any accountants?

[megwell]

high interest bank accounts........ do you have to keep cash in there for a long time?......ie a year or so?

so i hate the government and i'm thinking about instead of paying tax on every cheque.......... have my company not deduct any taxes and i'll be responsible for paying it at the end of the year......

i'm thinking about putting it into a high interest bank accounts that recently came out......... then at the end of the year when tax seasons comes around.... just pay it off.

with the taxes that we pay every cheque.......... the government uses it for what ever they want....... probably making money off of it. so i feel like saying to the government "hey.......**** you! i'm going to make money off of it"

i know that i wouldn't make that much off of it but i'd rather make some than just give it away to the "man".

also.......with these high interest accounts........if i put money into a rrsp... when the time comes for me to retire............ if i have rrsp's........... they will make my income higher when it comes time to cash it in.......... along with my pension of course.............

so my question with that is........... with rrsp's can i transfer them to the high interest account penalty free?

[nii]

I'm not an accountant but Ill try and clear some air. Im not clear on the tax you pay on every cheque, but some of this may be relevant.

Which high interest bank accounts are you referring to exactly? Tax Free Savings Account (TFSA)? There have always been 'high' interest savings accounts offered, but there's no such thing as a savings account anymore. The interest you're accumulating from it is negligible. Savings accounts are now just accounts with heavy penalties for withdrawals, a way for banks to use these deposits in more efficient manner since they know these funds are fairly illiquid. But TFSA's are something completely different. I think they've been improperly labelled. Sure you can open a TFSA and earn .5% interest which is tax free, but they're real value comes from investing in capital markets.

As for RRSP's, any withdrawal gets taxed, you cannot transfer from your RRSP to any other account without paying tax on it. But there is very little point in transferring funds from an RRSP to a savings account. The point of an RRSP is to use the savings in taxes, to invest for your retirement which allows your nestegg to grow at a faster rate than a taxed account. But if you're not investing, then it just becomes a way for you to get more money in the long run, via paying less taxes.

Hope this helps.

[musclehead123]

what you should do is check what your max rrsp contribution is. From there check and see how much tax you have paid for the entire year. Then check and see how much tax you would have had to pay. For example, your max contribution for rrsp is 20k and you have paid 30k in taxes, and if you were to max out your rrsp you'd have to pay 15k in taxes. Sure overall you have 5k less for that year, but u also paid a lot less in taxes and saved something for your retirement. And remember there's a way to borrow from your rrsp for when you purchase a home, how that works I'm not entirely sure.

I've seen a lot of investors advocate to max your rrsp and use your tax return to put money towards paying off your mortgage.

I believe albertabeef is an accountant.

[gingerbreadman]

I'm an accountant. You don;t have the option to not have your employer deduct taxes on your paycheque. As your "employer" they are legally obligated to collect tax and remit to CRA as frequently as CRA prescribes. The only way you can not have them deduct is if you can prove you are NOT in an employee/employer relationship and instead are a contractor. There is a list of criteria that has to be met for this to happen. If you have a regular job forget about even looking at the list. It's pretty black & white. You can find on CRA's website do a search for "contractor" or "employee" or something like that & you'll find the list of criteria defining employee from contractor.

An example of the questions are:

Does your employer dictate your hours of work?

[physique]

or u have to be self employeed.

[megwell]

thanks gingerbread man
and all of the other posts
and yes i did mean tax free savings account

[musclehead123]

I'm an accountant. You don;t have the option to not have your employer deduct taxes on your paycheque. As your "employer" they are legally obligated to collect tax and remit to CRA as frequently as CRA prescribes. The only way you can not have them deduct is if you can prove you are NOT in an employee/employer relationship and instead are a contractor. There is a list of criteria that has to be met for this to happen. If you have a regular job forget about even looking at the list. It's pretty black & white. You can find on CRA's website do a search for "contractor" or "employee" or something like that & you'll find the list of criteria defining employee from contractor.

