Tax-free savings account

There are only three sure things in life. First, there is death. Second, there are taxes. Finally, there is the fact that Dolly Parton sleeps on her back. Even though taxes are a sure thing, you should be aware of any new measures the government introduces to help you save some money. Recently, the government has introduced a savings plan that will at least reduce some of your potential taxes. It's called a TFSA or tax free savings account.

How does it work?

Each year, you are given an allowance of $5,000 to contribute to a TFSA. This amount is cumulative on an annual basis, so if in one particular year you cannot contribute to the maximum, you can carryforward the balance on your account. TFSA can be self-directed or they can be managed by a financial institution. For most people, they would likely manage their TFSA's similarly to their RRSP's, so that would be by a financial institution. The benefit of a TFSA is that any money that you earn with this investment is not taxed. This can lead to substantial savings for the investor over time. This is an excellent way to save money.

Which is better? RRSP's or TFSA's?

Well, both programs are designed to save you money, so you should take into account which form of tax savings work best for you. Each person has different needs with respect to cash flow needs and financial goals. It is probably best if you talk to an accountant. Sadly, that is the best advice that I can give, but there are many considerations that need to be made as to whether you should throw excess cash towards an RRSP or a TFSA.

Tax season

It's official. We're in tax season. It's time to start thinking about doing your taxes. If you usually get a refund, it's a good idea to get started early. That way, the Canada Revenue Agency will be able to get your refund back to you that much quicker. Money in the pocket is never a bad idea.

This year, I would like people to post some of their tax questions online. You can remain annonymous to protect your financial privacy, but I would like to offer advice so that everyone can save a little bit of money this year. If I save you enough money, you could always treat me to a nice dinner :P

I think I will post some tax tips occasionally because my real estate ventures are currently at a standstill. I'm too busy with accounting at this point to be worrying about completing the last course of the real estate program. I will be back to the real estate thing after April 30th, the tax deadline day.

Done!!!

For those that didn't know, I finished my studying and wrote the UFE last week. The UFE, the exam that I had failed last year, is the final exam in the process in trying to become a chartered accountant. There are a total of 3 exams in the process and there are 3 days worth of exams for the UFE. It's a heavy load and it uses a lot of mental resources to succeed. Not only does it take a bunch of knowledge, it also puts a lot of stress on a person. It is more of a mental marathon than a sprint, so its exhausting and daunting, but its important to keep studying even if you think you are ahead or behind.

But, now I am done! Hopefully, I passed though. It's a terrible experience in terms of dealing with stress and anxiety, and I really do not want to go through the process again.

To the unformed, writing the UFE is similar to writing an essay in school. In many ways, you can prepare properly and think you've created a masterpiece only to find out that the teacher didn't like what you wrote and you end up with a miserable grade. The reason for this is because the exam is relative to your peers. The exam is bell curved, so that the "best" students are passed. CA students are usually recruited before they graduate, so students are often very smart individuals. Therefore, like pimpin', its not easy.

So, how did I do this year? I don't really know obviously, other than I know that I prepared better this year. I knew I didn't kill the exam, but I thought I had managed to cover as much material as I needed to without getting frustrated. I think that's a key component to the exam, so hopefully it translates into success. I just have 2 and a half months till I get my results. Cross your fingers for me.

It's time to do your taxes!!!

I thought I would give everyone a heads up on doing their taxes this year. There is a good chance, if you are a friend of mine, you will have some tuition tax credits available and be entitled to a refund this year. Everyone likes a refund.

I mention this because, if you do your taxes now, that you would be able to get your refund soon because the government won't be as busy right now. There is a good chance that you are entitled to a nice little sum of money. There could be something you could do with that money that you did not expect.

You may have a chance to book a last minute deal and avoid this weather we've been having. For many, they live pay cheque to pay cheque, so when a refund comes in it becomes a nice windfall to help pay for things that you would normally not purchase.

I would like to recommend that people to try to do their taxes themselves this year. If you happen to owe, the good news is that the taxes are not payable until April 30. There is a good chance that your taxes are really simple, and you will not need my services. For those that are having some issues, I will be happy to assist you, but I would prefer that you approach me as soon as you can. When April comes, I do not know if I will be able to help very many of my friends.

Happy tax season everyone!