Wealth Inequality in Canada

WE NOW LIVE IN A WOLRD OF HAVES AND HAVE NOTS

  • Canada is in the bottom quartile of peer countries in terms of wealth disparity.

 

WE ARE ENTERING A NEW ERA OF MASSIVE INEQUALITY

  • Wealth inequality in Canada has increased over the past 20 years.
  • Each year the Canadian middle-class loses its’ share of total income while wealthier income groups increase its’ share.

 

THE 3 BIGGEST COSTS FOR CANADIANS: 1) TAXES, 2) HOUSING AND 3) LABOUR

 

THE AVERAGE MIDDLE-CLASS CANADIAN PAYS 27% INCOME TAX

THE WEALTHY PAY PAY ON AVERAGE 15% INCOME TAX

 

THE MIDDLE-CLASS IS OBSESSED WITH CUTTING COSTS BUT THE TRUTH IS THAT ONLY THREE MATTER: 1) TAXES 2) HOUSING AND 3) LABOUR

THE ONLY WAY TO ESCAPE BEING A HAVE NOT IS TO REDUCE THE ONLY THREE COSTS THAT MATTER.

THE MIDDLE-CLASS SHRINKS BECAUSE IT HAS NO PRIORITIES AND WASTES ATTENTION (DECISION FATIGUE) ON DECISIONS THAT MAKE LESS THAN A 10% CHANGE IN THEIR TOTAL INCOME.

Priorities

  1. Sell something worth buying, with a story worth telling
  2. Target it for small groups of people (you can not compete with Coca-Cola)
  3. Tell a story (like above) that matches the delight of those small groups
  4. Promote the word
  5. Produce at an elite level, in terms of both quality and speed to build up the brand (personal and business) and inspire confidence and trust.
  6. Plot the worst possible outcome and reverse engineer the opposite outcome.
  7. Get paid by project but pay others by the hour

Qualitative > Quantitative

$3 million earned through investments (real estate, stock, crypto) will never have the same value as $3 million earned through the diligent execution of your craft because of the uncertainty in the former.  Therefore, the only investment that matters is the money you spend into turning your craft into a business.

 

 

 

 

 

 

 

 

Advertisements

Math Hacks for Your Business

Location

Due to mathematical clustering and conformity, the closer you are to your highest-grossing competitor, the more likely it is you will get half their customers upon opening. If you follow the rest of the advice in this blog and have multiple sources of income, to begin with, you ride out the zero-sum game until you are the only one left.

Your competitor’s revenue can be estimated by multiplying their traffic and their average ticket price.

Is it worth hiding cash/claiming questionable expenditures?

Risk<Reward x Probability of getting caught

In 2018, the answer is a clear NO.  The reward (~20% combined income & sales tax saved on underreported income) is far less than the risk (100% penalty of the taxes evaded + the taxes) multiplied by the high probability of getting caught by the Canada Revenue Agency’s advanced algorithms. Your accountant should be able to tell you which of your financial ratios/metrics would flag your return for a limited review.

Investing

the estimated benefit x the probability of gain = value of the transaction

You must take the chance of a 100x return if you had a 1/10 chance of success.  So if you have a 1/10 chance of something that would make you $100,000 better off, the value of the trade is $10,000.  For this reason, it is worthwhile to understand the underlying technology of crypto assets.   As an exercise, I  even built my own blockchain in Python.

For crypto assets, it is fairly common to have a 10% chance of a 100x return. Even at only $10,000, the value of the trade is $1,000. Even if you value your time at $500/hour, it will take less than 2 hours to set up your accounts on Kraken/Binance and begin buying.

In contrast to crypto investing, due to the normal distribution Brownian function of the stock market, unless you are “playing” with enough money it is often not worth your time.  If you lose 25% you need to gain back 33% just to break evenIf you are young, you are better off dollar cost averaging into CIBC’s balanced index fund (the one without the S&P 500) and anyone would benefit by loading up on small caps after a crash.

