduling of a federal election this coming spring.

Taking capital gains to the ballot box

The proposed capital gains inclusion rate increase will no doubt be one of many election issues.

Current polling strongly indicates the outcome of the election will be a large Conservative majority, with Party Leader Pierre Pollievre at the helm. Unlike the Liberal Party, the Conservative Party does not support the proposed increase in the capital gain inclusion rate.

It is, therefore, highly unlikely that the proposed amendments will be passed in Parliament and become law.

What will happen if the legislation does not pass?

The CRA has indicated it will cease administering the proposed changes to the capital gains inclusion rate if it appears Parliament will not proceed with the necessary legislation. For those taxpayers who file taxes for 2024 based on the anticipated proposed increase, CRA will be obligated to process refunds based on the 50% inclusion rate once the proposal is abandoned by a new government.

This article Prorogation of Parliament and the proposed capital gains tax amendment

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

In the age of super high debt loads, bankruptcy remains one of the more misunderstood topics in Canadian personal finance, despite its prevalence over the past year.

As of the second quarter of 2024, households had an average debt level of $176,525 according to Statistics Canada. Plus the Canadian Association of Insolvency and Restructuring Professionals reported that about 386 Canadians filed for insolvency each day in the second quarter of 2024.

Whether you are going through bankruptcy now or considering it as a future course of action, it’s important to remember that people who experience bankruptcy aren’t consigned to financial ruin for life. Instead, bankruptcy is designed to help someone in financial trouble start fresh. Starting fresh means starting your life over, and for many Canadians, that could involve a post-bankruptcy car loan.

Finding potential lenders for a car loan after bankruptcy

Finding the best car loan rates after bankruptcy is a little complicated. First, traditional lenders like banks may not be interested in lending you money for a car loan, or they may only do so at exorbitant interest rates. You can apply for a car loan through in-house financing from a dealership, but again, be prepared for higher interest rates.

While many dealerships will work with you to secure financing, especially if you can demonstrate that your income will support the payments, the amount they are willing to lend you may be less. For this reason, you should expect to finance a car valued at closer to $10,000 than, say, $50,000.

An alternative to in-house financing from a car dealership is working with a lending company that specializes in customers who are recovering from bankruptcy. These companies look beyond your credit score and do a deep dive into your financial situation. They weigh your income, recent payment history, credit score, down payment, and reasons for bankruptcy, and then offer you financing based on that information.

How to increase your chances of car loan approval after bankruptcy

The first step to increase your chances of getting approved for a car loan is to increase your credit score. While your bankruptcy will remain on your credit report for six years, taking steps to build your credit score after bankruptcy does not go unnoticed. Here are some concrete steps you can take:

• Apply for a secured credit card use it regularly, and diligently pay off the balance every month
• Never miss a payment on your utility bills
• Keep your credit utilization rate to less than 35% of your overall credit limit
• Avoid applying for several new sources of credit at once, which can temporarily decrease your credit score

On top of that, you should work to save up a decent down payment for your car loan. A large down payment demonstrates to your potential lenders that you have extra space in your budget for savings and car payments.

Finally, work to increase your income as much as possible. A good income will demonstrate to lenders that you can afford your monthly payments.

Factors to consider when applying for a car loan after bankruptcy

Here are a few things you should keep in mind if you’re applying for a car loan post-bankruptcy.

Be wary of predatory loan terms

Unfortunately, applying for any type of credit after bankruptcy is more complicated, and you may be turned down by several lenders. Due to the difficulty in obtaining credit, Canadians who have been through bankruptcy are a target for predatory lenders, and you need to be on the lookout for these companies that claim to offer good interest rates to those with bad credit but don’t follow through. When evaluating a company as a potential lender, make sure to do your research and read online reviews and complaints carefully.

Reading the fine print

Once you know the interest rate you may qualify for, pay special attention to the loan terms, especially payment frequency and whether you can refinance or pay off your loan early. It’s important to evaluate whether you can afford this loan, and the payment frequency will play a big role in determining this. Double check whether the payment for this loan is monthly, not biweekly or weekly, and that you can afford it at that frequency.

