Since my last report, a new session of Parliament has started and usually that means reassignment of responsibilities.  I continue as a member of the Tactics Group which plans the daily strategy for the Official Opposition and also remain responsible for the coordination of Private Members Bills and Motions.

In addition, I have been elected as the Chairman of the House of Commons Standing Committee on Access to Information, Privacy and Ethics.  This Committee is responsible for related legislation, departmental activities and spending, and any other investigations or studies that may be referred to it by the House of Commons.  This is one of only four Standing Committees chaired by an Opposition member and I am very honoured to have the confidence of Parliamentarians to ensure the accountability of government.

In this Householder, I have included my annual tax tips which may help you to identify opportunities to reduce your income taxes for 2007.  I have also written an article with some suggestions on how you may be able to get free banking even if you are not a senior.  This article is a must read if you are paying service fees.  Please advise me of further suggestions or if you reduced your costs or increased your income.   I will share your experience in my report.

Many of you have expressed your concern about poverty.  I share that concern and have provided some information on the global campaign called “Make Poverty History.”  On the cover I am pictured with many other MPs at their October 17th rally on Parliament Hill to raise awareness on how we can reduce poverty.

Finally, I want to thank all of you for your thoughtful and constructive feedback over the past year. Your input has helped me to do the best job possible on your behalf and I am very grateful for the opportunity to represent you in the Parliament of Canada.
Sincerely,

Paul Szabo

Although I no longer operate my Chartered Accounting practice, I still do tax returns for family members and some friends. It’s a good way for me to keep up with tax changes.  From time to time, I have found that some people who come to my office do not take advantage of some basic savings opportunities.

Everybody has a different situation and every tip may not be applicable to you. However, in my experience, most taxpayers could find savings if they took the time to assess their choices. Below are a few tips which could save you money. Note that the figures that I have used are for the 2007 tax year.  Some of these are indexed and will change slightly from year to year.

• Medical Expenses – Everyone can receive a 15.5% tax credit for eligible medical expenses which exceed the lesser of 3% of your net income or $1,903.  First of all, check the tax guide to ensure that you know what is eligible. The list is long and includes things like premiums for private insurance and medical devices and aids. The next thing to know is that one spouse can and usually should claim all the expenses for the entire family (i.e. including dependent children). This makes a difference because if the spouse with the lowest income claims all the expenses, the 3% reduction will be less and the credit will be more unless both spouses make about the same income.                                                                                                                                              
  Finally, in any tax year you can claim medical expenses for any 12-month period which ends in the tax year. If you have large expense in the fall of one year and another large one in the summer of the next year, you may be better off by claiming them both on the same tax return. Taking this one step further, you may want to schedule appointments for medical or dental or vision care expenses before year end or delay until the New Year depending on what other costs you have had or are expecting. If you had $1,000 in one year and $1,000 in the next you may not get any tax credit in either year but if you claimed them both on the second tax return, you would save money regardless of how much you make.                                                                                                                                       You should also be aware that there is a Refundable Medical Expense Supplement of up to $1,000 for those with very high medical expenses and modest income.  This is worth checking into.
  
  
• Charitable Donations – Regardless of which spouse or dependent made a charitable donation, one spouse can and usually should claim them all. This can make a difference because the federal tax credit is 15.5% on the first $200 and 29% on everything over that. If both spouses made donations of $200 and each claimed their own you would only get 15.5% federal credit on the entire amount. If one claimed both donations, $200 would be at 15.5% and $200 would be at 29%. The provincial tax credit also increases. You should also be aware that donations can be carried forward for 5 years. That means that you may be better off delaying the claim for charitable donations and combine them in the following year which could maximize the amount eligible for the higher credit. The increased savings is likely more than you could earn in interest by taking the credit early remembering that any interest earned is taxable.                                                                                                   
  
  There are also some amended rules related to the gifting of publicly traded shares to charities.  Check the tax guidelines to see if donating a gift of capital property is a better way for you to support the charity of your choice.
  