 

 

CDIC: Best Way to Protect Your Cash in Canada (English)

Is your money protected by the CDIC? Keep reading below to find out how to keep your hard earned money safe.

Tiền của bạn có được bảo vệ vởi CDIC không? Hãy đọc để tìm hiểu làm thế nào để gởi tiền của bạn cho an toàn. Vietnamese posting here.


The CDIC insures eligible deposits in banks, trust companies, and loan companies against loss in case of member failure, BUT only to a maximum of $100,000 (principal and interest) per depositor, per category listed below:

  1. In one name: Savings/Chequing Accounts/Term Deposits (GICs) with original terms to maturity of 5 years or less
  2. In more than one name: Savings/Chequing Accounts/Term Deposits (GICs) with original terms to maturity of 5 years or less
  3. In Trust: Savings/Chequing Accounts/Term Deposits (GICs) with original terms to maturity of 5 years or less
  4. In RRSPs: Eligible deposits Savings Accounts/Term Deposits (GICs) with original terms to maturity of 5 years or less
  5. In RRIFs: Eligible deposits Savings Accounts/Term Deposits (GICs) with original terms to maturity of 5 years or less
  6. In TFSAs: Eligible deposits Savings Accounts/Term Deposits (GICs) with original terms to maturity of 5 years or less
  7. Eligible deposits for realty taxes on mortgages: Savings Accounts/Chequing Accounts/Term Deposits (GICs) with original terms to maturity of 5 years or less

Uninsured products include:

  1. mutual funds, stocks, and bonds,
  2. Term Deposits (GICs) with original terms to maturity of 5 years +
  3. foreign currency deposits

The CDIC has a nice infographic here which lists the remainder of the uninsured products.

Please use their online calculator to make sure your hard earned money is protected! Or contact the CDIC.

 

Why Do More Edmonton-area Nail Salons Choose THUT Accounting Than Anyone Else?

Có nhân viên kiểm tra thuế (auditor) làm ở cơ quan thuế Canada Revenue Agency (CRA) báo cho văn phòng mình biết là:

  1. CRA có nguyên một đội ngủ chuyên kiểm tra lại thuế tất cả các tiệm nail trong vòng 2 năm
  2. Trong đội ngủ này CRA có nhân viên biết tiếng Việt Nam sẻ giúp kiểm tra và thông dich lại những quảng cáo của những tiệm nails đăng trên Thời Báo (Trả bao nhiêu tiền một tháng và trả ăn chia v.v..). Auditor nói CRA sẽ dùng thông tin này để tìm lại số tiền mặt mà các tiệm Nail không khai báo là bao nhiêu.
  3. CRA đã và đang cho người giả xin việc gọi đến từng tiệm Nail và hỏi có trả tiền mặt hay không để báo lên CRA.
  4. CRA đang kiểm tra lại thuế tiệm Nail là vì có nhiều người trong ngành Nail phản ảnh với CRA vụ cách thức tiệm Nail Việt trả tiên cho nhân viên cho nên họ khong thế cạnh tranh được (ví dụ như tiệm Italian va Lebanese v.v.).
  5. Mua một chiếc xe với giá trị 75% hoặc nhiều hơn số tiền thu nhập hàng năm bạn báo sẽ gây ra một cuộc kiểm toán (audit).
  6. Trong một cuộc audit CRA cũng kiểm tra xem làm thế nào bạn có thể trả tiền mortgage của bạn.

CRA có quyền:

  • Tìm hiểu thông tin từ nơi đăng ký xe (Registry Office )mình có bao nhiêu xe và xe gì
  • Lấy thông tin từ ngân hàng (cá nhân lẩn doanh ngiệp) và thông tin mortgage của chủ tiệm nail
  • Và họ lên City of Edmonton website để coi giá trị của căn nhà của bạn

Chúng tôi đề nghị tiệm Nail phải có hệ thống quản lý bán hàng (Point of Sale system) hoặc ghi lại thu nhập , xem Example – Sales Journal – Month of July hoặc liên hệ với văn phòng THUT cho một mẫu để sử dụng.  Tiệm Nail cũng cần ghi lại tiền TIP trả cho nhân viên hàng ngày bởi vì chủ tiệm nail không cần phải trả thuế và GST trên tiền TIP này.  Để biết thêm về hồ sơ thu nhập : English / Vietnamese.