Refinancing and early payoff

On the same note, make sure that you can refinance this loan or pay it down ahead of schedule, because in a year or two, your credit rating may have improved enough that you can qualify for a much more competitive interest rate.

Credit reporting

Finally, make sure that the car loan is reported to at least one of Canada’s credit reporting agencies, Equifax and Transunion. Not all dealerships report their financed loans to these credit agencies, but if you are making faithful payments on your car loan every month, you absolutely want that reported to the agencies so that you can improve your credit score as much as possible.

Finally, keep in mind that applying for a car loan after bankruptcy is difficult, but that difficulty is temporary. While you may have to downgrade your expectations now to afford your monthly payments with their hefty interest charges, if you continue to make your monthly payments faithfully, eventually your credit score will improve, and you’ll be on your way to a better financial situation.

Sources

1. Statistics Canada: National balance sheet and financial flow accounts, second quarter 2024

2. Canadian Association of Insolvency and Restructuring Professionals: Q2 2024 Canadian Insolvency Statistics (Aug 2024)

This article Filed for bankruptcy but scared of getting a car loan at a ridiculous rate? Fear not!

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Let’s say you’re ready to buy your first home — and take advantage of mortgage rates that are finally starting to drop — but your bank account isn’t. If you don’t have the down payment money, loved ones are allowed to help.

But you’ll need what’s known as a "gift letter."

What is a gift letter?

A mortgage gift letter is a notice from your donor declaring that the down payment funds have been given to you as a gift.

It shows a mortgage lender that you’re under no obligation to return the money.

The lender wants to know that when you agree to make your monthly home loan payments, you won’t face the additional financial stress of having to pay back the donor. That could make you more prone to falling behind on your mortgage.

Mortgage lenders prefer that you owe your house to them and no one else.

The donor has to be an immediate family member, like a parent or a crazy rich uncle, and your lender may require proof that the money has been transferred into your bank account.

Will I pay taxes on the gifted money?

There is no “gift tax” in Canada; your donor can give you as much money as they want without incurring any taxes.

In the United States, though, the limit is $19,000 per year, up from $18,00 last year, before the tax man gets involved.

Down payment gift letter requirements and template

The gift letter must include the following:

• Name of the mortgage borrower
• Donor’s name, address, and phone number
• Donor’s relationship to the borrower
• How much is being gifted
• Statement that the gift is not to be paid back (after all, then it’s not a gift!)
• New property’s address

Here’s a good mortgage gift letter template you can use:

[Date]

To whom it may concern,

I, John Doe, hereby certify that I will give a gift of $5,000 to Jane Doe, my sister, on Jan. 1, 2025 to be applied toward the purchase of the property at 123 Main Street.

I certify that this payment is a gift and that there is no obligation, either expressed or implied, of repayment. No part of this gift was provided by a third party with an interest in buying the property, including the seller, real estate agent and/or broker.

I have given the gift from the account listed below, and have attached documentation to confirm that the money was received by the applicant prior to settlement.

The source of this gift is:

[Type of account]

[Name of financial institution]

Sincerely,

John Doe

[Signature]

321 Avenue Street

Anytown, ON

(123) – 456 – 7890

Down payment gift rules and restrictions

Unlike the United States, Canadians don’t have to fear a "gift tax." You can be gifted any amount of money at any time with no tax implications.

For conventional mortgage loans, a down payment gift typically must come from a family member. Anyone in a special relationship with the homebuyer — such as godparents or close family friends — must provide evidence of the relationship and there’s no guarantee that the lender will accept the letter.

And then things get tricky if you’re self-employed. When applying for the loan you need to come up with 5% of the purchase price on your own, and then gifts can cover the remaining 15%. The full down payment can be gifted if you’re employed full-time.

It’s important to remember that although 100% of your down payment can be handled by family, you still need to impress the lender with an excellent credit score and solid income to show that you can handle the payments.

To keep those payments low, an online broker like Homewise can help you find the best mortgage rate.

This article Using a gift letter for a mortgage down payment originally appeared on Money.ca

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.