  
• Provincial Sales Tax Credit – If you have a child who is 16 to 18 years of age in the taxation year and if you received no Child Tax Benefit for them from the federal government, they can actually file their own tax return and claim the $100 sales tax credit and receive a refund cheque for $100 as long as their income is less than $4,000. If you claim them on your return, the credit is only $50. Only one parent can claim for both spouses and any dependents and their tax credits are reduced by 2% of the total family net income in excess of about $4,000.                                                                                  
  
  In many cases, the income is too high to get any tax credit. That is another reason why a 16 to 18 year old should file a return. They will need a Social Insurance Number so if they do not have a card, now is a good time to get one. You may also have children who are over 18 years of age but are still in school or otherwise make no income. Make sure that they file a return as well to get their $100 provincial tax credit.
  
  
• Goods and Services Tax Credit – One spouse must claim the GST tax credit for both spouses and any dependent children. The credit is $237 for each spouse and $125 for each dependent child. This credit is reduced by 5% of the excess family income over $30,936. If you have a child who is 19 or older in the tax year, make sure they file their own return and claim the GST credit. It is worth $237 just for filing a return. Taken with the Provincial sales tax credit, a child over 18 years of age can actually receive $337 just for filing a return which they can do even if they have no income.
  
  
• Income Splitting – As a general rule, a couple will pay less tax if their income is split evenly. This is rarely the case so you may want to look for ways to shift income from the higher earning spouse to the lower. Investment income is usually a good place to start. If the higher earning spouse pays all the bills etc out of their bank account and the lower spouse uses their income to invest in GICs etc, all of the investment income can be claimed by lower income spouse. Too often couples have one bank account and often one taxpayer will claim all the income earned.                                                                  
  
  If you have a joint account, you can split the income between both spouses even though the T5 tax slip is in the name of one spouse. You should also be aware that those who receive a Canada Pension Plan benefit can choose to split up to 50% of their pension with their spouse. In most cases, this will reduce the total tax bill of the couple.  In 2007, there are new tax rules which allow pensioners to split certain pension income for tax purposes.  The rules are too complicated to describe in this article but if one spouse has income in excess of $37,178 and their spouse or partner has income below that amount or in a lower tax bracket, it may be beneficial to you to share up to 50% of the registered pension income between the spouses.  Please check this out carefully if you have registered pension income.               
  
  Did you know that your spouse could earn up to $758 in 2007 without reducing the amount of the Spousal Personal Credit.  This means that if one spouse has no income you could earn $758 of interest income tax free.  This is just another reason why you should look for ways to get some investment or other income into the hands of a spouse for tax purposes.
  
  
• Tuition and Education Tax Credits - When a child goes to a qualified post secondary institution, the student receives a tax slip for tuition and education tax credits.  If the student has income less than $8,929 from part time or summer employment, these credits are carried forward to future years.  Alternatively, the student can transfer up to $5,000 to a parent or grandparent each year.  Tax credits carried forward for years do not increase in value and therefore it is worthwhile to make the transfer and reduce the tax of the parent who usually has paid the tuition.  In the event that the student is actually funding their own education it is still worthwhile because the parent can give them the tax savings to help pay for their ongoing education or to invest and earn interest.                                                                                                                   
  
  Gifts of money to a dependent who is 19 or over are permitted and the income that is earned is taxable income in the hands of the dependent.  If the dependent is under 19, the income is includable in the income of the parent.

          There are quite a number of other areas where tax savings may be achieved and for which           you may be eligible.  These include:

• Eligible Dependant Personal Credit – where there is no spouse but you have a dependent child or other person.
• Pension Income Tax Credit – 15.5% of the first $2,000 of pension income.
• Caregiver Tax Credit – where the dependent’s net income is less than $13,431.
• Infirmed Dependants Tax Credit – where the dependent is over 17 years of age and their net income is less than $5,581.
• Adoption Expenses Tax Credit – 15.5% of net eligible expenses up to a maximum of $10,000.
• Disability Credit and Disability Supplement
• Interest on student loans – 15.5% of interest paid
• Political Donations – 75% of the first $400, 50% of the next $350 and one third of any additional amounts.  The maximum credit is $650.  In 2007, donations are limited to $1,100.
• Public Transit Passes Credit - 15.5%

I hope that at least one of these tips have helped you think of possible savings opportunities.  If your situation is complicated, seek assistance from the income tax office or a reputable tax return preparing service.  The key is to handle the family like one taxpayer and reduce the family taxes.  That means preparing the returns for all family members at the same time will help you to identify tax saving opportunities.  A final note to those of you who have family members, especially seniors who may have some of these opportunities but may not understand – offer to help them.