An example of the questions are:

Does your employer dictate your hours of work?


Is there a min. amount? So if someone is paying X amount can they get their employer to deduct only .5X ? Or does it have to be certain %?

[gingerbreadman]

Is there a min. amount? So if someone is paying X amount can they get their employer to deduct only .5X ? Or does it have to be certain %?

No the employer is obligated to follow certain deduction tables based on your income. You do have some options of course. When you complete your annual TD-1 form (although they should, not all employers ask you to do this) you can tick off if you have a non income earning spouse for example among other items and each will reduce the amount of tax the employer takes from you. Of course if you lie, at the end of the year when you do your taxes you're likely going to have a tax bill doing this. Or, if you have two jobs/two different employers and one is casual employment, the casual employer is allowed to accept a TD-1 from you asking that zero tax be deducted from that employer. This is under the premise that full taxes are being deducted from your other (main) employer.

[gingerbreadman]

or u have to be self employeed.

Correct. Contractor/self employed, same thing. Basically if you have your own business and you decide what contracts/jobs you take on & they are from many different people and you dictate at what time you show up and leave from work and each job is usually short-term (weeks to months) to completion them when you go down the list of questions from CRA that determine whether you're in an employee/employer relationship or not your're likley going to obviously fall out as a contractor.

On the other hand, if you only work for one employer, the employer offers you medical benefits etc, the employer dictates when you come and go from work, (your hours) and you have a specific job description it will be obvious once you answer the questions that you are an employee.

Remember, if you become self employed/contractor, you become responsible for remitting your own tax and you have to pay BOTH employer and employee portion of Canada Pension. Also, once you have one year of earnings under your belt, CRA will take the amount of tax you owed for that year and require you to make tax installments (usually quarterly, sometimes monthly) during the year you are earning the income (no different than paycheque to paycheque as an employee). If you fail to make these instalments, CRA will charge you instalment interest for being late if at the end of the year you actually owe at least the amount they asked for. Also, you are required to keep good accounting records of your income and expenditures, generally hiring an accountant is a VERY smart investment. It will keep your records clean and keep CRA from finding something bad and billing the shit out of you when you least expect it. Of course there are some benefits to being self-employed. Generally on average it would be fair to say they pay less tax overall as there are many more "gray" areas for deductions. ie. taking an estimation of the % of work related costs that apply to your home phone bill. As long as it looks reasonable, CRA will accept it. Generally if you're reasonable with them and not obviously trying to cheat/undermine the system then they will be fair with you as well.

However CRA always wins boys - they've got the biggest hammer, don;t get in a fight with them!

[nii]

I hate to go off topic like this but gingerbreadman I've got another question. The CRA website clearly states (http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/cntrbtn-eng.html) you do NOT have to open a TFSA account to earn contribution room. Yet i still get into arguments with coworkers and what certain financial planners are saying. Since i dont know any Chartered Accountants, could you possibly shed some light on this?

[gingerbreadman]

I hate to go off topic like this but gingerbreadman I've got another question. The CRA website clearly states (http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/cntrbtn-eng.html) you do NOT have to open a TFSA account to earn contribution room. Yet i still get into arguments with coworkers and what certain financial planners are saying. Since i dont know any Chartered Accountants, could you possibly shed some light on this?

Your link explains it all - good research! Without seeing the link though my gut would say it would operate like RRSP contribution room. In looking at the link it appears it operates the same. Who's the financial planners arguing with you? Keep in mind the financial planners of the world are all fighting for professional recognition. The most prominant is the Financial Planners Standards Board of which I am a member. however as a Chartered Accountant I only had to write a multiple choice exam to get the designation Certified Financial Planner. However I can say those that take the route of the institute's courses have a tough go as they're not easy. my round-about point is historically just about anyone could hang a sign outside their door as "financial planner". You have t be careful who you consult with, ask questions. Sounds like those you've been talking to know no more than yourself.