Wednesday, 7 March 2012

Apple time

Today is the day a lot of people have been waiting for. In a few hours, Apple shall (hopefully) unveil the latest version of the iPad. Every Apple product launch is awaited with bated breath. There are tons of rumours and leaks leading up to the launch. Its like an industry in itself - the rumour machine.

Anyways, this blog is not about the device itself. What I am going to talk about is the product and the cost. The iPad has thus far been priced from $499 ($519 here in Canada). And a ton of people have bought it. For themselves. For their kids. And in some cases even for their significant others.

And this has kind of surprised me. Even if you go for the cheapest iPad, after taxes and basic accessories, it sets you back by at least $600. And then you go ahead and spend more on apps. In my opinion, that's a good chunk of money. Especially for a device that very few people really need.

The iPad is the perfect example of a want. There is very little that you can do on the iPad that you couldn't already do with other devices that you already have (i.e. the laptop or desktop, your smart phone, your DVD player, your game console etc). Yes it does makes stuff more convenient but we don't actually need it.

And then in exactly one year a newer version is released and we want the latest one all over again. Of course Apple products tend to hold their value fairly well in the resale market. iPad 2s were apparently fetching around $375 as of a few days back. So you could sell the one you have for that amount and go ahead and get the latest and greatest.

Cost of ownership - ~ $225 / year

Of course this is for the base level WiFi model. If you splurged for the 3G model you have a data plan to pay for as well so the cost for the year would go up accordingly.

Is $225 a big amount to spend each year? Maybe. Maybe not. 

I have not yet succumbed to the calling. I would sure love to have one. But my frugal brain holds me back. Will it continue to win? I don't know. 

Have you already bought the iPad? Are you planning on buying one? or more? Is it an upgrade? What are you doing with the older one? Please do tell.

Tuesday, 6 March 2012

Tax Time

I'll call this the Tax special. Canadians (and others as well) are well into Tax season - everyone's favourite time of the year :) Some things to think of at this time ...

1. File early: I don't believe that I am unique in delaying filing my taxes simply because I am too lazy to get around to it. Canada Revenue Agency (CRA) is normally pretty good at grabbing your taxes through the year. So most of us file to get some back in the form of Tax refunds. And so if you are due to get a refund, better today than tomorrow. So get on it.

2. Slips and receipts: Make sure you have all your tax slips and receipts. Sometimes we change jobs a few times during the year or move accounts or actually move ourselves. Keep track of who owes you a T4 or T5 or RSP or Charitable Donation or other receipts. Businesses have until the end of Feb to mail out the slips. So if you have not received them by now, feel free to get in touch with them and find out what's happening. Worst case, call CRA and they will help you get your T4s.

3. Deductions: The Tax system offers a bunch of deductions ... even for us lowly employed folk. Make sure you use all of them that apply. Some common ones include RRSP, Child Care, Children's Fitness Tax Credits, Public Transit Credits, Medical Expenses, Relocation (if moving to be at least 40 kms closer to your job or school), Tuition credits (for students), Property Tax or Rent credits etc.

4. Save copies: Make sure you save yourself a copy of everything that you send to CRA. With online filing, a lot of us never send anything. But we also tend to get rid of stuff as soon as the refund cheque comes in. CRA send the refund cheques automatically assuming that your filing was accurate. They tend to take their time to decide if they need to look at your return closely and have upto 6 years (or is it 5) to request additional information or receipts. I normally advise people to keep their copy of the return and documents for upto 7 years. The analytical ones amongst us might want to store stuff even longer if they want to track their income patterns / tax payments etc. It can be fun :)

5. Carry forward amounts: Don't forget about your carry forward amounts. Tuition credits, unclaimed RRSP contributions, Capital losses, charitable donations etc can be carried forward. Make sure you do not forget about them.

Random tips:
  • If you donate money to charitable organisations (and you should) remember that the first $200 each year only offer you a 15% deduction. Donations beyond the $200 mark offer you a much larger deduction. So if you only donate around $200 each year, it is a good idea to hang on to your receipts and claim them once every 5 years (you can carry forward your donations for 5 years). That way you get the maximum bang (tax-wise) for your charitable donations.
  • All the govt support programs (child tax benefit, OAS, Disability, GIS, HST credits etc) are linked to your tax returns. What does that mean? It means that if you do not file, you won't get your benefits. So even if you have minuscule income, make sure you file your return.
  • If possible get the highest income earner in your family to claim the deductions. This will get you the biggest refund for those deductions since the deductions are always at the marginal tax rate. Pension splitting lets you get the same for seniors. A number of credits can be transferred amongst family members. One example is the Tuition credit. Students get a credit based on the tuition fees paid. They can carry forward this credit themselves to future years when they start having income. Or they can transfer it to their parents. If you are studying to be a Doctor or in an MBA program or something similar which will allow you to land into a high paying job as soon as you graduate, it may make sense to keep your credits for yourself. If however your parents have income that is significantly higher than what you will have (which is true in most cases), let them take the deduction for a bigger refund.
  • CRA doesn't complain too much if you are due a refund and you do not file your return. However if you owe, you absolutely must file by the April 30 deadline. Failure to file may result in penalties in addition to interest charges on the amounts owing. If you do not have the funds to send in a cheque along with your return, it is still a good idea to file your return. Call CRA and let them know of your situation. As long as you have filed your return, there won't be a penalty. And they may even be willing to waive the interest payments if you ask nicely.
  • Made an honest mistake in your taxes and realized it after you filed - file a T1 Adjustment. Need to come clean on income you had that you didn't report - use the Voluntary Disclosure process to kill those tax audit nightmares. However this won't work if CRA has already started investigating you. So the sooner the better.
  • Can't understand taxes and can't afford to pay someone to do them for you? If you are truly low income and have a simple tax situation (i.e. no business / investment income etc) you can avail yourself of the services of the volunteer tax preparers as part of the Community Volunteer Income Tax Program (CVITP

Any more you can think of? Please feel free to add in the comments.