Over the years, Canadians have been annoyed at the banks for their broad range of fees and service charges and their low interest on balances in your savings or chequing accounts.  Not too long ago, I encouraged readers to visit their bank if they had not changed their banking arrangements in the last few years.  The reason for my recommendation was that the banking industry has become more competitive and they have made changes in an effort to keep you as a customer.

I was delighted to receive numerous letters of thanks from constituents who had taken the time to have their banking services needs assessed.  In most cases, they are now getting free banking with no minimum balance and are earning as much as 4.5% interest on the daily balance in their account.

I took the time to speak with a number of banks.  They do not recommend how to do your banking unless you ask for advice.  You can inform yourself somewhat by visiting their web sites but in my experience, the personal face to face visit with your banking and other financial records will help them identify the best arrangement for you.  Some of us have been blindly loyal to one bank forever, but I have to tell you that some banks have better services, features and benefits than others.  You need to visit at least 2 or 3 banks to find the optimal service provider for you.

You also should be aware that most banks are also in the insurance business.  They will be happy to quote you on your home and auto insurance so have that information with you when you visit.  You may find savings there as well.  The key is to compare the range of services and the convenience for you.  These days almost all banks also offer banking over the internet and by telephone.  Do not feel pressured to make changes too quickly.  Assess your choices and talk to someone you trust.

Seniors are particularly attractive to banks.  They usually have money to invest and the banks would like to have that kind of customer because no matter what interest rate they pay you, the bank can earn even more by loaning the money out to others at a higher rate.  How old do you have to be to qualify as a senior?  Most will say 65 but things have changed.  One Credit Union considers you a senior at age 55 years of age which qualifies you for a Golden Account which is virtually unlimited free banking.  Scotiabank accepts you as a senior at age 59 and the rest of the main banks consider you a senior at age 60.

When a bank offers free banking, most of the banks include:

• Unlimited transactions
• Transfers
• Preauthorized withdrawals
• Debit card purchases
• Internet banking
• Banking by phone
• Travelers cheques
• Bank drafts
• Money orders
• Safety deposit box discount

You should be aware that when you reach the age at which you qualify as a senior at your bank, they will not tell you that you now qualify for seniors benefits nor will they automatically covert your account to the no fee status.  You must request it and it can often be done by phone and without changing your account number or cheques.

Here are a few points I personally discovered in my own case:

• President’s Choice is not a major bank but offers 4.5% interest on your daily balance over $1,000.
  
  
• TDCanadaTrust has a higher term deposit rate on $US deposits than $Cdn deposits.
  
  
• If you want to change banks, most banks will do all the paperwork to change your preauthorized withdrawals or deposits at no charge.
  
  
• ING offers 3.75% on daily savings balances but they are very slow to transfer money to your own bank’s chequing account.
  
  
• Getting new cheques is not cheap.  The minimum order for 50 cheques is $18.25 but you can get 150 cheques for $22.95.
  
  
• At some banks, if you open a new $US account with a minimum balance of $3,000, you get a discount on the foreign exchange rate to buy or sell $US dollars and receive a free $US Visa card.  This could be helpful to those who travel to the US from time to time particularly with the volatility of the $US.
  
  
• If you have joint accounts and one spouse is considered a senior then both spouses will qualify for the seniors benefits.
  
• You do not have to be a senior to get free banking but there may be a minimum balance requirement (eg $1,000) which is still much better than paying transaction fees etc.

To do a little research, here are the email addresses of some banks:

• www.BMO.com
• www.Rbcoyalbank.com
• www.Scotiabank.com
• www.TDCanadaTrust.ca
• www.CIBC.com
• www.pacecu.ca
• www.Pcfinancial.ca

Please take the time to reassess your banking arrangements and those of your family and especially seniors.  I hope you will let me know about your success or suggestions so I can publish them in a future householder.

Special personal messages of congratulations may be requested for those Birthdays and Anniversaries listed below.  As these events are very important occasions, you may want to request a message, when applicable, from Her Majesty The Queen, the Governor General and the Prime Minister of Canada.

Greetings from Her Majesty the Queen are available for 100th Birthdays and every 5th year thereafter, and 60th Wedding Anniversaries and every 5th year thereafter.  Please note that copies of birth certificates and marriage certificates are required by Government House for messages from The Queen.

