Archive for the “Taxation” category

Moving Abroad an Option for Retiring Canadians

015th Jan 2013Business News, Canadians, Income, Real Estate, Retirement, Savings, Self Employed, Taxation, Taxes, Work from home, , , , , , , , , , ,

Dwindling pension benefits are forcing many Canadians to rethink how they’ll spend their golden years, but that doesn’t necessarily mean giving up their dreams of a sun-soaked retirement.

Some experts say that with proper planning, uprooting to an exotic locale can actually help cash-strapped seniors stretch their retirement dollars.

Aside from milder temperatures, they say many of the destinations favoured by Canadians — including parts of Mexico, Panama and Costa Rica — offer another advantage prized by those on a fixed income: a lower cost of living.

“It’s sometimes assumed that an international retirement vision or lifestyle is something that wealthy people pursue,” said Rod Burylo, a Calgary-based financial advisor specializing in international retirement.

“The reality is… some people retire to Mexico because it’s so darn cheap,” he said.

“One could reason, therefore, that if the economy suffered and their finances suffered, they may be more inclined to retire to Mexico because… they could have a better quality of life than they could have here.”

Many Canadians are having to make tough financial choices — including prolonging their careers or downsizing their homes — in preparing for retirement as debt-ridden governments and companies scale back benefits.

While financial considerations alone are rarely enough to prompt a drastic change of scenery, they often play an important role in the decision-making process, according to a recent survey by the BMO Retirement Institute.

The survey by one of Canada’s largest banks found more than 70 per cent of Canadians aged 45 or older have given thought to where they want to live out their golden years.

But it also found that while many fantasize about retreating to faraway lands, just over 10 per cent of respondents said they were willing to follow through and leave Canadian soil.

“I think you get people moving abroad for two reasons,” said Brian Burlacoff, a financial advisor with Sun Life Financial.

“You get a proportion of people who do want to spend time very purposely outside of Canada — snowbirds, for example, in Florida or Arizona — (and) they have a plan for that,” he said.

“But the other group that you get moving away are people that have no plan and they’re kind of drawing at straws because they have to find a place that’s less expensive to live in order to carry out their retirement objectives.”

That kind of “reactive” move, he said, is similar to trading a downtown Toronto lifestyle for a more affordable one in a neighbouring suburb.

But unlike a simple hop across municipal borders, crossing national boundaries can have serious tax and health care implications, he warned.

And even regions where the average day-to-day costs are low can drain the savings of those without a clear budget plan, he said.

A guidebook published by the Department of Foreign Affairs lays out the potential pitfalls for those looking to retire abroad, from the loss of Canadian citizenship or residency — and the resulting loss of health coverage — to the intricacies of foreign tax systems.

“Many developing countries lack the resources to collect taxes on foreign-source income, so they compensate by imposing high consumption taxes or import duties,” the document reads.

“Make sure you take into account all taxes, duties and fees, as well as the withholding taxes you will pay on income originating in Canada.”

Burlacoff and Burylo both recommend consulting an advisor who understands the specific challenges involved, and keeping in touch throughout the preparations and after the move.

At 61, Kerry Strayton believes he’s still up to a decade away from retirement, but that hasn’t stopped the Richmond, B.C., resident from getting a head start on his plans to retire abroad.

He’s already “actively researching” possible destinations for him and his wife, such as Colombia, Uruguay and Thailand — places with a pleasant climate and a thriving cultural scene, that he says are accessible enough that their son and daughter will be able to visit.

Moving seems like a necessity for the couple, whom Strayton says will have to live off their savings and his wife’s “small, very modest” pension given that his employer doesn’t offer a pension plan of its own.

He estimates it would cost roughly $1,500 a month in one of his chosen destinations to keep the same standard of living that would cost $2,500 in Richmond.

“To be honest, living in this part of the country in particular, which is very, very expensive, it’s hard to see how we would manage to have at least some kind of reasonable lifestyle,” he said.

Many unknowns remain: for one thing, the couple hasn’t decided whether to make a permanent move or take the more popular snowbird route.

But with several more years of squirrelling away savings ahead, the pair has some time to figure it out.

And in the meantime, Strayton said, they’ll be checking out the top contenders to see which one could eventually become their new home.

