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Opinion

Budget 2019 – Don’t spend your new Canada Training Credit just yet

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On March 19, 2019, the federal government tabled its election-year budget. One of the new provisions is a refundable credit called the Canada Training Credit. However, the $250 credit won’t even be available until you file your 2020 income tax return in April of 2021.

Further, if you are born in 1995 or later, you won’t qualify yet. If you were born in 1954 or earlier, you would never be eligible.

In addition, the maximum benefit you can receive is $5,000 in a lifetime (which will take 20 years to get at $250 a year) and the benefit can only be used to a maximum of 50% of eligible tuition costs.

So let’s consider the following scenario:

It is 2019 – you are 25 years of age making $27,000 a year and file your taxes every year.

You decide to take advantage of this credit and enroll in your first semester of schooling in the fall of 2023.
According to Statistics Canada, the average Canadian undergraduate pays $3,419 per semester.

So, you take time off work to go to school full-time in the fall, thus reducing your income by 1/3 in the year to $18,000.

Under the current 2019 rules, you would only have $39 in federal income tax. This amount is low because the tuition credits reduce your taxes.

By 2023, you have built up a “pool” of $250 per year after you turned 26, and believe you have a $1,000 pool available for that year.

When you file your 2023 return the $1,000 is triggered as a refundable tax credit. But you won’t be getting $961 back ($1,000 – 39).

Here’s the catch:

The $1,000 pool reduces the amount you can claim for tuition credits as well, which changes the tax owing to $189 Federal income tax. Meaning the $1,000 pool that you waited for is reduced by 15% by the time you pay it out.

Cash in jeans: $811.

But what if the course you decided to go into begins in January of 2023? You go for the January-April semester, work from May-August, and attend school September-December.

Using the same $27,000 – your income is now reduced by 2/3 while attending full time. Your income is only $9,000 as a result of the May-August period.

Your tuition (possibly paid through student loans) is $6,838 for the year.

Your tax is now zero because even before tuition credits you are below the Basic Personal Amount in your earnings.

Does this mean you get the full $1,000?

No.

Because your income is less than $10,000 in 2023, you don’t get the $250 for that year. As such, you only get $750, and your tuition credits available for carryforward are reduced by $750 as well, thus having a future negative impact on tax of $112.50.

Net result: $637.50 cash in jeans

What if you are a parent that decides to stay home with the kids until they are in school full time and go back to school in 2023?
Unfortunately, because you did not make more than $10,000 a year in any of the years, you get zero.

What if you were laid off, collecting regular EI benefits, and decide to go back to school?
Regular EI Benefits don’t qualify for the $10,000 income calculation. As a result, unless you had special EI benefits like parental leave or earned income from another source greater than $10,000, you don’t qualify.

What if you were self-employed through a small business corporation and paid yourself dividends instead of wages and then decided to upgrade your training?
Your dividend income does not qualify, and so you are not eligible for amounts to be added to the pool.

So assuming you qualify, and you wait the four years to build up a pool of $1,000 (remember that the $1,000 is only a net $850 because of the reduction in tuition credits). That same Statistics Canada report says that tuition is increasing at 3.3% per year. That means by you waiting four years so you can get the Net $850 means your annual tuition has likely increased from $6,838 to $7,786 ($948).

You waited four years, and the tax amount you receive won’t even cover the inflationary price increase on tuition.

In Conclusion

  • Those that do qualify won’t see anything until April 2021; the actual net amount of what they will see is only $212.50; and their annual tuition will likely have increased by $225.65.
  • Students under the age of 25 will see nothing;
  • People over the age of 25 that don’t have more than $10,000 of income will see nothing;
  • Seniors will see nothing;
  • Parents looking to re-enter the workforce will see nothing; and
  • People who have been laid off and have less than $10,000 of non-EI income will see nothing.

Seems like a lot of complex legislation for nothing.


Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr is the President & Founder of CGL Strategic Business & Tax Advisors; you can find out more about Cory’s biography at http://www.CGLtax.ca/Litzenberger-Cory.html

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Alberta

Retired Oil Field Worker sparks national conversation with his pitch for a new route to move Alberta Oil

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The following Opinion piece comes from local writer / editorialist (and former oil field worker) Garfield Marks. 

We have not been able to run our bitumen through a pipeline to a refinery in New Brunswick. There has been resistance in parts of Ontario and in Quebec. What if we came up with another plan. Would we consider it? There will be road blocks, but not insurmountable, would we consider it?
Yes how about Thunder Bay?
Thunder Bay, Ontario, the largest Canadian port of the St. Lawrence Seaway located on the west end of Lake Superior, 1850 kms. from Hardisty, Alberta. A forgotten jewel.
So what, you may ask. 
They used to ship grain from Thunder Bay in huge tankers to ports all over the world. Why not oil?
The Saint Lawrence Seaway ships fuel, gasoline and diesel tankers, to this day.
We could run oil tankers to the Irving refinery in New Brunswick, bypassing the controversial pipeline running through eastern Ontario and Quebec.
The pipeline, if that was the transport model chosen, would only need to run through parts of Alberta, Saskatchewan, Manitoba and Ontario. Like, previously stated the pipeline would only be 1850 kms. long. 
The other great thing about Thunder Bay is the abundance of rail lines. Transportation for such things as grain and forestry products from western Canada. If you can’t run pipeline from Hardisty, through to Thunder Bay, use the railroad.
Why Hardisty, you may ask.
Hardisty, according to Wikipedia,  is mainly known as a pivotal petroleum industry hub where petroleum products such as Western Canada Select blended crude oil and Hardisty heavy oil are produced, stored and traded.
The Town of Hardisty owes its very existence to the Canadian Pacific Railway. About 1904 the surveyors began to survey the railroad from the east and decided to locate a divisional point at Hardisty because of the good water supply from the river. 
Hardisty, Alberta has the railroad and has the product, the storage capacity, and the former Alberta government planned on investing $3.7 billion in rail cars for hauling oil while Thunder Bay has the railroad and an under utilised port at the head of the St. Lawrence Seaway.
Economics are there along with opportunity, employment would be created and the east coast could end its’ dependency on imported oil. 
Do we have the vision or willingness to consider another option. I am just asking for all avenues to be considered.
In my interviews in Ontario there is a willingness to discuss this idea. 
The St. Lawrence Seaway Management Corporation is still reviewing the idea of shipping crude oil from western Canada through its system, and it’s a long way from happening, according to Bruce Hodgson, the Seaway’s director of market development.
“Obviously, there needs to be an ongoing commitment on the part of a producer, and so that’s going to be required for any project of this nature,” he said. 

