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Market
Focus
- By Jeff Wachman
In this bulletin, I review interest rate trends in
Canada. The Bank of Canada has committed to
maintaining a level interest rate policy until the
middle of 2010. This was done to provide stability
of funds for our charter banks which would
facilitate lending at reasonable rates.
Ultimately, increased economic activity will be
regulated by rising interest rates. A rise in rates
would also lead to an increase in the value of the
Canadian dollar, which may not be desirable at this
stage of the recovery.
I think that a good signal for positive economic
activity will be a sustained upward trend in the
cost of energy (a trend, not a jolt). As a positive
signal of economic growth this would indicate an
upward trend in equity markets as well.
As oil rises so does the Canadian dollar vs the USD.
I expect that the devalued USD will raise profit
margins for US manufacturers in the nearer term.
This would be good for the US equity markets, but
would ultimately provide an opportunity for the US
central bank to raise interest rates (mid
term).
Please read the Monthly Bulletin (see link above)
for more detailed stories on these subjects.
For
Ontario clients-What you should know about HST
Ontario
HST - pdf
What is the HST?
As announced in the 2009 Ontario Budget, the
Provincial Sales Tax (PST) will be replaced with a
more modern, value-added tax that will be combined
with the federal Goods and Services Tax (GST) to
create a Harmonized Sales Tax (HST) for Ontario,
effective July 1, 2010.
The provincial
portion of the HST will be eight per cent and the
federal portion will be five per cent, for a
combined HST rate of 13 per cent.
How it works
Right now the PST is charged on many purchases made
by businesses in manufacturing goods and providing
services.
It increases costs
by adding tax on every step in the
production, distribution and retail processes –
making it a tax on a tax on a tax.
Roughly $4.5
billion in embedded sales tax is hidden in
the cost of doing business in Ontario.
The HST will
generally remove this hidden tax by refunding sales
taxes paid on most business inputs. They consumer
will pay tax only once on the purchase price of
these goods and services. While HST will now be added
to many services and products previously PST exempt
to generate tax revenue, it is believed that the
refund process in the new HST system will lower
business costs and should lead to lower prices for
many consumer purchases. The government is hoping
that this will improve the competitiveness of
Ontario businesses and result in increased business
investment, leading to more jobs and improved wages.
HST The quick method- If you can use it, the
quick method of accounting GST/HST is a godsend,
because you can calculate your remittance without
having to record GST/HST separately on your sales.
This CCRA
Guide explains how the quick accounting method
works, and who can use it.
Sincerely,
Jeff Wachman B.Comm, R.F.P
Senior Financial Planning Advisor
Assante Financial Management Ltd.
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