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Investor's Quarterly - SPRING EDITION 2017

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HIGHLIGHTS: 

2016 Tax Filing Deadline - For Canadians, the long anticipated arrival of Spring coincides with tax filing time. This year, April 30th is a Sunday so the deadline for filing your 2016 personal income tax return is midnight on Monday, May 1st. If you or your spouse are self-employed, you have until Jue 15th to file your income tax and benefits return. 

Bank of Canada Holding Rate Steady - The Bank of Canada announced April 12th that it would not be raising interest rates. Despite recent stronger-than-expected data showing that Canada had exceeded the bank's growth expectations, Governor Poloz remains cautious. "A notable increase in global protectionism remains the most important source of uncertainty facing the Canadian economy," the bank said.

What's Up With Real Estate? - The Bank of Canada warned that climbing real estate prices in the Toronto area appear to be now driven, in part, by speculation. "There's no fundamental story that we could tell to justify that knd of inflation rate in housing prices... demand is being driven more by speculative demand or investor demand, as opposed to just folks that are buying a house," Governor Poloz said. This is not just about low interest rates. It used to be that the the amount spent on a typical house was 3 x the average salary. That figure has now jumped to at least 8 x the average salary.  

Cooling a Hot Housing Market: Ontario Premier Announces New Measures - The average price of a detached house in the GTA increased to $1.2 million last month, up 33.4 per cent from a year ago. At the same time, many Toronto renters have been subjected to sudden, massive rent increases. Young people are being priced out of the housing market as demand continues to outweigh supply. On April 20th, in response to concerns about an overheated real estate market, Premier Wynne announced 16 new measures in an effort to curb housing costs including: Non-Resident Speculation Tax; Anti-Flipping Mechanism; Incentives for Development of Rental Units; Broadened Rental Control; Vacant Home Tax; Review of Real Estate Rules.

2017 Federal Budget Update - Changes that may impact your 2016 return include:

Family Tax Cut Eliminated: Also known as the Income Splitting Tax Credit, the government eliminated this credit because they said it disproportionately benefitted higher income families, in which one spouse earns significantly more than the other. The maximum benefit was $2,000.

Changes To Child Benefits: Childrens fitness and arts credits have been cut in half for the 2016 filing year. These credits are set to be eliminated in 2017, along with two for education expenses and text books. The Canada Child Benefit (UCB) replaced the Enhanced Universal Child Care Benefit last year. Unlike the former benefit, the UCB is a non-taxable transfer. The Child Care expense Deduction limit was increased.

Principal Residence Designation: The CRA is focusing on real estate earnings with a new rule requiring taxpayers report the sale of their principal residence, whether they owe tax or not, starting with the 2016 return. Although primary properties have always been immune from capital gains tax, if you are selling your principal residence so frequently that its become your primary source of income, you may not escape the tax man.

Federal Tax Bracket Shake-Up: Two changes to the tax rate table this year favour the middle class at the expense of top earners. A new bracket has been added or those earning over $200,000. Canadians earning between $45,282 and $90,563 will see their tax rate drop this year.

Accessibility Reno Rebates: Seniors and those who qualify for the Disability Tax Credit can claim 15% of eligible home improvements up to $10,000 for a maximm benefit of $1,500 under the Home Accessibilty Tax Credit.  

Know Your Canada Pension Plan (CPP) Options - The amount of CPP you will receive depends on how much and for how long you have contributed. For 2017, the average monthly CPP benefit at age 65 is $685.11 and the maximum is $1,114.17. The CPP amount is adjusted based on the number of months you begin receiving it prior to or after age 65. For each month you receive CPP prior to age 65, your pension is reduced by 0.6% (7.2% per year). For each month you delay receiving your CPP beyond age 65, your pension is increased by 0.7% (8.45% per year). Since July 2012, Canadians have had the choice of contributing to the CPP after age 65 (up to age 70) if they are working and receiving their CPP retirement pension. The benefit of contributing to CPP after age 65 while receiving a CPP pension is that you will be eligible for a monthly Post-Retirement Benefit (PRB), paid monthly for life. If you are not receiving CPP at age 65 and you already have 39 or more years of maximum CPP contributions, additional contributions will not increase your CPP at all. For an accurate estimate of your future CPP benefits, call Service Canada or use their online CPP calculator.   

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