We could consider it, could we not?
CBC NEWS did a story about this idea on March 7 2019;
A retired oil field worker in Alberta has “floated” a novel solution to Alberta’s oil transportation woes: pipe the bitumen to Thunder Bay, Ont., then ship it up the St. Lawrence Seaway to the Irving oil refinery in New Brunswick.
Marks’ proposal might be more than a pipe dream, according to the director of the Queen’s Institute for Energy and Environmental Policy.
‘I don’t think that it’s a totally nuts idea’
“I don’t think that it’s a totally nuts idea,” Warren Mabee said. “I think that there’s some flaws to it … but this is an idea that could work in certain circumstances and at certain times of year. … It’s not the craziest thing I’ve ever heard.”
The chief executive officer of the Port of Thunder Bay said shipping oil from the port “could easily be done.” 
“We ship refined gasoline and diesel up from Sarnia. We’ve done that for many many years,” Tim Heney told CBC. “So it’s not something that’s that far-fetched.”
There are, however, plenty of potential drawbacks to shipping crude through the Seaway, Mabee explained, not least of which is the fact that it isn’t open year-round.

The need to store oil or redirect it during the winter months could be costly, he said.
Potential roadblocks
Another potential pitfall is capacity, he added; there may not be enough of the right-sized tankers available to carry the oil through the Seaway. 
Finally, he said, the journey by sea from Lake Superior to the Irving refinery in New Brunswick is a long one, so it might make more sense to transport the product to a closer facility such as the one in Sarnia, Ont.
The St. Lawrence Seaway Management Corporation is still reviewing the idea of shipping crude oil from western Canada through its system, and it’s a long way from happening, according to Bruce Hodgson, the Seaway’s director of market development.
“Obviously, there needs to be an ongoing commitment on the part of a producer, and so that’s going to be required for any project of this nature,” he said. 
So far, no producer has come forward seeking to ship crude through Thunder Bay, he said. 

Asked about the possible environmental risks of shipping oil on Lake Superior, both Hodgson and Heney said shipping by tanker is relatively safe; Hodgson noted that any tankers carrying the product would have to be double-hulled, and crews are heavily vetted. 
Time to rethink pipelines?
There hasn’t been a spill in the Seaway system for more than 20 years he said. 
Nonetheless, Mabee said, the potential for an oil spill on the Great Lakes could be a huge issue. 
“The St. Lawrence and the Great Lakes have a lot of people living in close proximity, a lot of people who rely on it for drinking water,” he said. “There’s a delicate ecosystem there. I think a lot of people would push back against this proposal simply from that perspective.”
In fact, one of the reasons Mabee appreciates Marks’ proposal, he said, is because it invites people to weigh the pros and cons of different methods of transporting oil. 
“If we’re not going to build pipelines, but we’re going to continue to use oil, it means that people are going to be looking at some of these alternative transport options,” he said.

“And if we don’t want oil on those alternative transport options, we need to give the pipelines another thought.

Time to consider all options, I dare say.

​Garfield Marks​

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Opinion

The cost of the Canada Winter Games?

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The following Opinion piece comes from local writer/editorialist Garfield Marks.

The Gary W. Harris Canada Games Centre is a beautiful building but a very costly one. In more than money.

Construction costs of $22 million is an expensive undertaking. Operating and maintenance and interest on debt compounds the expense. The city is paying $11 million over a 10 year period or $1.15 million per year. (2017-2026) The college and the province are covering the rest, right?

Employees at Red Deer College are paying, too, and some are paying dearly. With their jobs. Red Deer College has to maintain a balanced budget, and with the huge cost of building, operating and maintaining this facility, they had to make cuts.

Early retirement, lay offs, and hours cut are an unintended consequence of the Canada Games.  The Gary W. Harris Wellness Centre was only about 25% of the cost of the winter games and will cost some residents their paycheques, their livelihoods with no one available to top-up their incomes.  Every resident will be paying for this centre for another 7 years, how much are we paying for the other 75%? Will we ever know?

The CFR cost the city last year $151,000 and $50,000 so far this year. Last fall when council voted themselves huge pay increases, one councillor stated they were worth the increases because they brought these events to the city. 

Thank you for lightening our wallets and for some their jobs. Will we ever know the real costs of the Canada games, would we do it again if we knew the real costs? I don’t think so but I doubt we will ever know the real costs, will we?

​Garfield Marks​

Background Information:

Budget Requirements, Council Decision Points and Funding Sources: click reddeer.ca

“…Through a tri-party agreement with The City of Red Deer, the Canada Winter Games Host Society and Red Deer College, a contribution will be made to the College over a 10 year period totalling $11,501,000. This contribution represents about 50 per cent of the expected costs of the Olympic sized ice surface and squash courts to be housed within this facility. Payments of $1.15 million will be paid annually from 2017 to 2026 inclusive. The grants being given to RDC for this project are funded from debt and the Canada Winter Games grant...”

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