The material has been provided by The Collaborative Association members for the assistance of the readers.
ARE YOU SUBJECT TO U.S. TAX REPORTING RULES?July 11th, 2017
forwarded from Jas Salh
If you are classified as a “U.S. person”, you may be subject to certain U.S. tax filing requirements and not even know it.
Does this apply to you?
The definition of a “U.S. person” generally includes
* U.S. citizens
* U.S. residents
* U.S. green card holders
* anyone who has a substantial connection to the U.S.
* certain entities organized in the U.S.
However, since the Internal Revenue Service (IRS)’s definition of a “U.S. person” is very broad, it’s possible there are Canadians who may not realize they have U.S. tax filing obligations.
What you need to know
In 2010, the IRS issued a clarification to a set of existing tax rules. That clarification resulted in Canadian mutual funds being classified as corporations for U.S. tax purposes. As a result “U.S. persons” who hold Canadian mutual funds are subject to the PFIC * rules. These rules are complex, and it is suggested you seek U.S. tax advice on how you may be affected. “U.S. persons” are required to report income from each PFIC held at tax time.
* Additional PFIC details
A PFIC is a non-U.S. corporation of which 75% or more of its gross income consists of passive income, or 50% or more of the average fair market value of its assets consists of assets that produce passive income.
Passive income includes, among other things, dividends, interest, rent, royalties and capital gains from the disposition of securities.
It is generally believed that virtually all Canadian mutual funds and ETFs are PFICs. Certain public companies are also PFICs.
The Qualified Electing Fund (QEF) election on U.S. income tax returns
Include only the pro-rata share of the mutual fund’s earned income and capital gains for U.S. tax purposes. This is roughly similar to how U.S. mutual funds are taxed in the U.S. and is generally aligned with how Canadian mutual funds are taxed in Canada. There are other reporting options but in many cases the QEF election will be the most beneficial to U.S. tax filers.
What to do next
It’s recommended that you consult with your advisor and a U.S. tax expert. PFIC rules are complex, and it is important for you to have the knowledge necessary to make informed decisions. Affected investors should not make changes to their Canadian investment holdings without first speaking with their advisor and a U.S. tax specialist.
How do these rules affect different types of accounts, such as non-registered accounts, TSFAs and RRSPs?
These rules affect investments in non-registered accounts, TSFAs and RESPs. For PFICs held in retirement savings accounts such as RRSPs and RRIFs, most tax advisors suggest the PFIC rules should not be applicable. However, you should speak with a U.S. tax advisor.
Note: this information is general in nature. It should not be relied upon or construed as tax advice.
There’s an ELEPHANT in the room!!June 7th, 2017
submitted by Patricia Lalonde
That elephant has been the subject of money throughout your relationship. It’s a tough subject. Not because arithmetic is complicated, but, because the subject is loaded with emotional baggage and multi-generational values.
When a relationship ends, that baggage of emotionally charged money matters needs to be opened, scrutinized, clarified and divided. This is no easy task! To make matters worse, emotions have sky-rocketed, plans and dreams have exploded and the future is uncertain at best.
Help is at hand.
BC’s Family Law Act was designed to help families stay out of court by directing them to “Alternatives” such as Mediation and Collaborative Practice.
When money is an issue, Mediators and Collaborative Practitioners call on Neutral Financial Professionals who are also Mediators and Collaborative Professionals. When there are emotional issues or concerns about the children, there are Mediators and Collaborative Professionals who specialize in mental health. In this way, people have support from specialists in Law, Finance and Mental Health. It might seem counter-intuitive to think that this can be a cost-effective solution. But, it is. How much better is it, to have a financial specialist sort out your financial confusion? Less time, less cost, more clarity and better to have one financial document than fighting over two different ones.
How much better to have a mental health professional guide you through the emotions of separation than a lawyer or financial person?
Yes, help is at hand for that big financial ELEPHANT! That’s what a Neutral Financial Mediator can do for you.
CFP, Qualified Mediator, Neutral Collaborative Professional
The Three Most Important WordsMay 25th, 2017
submitted by Gerry Bock
Nasty Hurricane Andrew
In August 1992, Hurricane Andrew went bananas. Like a drunk on too many Tequilas, he tore into South Florida with wind gusts of 175mph, redrawing the landscape. Approximately 600,000 homes and businesses bore the brunt of his menacing and destructive actions. By the time Andrew left, he had run up a tab of $26 billion dollars and left behind some very angry insurance companies. Andrew was responsible for the second highest insurance payout in history, surpassed only by that associated with September 11. Many insurance company consulted their crystal balls and decided the future in Florida was too unpredictable. So, while they covered the claims, they refused to renew policies.
State Farm Had a Different Opinion
State Farm looked further and assessed the reasons why these homes had been so vulnerable. Hurricane Andrew had blown roofs off because contractors had not anchored them to the frames of the homes. Then, having taken action to understand the situation, State Farm paid out the policy claims and also paid for its customers to bring their buildings up to code. This insurance company was willing to make sure their customers had peace of mind should Andrew or one of his family come visiting once again.