ORIGINAL SOURCE: Retirement Canada: Moving Abroad Still Possible For Canadians With Cash Woes


Business Braced For Sales Tax Chaos In BC

03rd Sep 2011Business News, Canadians, Money, Tax, Taxation, Taxes, , , ,


by Mike Godfrey,, Washington

02 September 2011

British Columbia’s decision to scrap the harmonized sales tax (HST) system has provoked a mixed reaction from the business community, but opinion is largely unanimous that businesses and the government alike must think about making the transition back to the provincial and general sales tax regime as smooth as possible.

The Canadian province currently operates an HST system, under which the 7% provincial sales tax (PST) and the 5% federal general sales tax (GST) are blended to create an overall HST rate of 12%. The HST regime was introduced last year and a long and frequently bitter campaign to have it revoked reached its height during the recent referendum to decide the tax’s future. The referendum – the results of which were announced on August 26 – resulted in a 54.73% majority for those wishing to reintroduce the PST/GST.

According to Finance Minister Kevin Falcon the 12% PST/GST will be duly reinstated. The transition period is expected to take at least 18 months, and British Columbia will have to repay a CAD1.6bn transition payment provided by the federal government when the HST was first introduced.

The overriding reaction to the results is an awareness that businesses will need to prepare for the impact of the transition. As summed up by KPMG, businesses need to begin thinking about the system changes they will be required to make, and will need to assess the overall financial effect of the reintroduction of the PST/GST. Jock Finlayson, Executive Vice President of the Business Council of British Columbia added that “businesses and the government will face direct and indirect costs and lost revenues in the billions of dollars as the province shifts back” to the old system.

There is understandably a great deal of disappointment among those who fought against the reinstatement of the PST/GST. One issue raised is that of British Columbia’s competitiveness and the damage the uncertainty of a transitional sales tax regime will cause. Finlayson regards the PST/GST as an “inefficient and cumbersome retail sales tax”, and said that the decision “poses a risk to the province’s reputation as a stable jurisdiction in which to do business”. In addition, the construction industry in particular is fearful of the impact on job creation, where the HST was seen as beneficial to bolstering employment.

On the other hand, those representing the restaurant industry expressed relief that the debate over the HST has at last drawn to a close. Mark von Schellwitz, Western Canada Vice President of the Canadian Restaurant and Foodservices Association said that adding the 7% provincial tax to all restaurant food had created an unlevel playing field, adding that his members welcomed the return of “certainty and food tax fairness”.

According to Falcon’s ministry, the government has established an action plan to guide the transition process back to the PST/GST regime. Falcon has also clarified that: “We will work as quickly as we responsibly can to return to the PST. We have always been clear that, as the independent panel found, dismantling the B.C. HST and returning to the PST will take time to do properly. I can assure British Columbians PST will not be applied to such items as restaurant meals, haircuts, bikes and gym memberships – just as it was before the HST was introduced in B.C.”



Business Braced For Sales Tax Chaos In BC.

It’s Tax Freedom Day, but only death brings real tax freedom

06th Jun 2011Canadians, Freedom, Money, Savings, Tax, Taxation, Taxes, , , , , , ,

By Gordon Clark, The Province June 5, 2011

Stick a candle in a cake and blow it out: we’ve all got something to celebrate. (On second thought, you’d better not light those candles. You don’t want to add to your carbon footprint.)

If you believe the Fraser Institute (and who doesn’t?) Monday is Tax Freedom Day in British Columbia, the day “the average Canadian family has earned enough money to pay the taxes imposed on it by the three levels of government.”

We’re lucky we remain such a cosmically underdeveloped species and so far classified as “untaxable” by the Intergalactic Council, or we’d have a fourth level of government to worry about.

I suppose I should be more excited by Tax Freedom Day, but I’m not. I’m holding off our household’s carbon-neutral celebrations involving Judeo-Gaelic folk-dancing and rooibos tea until Mortgage Freedom Year, which should occur, given our dubious decision to buy a house in Vancouver, sometime in the 2070s as long as we stick to our accelerated bi-daily payment schedule with the bank.

According to the Fraser Institute, the average B.C. family earning an average of $85,745 in 2011, will pay an average of $36,611 in total government-imposed income, sales, liquor, tobacco, amusement, excise, auto, fuel, carbon, motor-vehicle licence, transit, social security, pension, medical, hospital, property, import, profit, natural resource, and other taxes, duties, levies and fees.