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Escaping the Rat Race

According to Wikipedia, the Rat Race is “an endless, self defeating, pointless pursuit”.  Envision a rat going through a maze, trying to find the cheese, but ultimately achieving nothing meaningful.

Depressing, isn’t it?

I recently watched “The Secret” movie the other day (read the book a while ago) and it reinforced the importance of how our thoughts shape our actions and what the universe has in store for us.  While I am completely happy in my job, I find the 9-5 grind tiring sometimes.  Those weekends are just a little bit too short, you know?

For those that believe that you are destined to continue with this every-day grind and this ‘rat race’, unfortunately you will likely self-fulfill this prophecy.  If you can envision yourself breaking free from the daily 9-5 hours and the daily slog and have a plan on how to get there, you are closer to achieving this than the other people out there who have not thought of a plan.

What is your Escape?

Escaping the Rat RaceEveryone has a different vision what what “escape” is.  For some, it is simply being able to take a sabbatical from their normal career to travel the world or pursue a hobby or learn a new language.  Whatever makes you happy.

For me, I would be happy if I could take off work to go traveling and to learn about the world.  I would be happy if I could work part-time and have flexible hours.  I would be happy if I could spend time with my family and not have to worry about work if I had to take my aging parents to a medical appointment.  I don’t think I would want to retire completely early, because I believe that working can give you a sense of accomplishment and socialization that you probably can’t get easily elsewhere, but I can’t imagine myself working full-time like I am now, with children, with aging parents, and being tied to a large mortgage.Continue Reading

So I Over Contributed on my TFSA

&$#)@*$)#@*$#)(*$)@#

Yes, that’s the first thought that came to my mind when I received the letter from the Canada Revenue Agency that informed me I over contributed to my TFSA.

I was in disbelief when I received the letter.

I didn’t think it would ever happen to me.

I even had a post titled “Watch Out for TFSA Over Contributions!”  No one ever thinks it will happen to them, but it did.  It happened to me too.  No one is immune (haha okay maybe most people who actually keep detailed records of their TFSA contributions are immune).  Although it’s not very much that I had to pay (around $500 for this year and I think another $300 or so next year), I wish I knew about it earlier so I didn’t have to pay the penalty for a full 6 months (and then another 6 months or so next year because I found out in June).

How I Over Contributed To My TFSA

So I Over Contributed on my TFSAI thought I was doing really well because I checked the Canada Revenue Agency Quick Access Tool and saw that I had X contribution dollars.  It wasn’t straight and easy (not simply $5000 per year) because I took out money in 2011 and was able to contribute more the following year because I made more money than the annual TFSA contribution limit.  I was doing a lot of in-kind transfers from my non-registered accounts to my TFSA as well, for small amounts like $452.14 so it was hard to keep track (no excuses I know).

Related: 3 Reasons Why a TFSA Is Likely Better than a RRSP if You’re Under 30

Anyway so I used the Quick Access Tool.  I ended up thinking hey, this should be reliable since it’s straight from the government.  However, it was not.  It was not updated and I ended up having a domino effect happen to my TFSA account and I over contributed by almost $5000 or so in 2013.

Yikes, right?Continue Reading

What is the First Time Donor’s Super Credit?

It is generally agreed upon that charitable giving is a good thing.  That is why the government rewards charitable giving by being charitable with your taxes.  Which is nice.  Free money from the government is always good.

In the 2013 Budget, the government created a First Time Donor’s Super Credit.  This is a credit that can be claimed between the tax years of 2013 and 2017.

For any charitable donor (those who have already donated before, and first time donors who donated before Budget 2013), you get a non-refundable tax credit of the lowest personal tax rate on the first $200 you donate, and the highest tax rate federally and provincially on any amounts over $200.  So in British Columbia where I live, I get a 15% federal tax credit on any amount I donate up to $200 and 29% on the remainder of my donation past $200.  In addition, I get a 5.06% amount up to $200 and 14.7% on the remainder past $200 of a provincial tax credit.

So basically, if I donated $400, I get a tax credit of $127.52 and hence, the actual cost of donating is $272.48.  If you live in B.C. the University of British Columbia has a convenient tax credit calculator here.  Check out one of my favourite tax related websites, Tax Tips for more details.

What is the First Time Donor Super Credit?

First Time Donors Super CreditWell, my friend, the First Time Donor Super Credit allows you to have up to an extra 25% of non-refundable tax credit on your donation.  You must not have donated in the past five years (the government of Canada is rewarding stingy and non-generous people, goes to show!) in order to be eligible for the First Time Donor Super Credit.

For any values up to $200, you may be eligible to get up to 40% of a tax credit and up to a 54% tax credit on the amount past $200 (up to a maximum of $1000).  These numbers are variable depending on the province that you live in.

Related: How to Get More Money Back from your Tax Return

Some of the rules according to the Canada Revenue Agency Website are:

  • That the person claiming the First Time Donor Super Credit has not donated in the past five years
  • Their common law partner or married spouse must not have donated in the past five years either
  • You can only claim it once between the years of 2013 to 2017 (so make it count!)
  • The maximum amount of the Super Tax Credit that you can claim is up to $1000 in donations
  • It has to be a registered Canadian charity (well, of course!)

If you have not donated in the past five years (now is the time!) and you are interested in seeing how much your first time donation reward you when it comes to claim your taxes, Canada Helps has a handy First Time Donor Super Tax Credit calculator.  Alternately, if you want to be more legit, you can go to the Canada Revenue Agency First Time Donor Super Tax Credit calculator too.

So, if you have never donated and you donate $400 after 2013, you are eligible for a tax credit of $127.52 as your standard donation credit, and an additional $100 One Time super credit.  That means, that $400 donation really only costed you $172.48.

Pretty amazing huh?

How to Make the First Time Donor Super Tax Credit Count

Go big or go home, right?  Isn’t that life’s motto?

In order to maximize the First Time Donor Super Tax Credit, you might want to save up your donations to make sure that you accumulate as much donation amount as you can.  This may mean deferring claiming your donations against your taxes until 2017 if you don’t plan to donate a large amount in certain calender year…otherwise known as carrying forward your donations.  Some people may find that too cumbersome.  Alternately, if you have a spouse or a common law partner you can amalgamate your donations in order to maximize the amount donated for the year in question.

The First Time Donor Super Tax Credit sounds pretty amazing to optimize your taxes, unfortunately I am often approached by friends asking to donate for something they are doing for charity so I won’t be able to take advantage of this tax credit.

Readers, are you planning to take advantage of the First Time Donor Super Tax Credit?