Two Tax Scams to Watch Out for This Tax Season

Tax Season Tax Scams

First Published Date: March 8, 2015

Hard-working Canadians are busy getting ready to file their taxes. And so are the scammers are busy getting ready to utilize this seasonal opportunity to make some money. Tax scams can come in various ways. Today, I will talk about two methods that are popular among con artists, as these methods are easier for con artists to use to get your money.

Tax Software Scam: If you are filing taxes via tax software, scammers can reach out to you via various methods like emails or phone calls. What usually happens is that they will tell you that you filed your taxes with the wrong information, password, or made terrible mistakes while filing and they need to fix the mistakes with the tax authority. So they will require your personal information to access your files. The emails they send can have malicious links to install a virus on your computer or would ask to enter a fake site that looks like your tax software site to obtain your password or other information. Sometimes they will make phone calls instead to obtain your information.

Tax Authority Phone Call: Scammers can manipulate phone lines to show they are calling from tax bodies like the CRA or IRS and will ask you for money to settle your issues, otherwise a warrant will be issued or a lawsuit will be filed. They can even provide you an 800 # to call back, which will look like a legit number. When such calls happen, scammers will have your previous tax information, your home address, and personal information – so you will think they are calling you from the tax authority for real. Then they ask for money right away to settle your case. Usually they ask to wire transfer money, but there are reported cases where scammers agreed to meet in person to receive the money.

Government agencies do not call or send email notifying you that a lawsuit or warrant is on its way and will never ask you to wire money or receive money in person. Any tax correspondences will arrive in the mail. Your best defence is your own common sense and vigilance. Look for suspicious behaviour and other elements from anyone contacting you for money in a sense of emergency and hurry.

How To Organize Your Finances

Organizing Your Personal Finances

First Published Date : Feb 28, 2009

When it comes to finance, the temptation to just ignore everything is quite simply overwhelming. In a modern world where speed is everything and time is a premium, letting money just sort itself out can be extremely tempting. You get paid, you pay bills, you sometimes squirrel some cash away in a savings account – and that’s that. As long as some people are in the black (or as close as can be), they see no need for any further attention to financial matters.

As with anything, before you can get your finances running smoothly, you will need to invest a little time. With personal finance, the key is organization. You will need to set aside a little time to get a workable system in to place, but the rewards are ongoing. With a little initial time spent, your finances could look much healthier, and your mind could be better off, too. Knowing you have a secure financial strategy in place could put an end to those heart stopping midnight moments when you’re quite convinced you’re financially ruined. In a way, see the initial time as an investment, which is particularly apposite for what you’re trying to achieve.

To begin with, sit down and work out exactly what comes in every month. This may sound simple, but a surprising amount of people aren’t sure of the exact amount of money they have available to them each month – only realizing when there’s a problem. If your wage is variable, due to overtime or shift patterns, it is best to just start with your basic salary – anything on top of that can then be seen as a bonus. Don’t forget to include tax credits and other forms of income, too.

Then write down exactly what goes out every month, on things like your mortgage, groceries, bills and standing payments. Again, for variable bills – such as electricity – work off the basic level, remembering to increase it for seasonal variations.

When these two columns are complete, see how much money you have available at the end of the month. Your goal is now to increase this figure. To do this, look at each outgoing and see if it can be reduced. Is there possibly a cheaper energy plan you could be on? Do you have payments for things you don’t use, such as a gym membership? Is there a call plan that would reduce your telephone bill? Shop around on the Internet to find the answers, using comparison websites where necessary.

When you’ve reduced your outgoings to their lowest possible levels, the main work is complete. Set up a standing order to put a percentage of your surplus money into a savings account. Even if it’s only $10 a month, it may soon build up and can help cover fluctuations in your income and outgoings.

The final step is to write everything down. Every purchase, every bill payment and every time you use your credit card; put it on a spreadsheet. When bills and bank statements come in, check everything against what you were expecting. Errors do occur frighteningly often, and unless you are diligent, you may miss something. By keeping proper records of all incoming money and outgoings, you will see a pattern to your spending and will be able to prioritize more effectively.

Every six months or so, re-evaluate. There may be a new electricity plan that will work out better for you, so keep checking your statistics. The only way to keep your finances running smoothly is to give them the time they need and to remain vigilant to any changes. By paying close attention, you could save yourself a fortune.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on Feb 28, 2009.

Beware of Collateral Mortgage

What Type of Mortgage Is Yours?

First Published Date: March 16, 2015

When you shop for a new mortgage, pay attention to what type of mortgage your financial institution is registering you. You may be lured into collateral mortgage without knowing, as financial institutions may not disclose enough to let you know that’s it’s collateral mortgage you are registered for.

Traditional mortgage represents the exact amount you need to borrow – plain and simple. With a collateral mortgage, the amount you are borrowing is up to 125 percent to 150 percent value of your property. And for that reason the lender will have a promissory note and lien registered against your property. For example, if your mortgage amount is $100,000, the bank will register you for $150,000, although you are receiving only $100,000.

Banks or financial institutions will tell you that it’s a good thing to register you for more than what need because you will have easy access to credit in the future without reapplying or avoiding extra fees and credit.

