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Your Interview: Surviving unemployment
- March 11, 2009 11:42 AM |
- By Your Voice
Canada is facing some of the highest job loss figures the country has seen in decades, according to Statistics Canada.
How do those facing unemployment survive financially?
Carol Bezaire, Vice-President, Tax & Estate Planning for Mackenzie Financial Corporation, took your questions on getting through the hump.
Read her responses below.
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Comments (5)
My mortgage will be up for renewal soon and only my wife is working, I am on EI. What advice would you have for choosing the new financing deal? Thank you.
Carol Bezaire: Thank you, Marcel, for your question. Without knowing all of the specifics in your case I would suggest you look at your cash flow needs and your budget requirements when choosing the terms of your mortgage renewal. Rates are very low at the moment, and you have a choice of locking in a low rate or taking a variable rate. Factor in the length of time your EI will be paid to you, the prospects of future employment,
and look at how much money you will need to have to pay your mortgage now, and as rates increase over time.
I would suggest you and your wife speak with a financial advisor to look at your entire financial plan to ensure you select the new financing that is right for you.
Since I am on EI should I use my tax return to pay down my credit card debt or use it towards living expenses once my EI runs out? The credit cards are at 3.99% until June, and the tax return would cover ~80% of that debt.
Carol Bezaire: Reducing non-deductible debt, such as a credit card, is always a good option when receiving a tax refund, but if you are going to need cash to cover living expenses once your EI runs out, I would
suggest you make your minimum monthly payment on your credit card until you see what your overall cash flow needs will be. If you have ample cash for your longer term living expenses, then by all means, pay down your credit card.
Does incorporating a business help in saving some cash flow through Tax deductions, as I am finishing off my MBA full time?
Carol Bezaire: In a typical case where you have a profitable active business, incorporating can make sense. This is because your active business can utilize the lower corporate tax rates for small businesses and keep more money inside the company.
This can be of benefit to you if you are in a higher personal tax bracket, or if you are paying tax by quarterly installments. You can then have the business pay out dividends to you as a shareholder to pay your MBA tuition, and those dividends are taxed at a preferred rate. This strategy however is for "tax-deferral" or "tax savings" purposes, not "tax deductions." By comparison, you would be able to claim tax credits for your tuition and education amounts for your MBA program and lower your personal tax bill without a corporation.
The only tax deduction I can see that could occur if you incorporated a business would be a deduction from taxable income of the corporation of any amounts used to pay tuition on your behalf by the corporation.
This isnt a question but its an issue your reporters need to look at: The Employment insurance system needs a serious overhaul. I'm not the only one, because Ive asked around,
But EI freezes us out if they have "new
information, (their mistake or ours.)
Currently, I've been frozen out for over a month because i've claimed income in the wrong manner...I claimed it though---the income was 145 dollars in 3 months time (less than what we are allowed to earn)....So in that amount of time I received zero dollars. The ironic thing is I had worked for 12 years previous to my claim, so I'm not there to screw the system. Thanks to that my family has been really living on almost nothing, where I used to make over 45 thousand a year! We are NOT making ends meet to be honest, and I feel that you guys need to investigate this and bring this to light. Someone needs to be heard here, EI is a total bully not a support system. It's abusive degrading and kicks you when you're already down! I for one am not helping the economy get better because I have zero money to spend, and I'm not exaggerating.
My understanding is that the fund has a healthy balance. Yet the max. weekly benefit only brings $387.00
The auto workers union realizing how short this would be if there members should have to collect, negotiated a supplementary weekly amount to add to this UNREALISTIC benefit ! !
Why not get real and pay better benefits.