Families can be Like Hurricanes
When crisis strikes a family unexpectedly, it can blow the roof off, leaving family members exposed and vulnerable. When a family has a good internal structure, the roof stays anchored and in place, regardless of the turmoil going on outside the family home.
Which Brings Us to the Three Most Important Words
Webster’s Dictionary defines the word “Client” in the following way: “A client is one who comes under your care, guidance and protection.” This definition places the emphasis on us, as professionals, in our relationship with you, to care, protect and guide, as you recover from unexpected events, assisting you in rebuilding your family to achieve a new and more enjoyable standard of living. When the unexpected blows the roof off, leaving you needing care, guidance and protection, please allow us to bring you and your family to a new, and improved standard of living.
Defeating FraudMay 20th, 2017
submitted by Jas K. Salh
IT’S A HEADLINE THAT APPEARS all too often. Fraudsters posing as agents from the Canada Revenue Agency (CRA) call innocent Canadians saying they owe back taxes. The call sometimes includes a threat of arrest if they don’t pay up. In 2015, 763 Canadians reported being defrauded by this scam, with losses totalling $2.5 million. These figures tell only part of the story, however, as the majority of victims do not file reports.
1 Organized criminals are often the main perpetrators of financial crimes such as this scam, with the total cost to Canadians estimated at $5 billion annually.
2 Financial institutions, police and governments are fighting back with new technologies and public awareness. Here’s how you can help protect yourself.
You can’t always be sure who’s on the other end of the line, so exercise extreme caution with account numbers, passwords, social insurance numbers and other personal information.
Along with the CRA scam, fraudsters have a repertoire of other schemes and often target the elderly. Beware of callers claiming they’re:
■ From your bank or the police, asking for your help in an investigation
■ “Officials” informing you of a prize or lottery winning, and a fee required to collect your jackpot
■ Long-lost family members saying they’re in trouble and need cash to get out of jail (or some other predicament)
If a caller tries to pressure you into buying, subscribing to or signing up for something, don’t say yes until you’ve confirmed they’re legit. The best advice if you feel you’re being pressured? Hang up!
Protecting your cards
For decades, credit and debit cards were prone to fraud. With the advent of chip cards in Canada in 2008, counterfeiting plummeted 76 per cent.
3 Today, use of contactless cards, which only need to be tapped or waved in front of a merchant’s reader, is growing. This method of payment for smaller purchases is fast, convenient and very secure.
4 However, instances of “card not present” fraud, where card details have been stolen without obtaining the physical card, have risen.
5 To help keep your accounts safe:
■ Avoid using birthdates, addresses, phone numbers or other easily guessed numbers for your personal identification number (PIN)
■ Don’t share or write down your PIN
■ Check every statement for unusual transactions
■ Shield your card from “shoulder surfers,” who peek or use cameras to record PINs at automated banking machines and stores
■ Never share your card number, expiry date and security code unless you’re dealing with a reputable company and you’ve initiated the transaction
■ If a card is lost or compromised, report it immediately
Even though cheque use is on the decline, nearly a billion cheques are still processed annually in Canada.
6 Security features such as foil stamping, micro printing and watermarks have defeated most cheque forging – but paper-based documents remain vulnerable to fraud and identify theft.
If you use cheques, follow these tips:
■ Store your cheques safely
■ If you’re issued a cheque, verify its security features (listed on the back). Even high-quality photocopiers can’t duplicate them
■ Accept cheques only from people or companies you know
■ If you’re selling an item, wait for the cheque to clear before handing over the goods According to security experts, e-payments and online transfers are more secure than cheques or cash.
7 Remember, too, that you’re generally liable for losses through cheque fraud, so consider going paperless with your financial transactions. Mail fraud Since mail is still necessary in some cases, exercise caution, especially during tax season. That’s when sensitive statements are sent out and scammers raid mailboxes to steal identities.
It’s a good idea to:
■ Pick up your mail promptly
■ Inform banks, utilities, your employer and any others who should be aware if you change your address
■ Have Canada Post forward your mail if you move or hold it if you’re away
Advances in security
Banks and financial institutions are constantly upgrading security measures to protect clients. Biometric identification is one of the newest methods being adopted in Canada and around the world. These systems analyze unique physical characteristics such as fingerprints and eye, vein and voice patterns to confirm identify with a high level of accuracy. As new technologies are introduced, fraudsters will continue to update their methods of operation. But by being informed and remaining vigilant about your personal security, you can help stop fraud in its tracks.
WHAT TO DO IF YOU’VE BEEN SCAMMED
■ If it’s credit card, debit card or cheque fraud, immediately contact your bank, financial institution or credit card company
■ Report it to local police and to the Canadian Anti-Fraud Centre at 1-888-495-8501
■ Call Equifax Canada at 1-800-465-7166 or TransUnion Canada at 1-877-525-3823 to issue a fraud alert
from http://www.manulifesolutions.ca/docs/en/ws_spring2017_e/ws_spring2017_e_AODA.pdf page 12