However, what banks will not tell you is the following:

– Unlike traditional mortgages, collateral mortgages are complicated and expensive to transfer to another lender at the end of the term.

– You could be paying higher interest at renewal because your lender knows it’s difficult to switch mortgage and you will have to stay with them, so they can make pay you more.

– Because you can borrow only up to 80 percent of your property value, collateral mortgage will not be able to let you access you the extra money banks are registering you for if your down payment or equity is less then 20 percent.

– If you want to transfer out of collateral mortgage, you must hire a lawyer and pay $1,000 or more to discharge the collateral mortgage.

So when you are shopping for mortgages, always read the fine print and consult an independent mortgage professional before making your decisions.

Budgeting: The Dos and the Don’ts

Strict Budgeting Does Not Work

Published Date : March 07, 2009

It would seem that anyone giving financial advice always begins by saying “use a budget”. Unfortunately, this to many seems restrictive and cloying, and few people do it when times are good. Budgeting is associated with periods of low income, but in reality, if you budget during the affluent times too, the benefits can be huge.

If budgeting does seem to be too restrictive for you, then introduce a flexible budget. Instead of saying that X amount will be spent on X every month, try saying between X amount and X amount will be spent on X every month. For example, a strict $300 for groceries can become $300 to $350 a month for groceries. Studies have shown that even this slight difference is enough to make people feel released from the confines of a budget.

A budget doesn’t need to be strict. Instead, it can be more of a general guide If you aren’t struggling financially, then you can make your budget as vague as you like, while the practice of actually having a budget and sticking to it will be stored for future use should your circumstances change. There’s no need to write down the exact amount of money for everything you could possibly spend it on; some budget “$10 per month for magazines”, which is a little extreme.

Why not budget just for the essentials?  . These are simply amounts that rarely fluctuate and are essential. When you know roughly how much you need for these each month, the real budgeting begins.

At this point, the most common mistakes of budgeting arise. People make the limits of their budget too strict or not strict enough. The only way to avoid this is by trial and error. Split your non-essential expenditure into different groups, rather than specific sets, to begin. Allow amounts for entertainment, going out, clothing and other such variables. At the beginning, it really is best to just guess – find an amount that you think “sounds” right. This might sound a little pie-in-the-sky, but there’s no set figure that is ideal for each person. You have to find out what works for you.

With this done, go through a month on your non-essential budget, then evaluate it. Are there areas where you have a lot of money left over, or areas where you spent more than you were expecting? Within reason, simply alter your budget for the next month to fit the discoveries you’ve made. After three or four months of this, you should have a pretty good idea of the patterns to your expenditure. After six months, you’ll have learned enough to set a semi-permanent budget. After all, if you keep changing your budget forevermore, the point of it is lost slightly!

With your personalized budget in hand, you’re ready to begin. But there’s one final addition that should be in every budget; miscellaneous. You can never know what exactly might appear over the coming months – be it an unexpected bill, or something more exciting like a gadget you just can’t resist – so by always including a miscellaneous amount, you’ve got that covered. If nothing of this type appears over the course of a month, simply roll this amount over. With a plan designed to suit you and a miscellaneous figure allowed for, you’ll soon wonder how you ever managed without a budget.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on Mar 7, 2009.

ETFs Birthday and New Dividend ETFs

Canada Invented ETFs 25 Years Ago

First Published Date: March 29, 2015

Canada is the country that invented peanut butter, walkie-talkies, insulin, garbage bags, basketball, alkaline batteries, sonar, and the telephone, among many other things. Included among all of these is, of course, ETFs. The Toronto Stock Exchange launched the world’s first ETFs called TIPs (for Toronto 35 Index Participation Units), similar to the iShares S&P/TSX 60 Index ETF that trades these days.

Today, global ETF assets have reached a staggering record high of $2.919 Trillion. In Canada alone, the amount is more than $85 billion, and it has a lot more to grow in the future.

New Canadian Dividend ETFs

iShares recently launched 5 new Core ETFs, including one U.S. Unhedged Dividend ETF. Let’s look at these ETFs.

iShares Core S&P U.S. Total Market Index ETF: XUU MER 0.10 – U.S. large, mid, and small cap exposure. Holds 1500 stocks. Similar to Vanguard U.S. Total Market VUN that holds 3800 stocks.

iShares Core S&P U.S. Total Market Index ETF: XUH MER 0.10 – Same as XUU, but hedged to the Canadian dollar.

iShares Core MSCI All Country World ex Canada Index ETF: XAW MER 0.20 – Large, mid, and small cap exposure to US, developed, and emerging markets, excluding Canada. Holds 5000 stocks. Similar to Vanguard FTSE All-World ex Canada VXC that holds 3000 stocks.

iShares Core MSCI EAFE IMI Index ETF (CAD-Hedged): XFH MER 0.20 – Large, mid and small cap exposure across developed markets, excluding the US and Canada.

iShares U.S. High Dividend Equity Index ETF: XHU MER 0.30 – 75 high quality, U.S. dividend stocks. The Canadian dollar hedged version of XHU is XHD.

More ETFs mean more competition, more choices, and lower MER for you. However, before loading up your portfolio with any ETFs, make sure you are not holding similar ETFs from different providers. Keep your holdings minimal and simple, as simplicity applies even when it comes to your finances.