Briefly:

(January 25, 2008) The Canadian Revenue Agency is urging Canadians who plan to file their tax returns electronically to keep their tax records on hand in case they are contacted by the CRA. Taxpayers must hold on to tax records, such as receipts, even after they’ve received their income tax assessments.

The CRA says some initial reviews of deductions and credits are conducted when returns are filed and before taxpayers receive their Notice of Assessment. The majority of reviews take place later in the year, as the CRA works to verify the information on an individual’s tax return with the information provided by other parties, such as an employer or a spouse or common-law partner.

The CRA says it may contact taxpayers to request more information on income sources or dependants, and may ask for copies of receipts or information slips to support claims, including medical expenses, charitable donations, childcare expenses, spousal or child support payments, and moving expenses.

Stay invested: BMO

(January 25, 2008) BMO Financial Group is urging Canadians to stick it out during the current market volatility rather than take their money out. BMO believes remaining in the market rather than getting out when times are tough will ultimately help Canadians achieve their retirement goals.

In a release issued on Friday, BMO notes that stock markets have historically rebounded from their corrections over time. For example, in the final months of 1987, the S&P/TSX Index fell by about 25%, and all of that loss was recovered in just over a year. In September 2000, the S&P/TSX was at 11,388 and dropped to 5,695 in October 2002. Of course, it is now over 12,000.

Only a few days out of the market may have a dramatic impact on long-term growth, BMO says. For example, BMO highlights that if an investment of $10,000 was fully invested for 15 years, it would now be worth $55,570. But if it wasn’t invested during the top 60 days in the market, it would be worth only $10,593.

(01/25/08)

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.