Trong trường hợp nếu bạn bị kiểm tra thuế thì bạn cung cấp cho Auditor bằng báo cáo thu nhập thì bạn không có vấn đề.

Share with someone that could use some advice in this post or save some taxes
For every person you refer we’ll give you a free month or a gift card equal to 1 month of service of your referral – whatever is bigger! Up to to $600!
Anyone you refer gets a free month of bookkeeping!
THUT data capture technology extracts data from bank, credit card and online statements and allows for automatic bank reconciliation.
THUT uses artificial intelligence to locate and extract line item and tax summary data from receipts and exports it into a csv file.
Cleansing algorithms allow it to extracts transactional data that is 100% accurate.
Send us your prior financials and we will prove to you how our value is unrivaled in Canada.
➤➤➤

5 Rules To Keep Your House From Being A Bad Investment

  1. If the housing market has a positive outlook you can consider a home less than 2.5x your gross annual household income if you make a 20% down payment.  If you can make a down payment of at least 30% you could consider a home that costs up to 4x your gross annual household income.
  2. Consider an open mortgage even though the % is higher, you can pay it off whenever you can. Interest is an exponential function not linear so spending only 10% of your wage on keeping your family alive and putting the other 90% of your wage into your open mortgage will have you owing your home as fast as possible (meaning house costs your the least). Conventional banking will only dictate you pay $3K/month and spending and saving the rest. Because of the exponential fx of interest, this makes no sense since few investments now can guarantee you a  better return, and spending the money just makes everything harder than it has to be.  That means no vacation for the first year or two (no big deal, your own life is so good you don’t need to escape from it you will be exponentially better off than had you followed the bank’s amortization schedule, and you can ball out all you want.
  3. Choose a home with the largest area of Low-E windows facing the south (at least two-thirds).  Use retractable awnings to control heat into your south-facing windows.  Use hi-tech window film on the east and west windows to block out summer sun and retain warmth in the winter. Do not install film on the south windows since efficiency gains in the summer would be less than the solar heat blocked in the cold months when the sun is in the low southern sky. North-facing windows never need film except for privacy reasons.
  4. Choose a home with dark colored stone/tile/natural wood floors and build a dark stone/gypsum wall in the south-facing room.  These materials add to the thermal mass of your home, keeping your home warmer in the winter and make it more efficient to cool in the summer.  If there is considerable mass in the wall, lighter more reflective floors will distribute heat to the wall.  The rest of the home should be painted light with zero VOC paint to maximize light.
  5. Buy residential real estate for improving your life first, rental income second, and capital appreciation third.

Example Buying a $500K house when your household monthly disposable net income is $13,500. 

  1. Put 20% ($100K) down and avoid CMHC.
  2. Put 90% – $12K/month in the mortgage (including prop. tax) and the remaining  10% ($1,500 per month) is for groceries + car + insurance + utilities (note utilities are less because of the houses South facing windows).
  3. You own the house in less than 4 years (usually much less since scalable businesses don’t yield linear gains).
  4. After the house is owned outright, interest cost is out of the picture, in 10 years the same $12K being dollar cost averaged into a low-cost index fund you are looking at least $2 million + the paid off house (using a conservative 7%). Click here for the optimized wealth breakdown.

Extra tips

  • Choose a fixer-upper that is as new as possible 1990+ with no more than $30,000 required in fixing up costs.
  • Look for houses that have been for sale over 60 days and try to pay 10% below the assessed value.
  • A stone patio adds significant thermal mass and buffers outside temperatures around the home. Stone pavers make a thermal mass battery from which the house derives heat during the fall and early winter and melts snow early and allows microclimate gardening in planter beds.
  • Rocks create a desirable microclimate (keeping your yard cooler in the summer and warmer in the colder months).
  • Avoid leveraged real estate investments unless you are doing it right: if you can flip it for 50% increase on your purchase price after putting 25-33% down and doubling or tripling your investment in fixing it up.
➤➤➤

How do I apply for a business number (BN)?