Birthdays

75th and over   - message from the Prime Minister

90th - 99th         - message from the Governor General

100th and over - message from Her Majesty The Queen
                          (copy of birth certificate required)

Wedding Anniversaries

25th and over    - message from the Prime Minister

50th - 59th         - message from the Governor General

60th and over   - message from Her Majesty The Queen
                         (copy of marriage certificate required)

___________Wedding Anniversary or ___________Birthday
     (#)                                                               (#)
Date of Birth/Marriage __________________________________
                                                           Day/Month/Year
Date of Celebration     ___________________________________
                                                           Day/Month/Year
Circle one:  Mr. and Mrs.    Dr.    Mr.    Mrs.    Miss    Ms.

Name:    _____________________________________________

Address: _____________________________________________

_____________________________________________________

______________________Postal Code:  ____________________

Telephone Number:  (      ) _______________________________

Send message to:  same as above __________________________

or c/o:  _______________________________________________

_____________________________________________________

_______________________Postal Code:  ___________________

Telephone Number:  (      ) _______________________________

Your name:  __________________________________________

Your telephone number:  (      ) ___________________________

According to GCAP, a child dies every three seconds as a result of extreme poverty.  More than a billion people are trapped in a situation of abject poverty and gross inequality and 70% of them are women.  We face an AIDS and Malaria emergency with 40 million people infected and 104 million children denied access to school.  860 million adults cannot read or write and millions of people are unemployed or working in precarious jobs with deteriorating conditions of labour.  Neither have a secure income to sustain their families.

Children and young people make up half of the world’s population and suffer from the lack of inclusion and provision of basic services.  Hunger is a daily reality for many.  In parts of the world, the death of mothers in childbirth and infant children are still routine but could have been prevented by the availability of simple healthcare.  As well 1.4 billion people do not have access to safe water.

These are alarming facts which have inspired people from around the world to take action because the world has enough resources, knowledge and technology to eradicate poverty.  In 2000, all 191 member countries of the United Nations committed to eight targets to halve poverty by 2015.  In their view, poverty will not be eradicated without an immediate increase in international aid and an improvement to how that aid is directed.  More and better aid is needed to:

• Help end extreme poverty
• Enable every child to attend primary school
• Reduce child mortality rates
• Improve maternal health
• Create decent jobs
• Begin to reverse the spread of HIV/AIDS.

Here are some of the ways in which poverty can be addressed:

1. We need to provide debt relief so that poor governments can spend more on reducing poverty - providing food, clean water, housing, health care, jobs, education and building economies for their communities.
   
   
2. We need fairer trade so that poor countries can protect small farmers and staple crops and governments can access affordable medicine and maintain public services.

3. We need to help communities to keep their governments accountable.  Improved governance is essential to ensure that aid programs are not directed to “top-down” governance programs at the expense of poverty reduction.
   
   
4. We need to tackle climate change which is the worst environmental and economic problem we face today. We need to cut greenhouse pollution and provide greater support to prepare poor countries for the impacts of climate change.

October 17th was the International Day for the Eradication of Poverty around the world and I was pleased to participate with Make Poverty History on Parliament Hill.  It was an extraordinary experience to meet with people from all walks of life who are deeply concerned about the devastation caused by poverty.

We need to do our share to eradicate poverty and one of the key initiatives in Parliament is Bill C-293.  This Private Members Bill was introduced in early 2006 by my colleague John McKay who is from Scarborough.  In brief, it establishes clear criteria for Canadian international aid to ensure that our aid is directed at poverty alleviation.  The Bill has passed in the House of Commons and now is in the Senate for final consideration.  There is some opposition from the Government but it has a very good chance of passing.  For more information on the Bill please contact my office.  For information about Make Poverty History, you can visit their web site at http://www.makepovertyhistory.com.au/.

Visit us on the Internet: www.paulszabo.com

Mississauga Office Hours: Monday to Friday 9 a.m. to 5 p.m. Appointments can be scheduled during office hours or other arrangements can be made by calling the office.

Constituents may write to any Member of Parliament or Cabinet Minister postage free. Simply address your envelope to the particular Member, c/o House of Commons, Ottawa, Ontario K1A 0A6. Your views and suggestions are important.