 A business number (BN) is a common identifier for businesses in their dealings with the government. Each business, whether it is a sole proprietor, partnership, corporation, trust or other organization, requires one BN for it’s legal entity. Whenever you deal with the government you must provide your BN to identify the legal entity you are referring to. Just like when you provide your social insurance number to identify yourself when you call CRA or file your personal tax returns.

There are four major program accounts:

  1. RT – Goods and Services Tax/Harmonized Sales Tax (GST/HST) (see bullets below for reporting periods available)
  2. RP – Payroll
  3. RC – Corporate Income Tax
  4. RM – Import/Export

Registering for a business number for your business can be done online and is simple. Simply forward us a copy of your incorporation documents and ask us for a “Fiscal year-end recommendation” specifically for your business.

If you are registering for a GST number:

  • If your annual taxable sales are “$1,500,000 or less” your assigned reporting period is annual. Monthly or quarterly is optional but is not recommended (please contact us if you have any questions)
  • If your annual taxable sales are” $1,500,000 up to $6,000,000″ your assigned reporting period is quarterly with monthly reporting period being optional.
  • If your annual taxable sales are “More than $6,000,000” your  assigned reporting period is monthly.

Please click here once you are ready to register your BN through the Canada Revenue Agency’s website.

Share with someone that could use some advice in this post or save some taxes
 
For every person you refer we’ll give you a free month or a gift card equal to 1 month of service of your referral – whatever is bigger! Up to to $600!
 
Anyone you refer gets a free month of bookkeeping!
 
THUT data capture technology extracts data from bank, credit card and online statements and allows for automatic bank reconciliation.
 
THUT uses artificial intelligence to locate and extract line item and tax summary data from receipts and exports it into a csv file.
 
Cleansing algorithms allow it to extracts transactional data that is 100% accurate.
 
Send us your prior financials and we will prove to you how our value is unrivaled in Canada.
 
➤➤➤

Paying Canada Revenue Agency (CRA) / Receiver General

For safety reasons, we recommend you to pay online through your online banking system or through CRA’s My Payment system. You may also pay at the bank if you have the original payment form mailed to you from the CRA. (Instructions for CIBC online banking below)

You can use  CRA’s My Payment system if you have an online banking account at the following financial institutions that currently participate in Interac Online:

  • BMO Bank of Montreal (personal accounts only)
  • Scotiabank
  • RBC Royal Bank
  • TD Canada Trust
  • Envision Financial
  • Libro Credit Union

For detailed instructions on how to use CRA’s My Payment system please click here.



If you bank with CIBC you can pay through CIBC’s online banking.

To pay through your CIBC online banking:

  1. Log onto CIBC banking online
  2. On the left hand side of the screen click “PAY & FILE TAXES”
  3. Click the blue “CONTINUE” button on the bottom right hand side of the screen
  4. Select “ADD PAYMENT TYPE”
  5. Choose the correct payment type
  6. Click “NEXT” and enter in the information required
  7. Click “ADD THIS PAYMENT TYPE”

Once the payment type is added then whenever you click “Pay & File Taxes” select the payment type, type in the dollar amount and date of payment and follow through with the payment until you receive confirmation.

Share with someone that could use some advice in this post or save some taxes
For every person you refer we’ll give you a free month or a gift card equal to 1 month of service of your referral – whatever is bigger! Up to to $600!
Anyone you refer gets a free month of bookkeeping!
THUT data capture technology extracts data from bank, credit card and online statements and allows for automatic bank reconciliation.
THUT uses artificial intelligence to locate and extract line item and tax summary data from receipts and exports it into a csv file.
Cleansing algorithms allow it to extracts transactional data that is 100% accurate.
Send us your prior financials and we will prove to you how our value is unrivaled in Canada.
➤➤➤