I have occasionally found myself watching a local worker with curiosity.
He is an independent contractor of sorts, who slugs through some very challenging working conditions. He is completely exposed to the elements, day in and day out - come scorching heat, driving rain or bitter cold, he is always there.
He is up early, usually before me, and works a full day, then transports the product to a local warehouse. Sometimes he prefers to work through the night instead.
His job requires strength, stamina, agility - including the wherewithal to climb smaller structures without the aid of a step ladder or a co-worker.
Protective clothing is required, gloves, a hat, boots. Most of us would also require some sort of breathing filter, but I have never seen one of these guys willing to be bound by that sort of convention.
He is a public servant of sorts, providing an important intermediary function which has a net positive impact on our environment.
In all his productive capacity, he manages his daily cargo without burning diesel, gas, nor even recycled fry oil.
But despite his environmental functionality in our community, he gets absolutely no respect, other than perhaps me gazing, wondering: "What drives him to work so hard?"
Have you guessed his occupation yet?
As a part of a training exercise, years ago I was required to interview a few people and ask them questions about their relationship with money.
Among others, in an effort to study the outliers, I chose one of these workers. What do we call them?
An unkind term might be "dumpster diver."
A friendlier moniker might be "environmental search, sort and delivery specialist."
He was cheerful and fairly intelligent.
I mean, I wasn't about to trade places with him, but it was a pleasant chat with a gentleman who was not ill at ease with is position. Freedom is something we all crave, and some are willing to pay handsomely for the right to make their own hours, to be completely at liberty when to stop and start.
Although his pay is meagre, his total reward is apparently compensatory.
My guess is that his daily effort nets him something in the range of $30.
If he works six hours, he nets a tax-free wage of around $5 per hour, less than minimum wage, tax-adjusted.
And a well-deserved tax break it is.
Taxes and year-end
This is the final in this series on year-end tax saving ideas, this time sweeping up a few crumbs of ideas on this extensive topic. Next week, something completely different!
Consider an individual pension plan.
If you are a shareholder and an employee of your own incorporated business, you have the option of considering an Individual Pension Plan (IPP) as a method of saving for retirement. An IPP is a registered defined benefit pension plan, similar to many large company sponsored plans, except it is established and sponsored by your company and designed for you as the only member (or perhaps your spouse as well).
An IPP is most suitable for those who have significant T4 income and are at least 40 years of age. If you are looking for both year-end corporate income tax deductions and a structured retirement savings plan for yourself - and if you don't mind locking in a chunk of your surplus company's cash in a pension plan for you, consider establishing an Individual Pension Plan (IPP).
Managing year-end expenses.
Remember to pay all investment management fees, tuition fees, deductible accounting and legal fees, childcare expenses, alimony, medical expenses and any business expenses (if deductible on your personal tax return) by year-end if it is your intent is to deduct them on your 2015 tax return.
Interest on family loans.
If you set up a spousal loan, or funded a family trust with a prescribed rate loan, remember to pay the interest owing by Jan. 30, 2016. The borrower will be able to claim a deduction for the interest paid on their tax return. The lender will have an income inclusion on their tax return. The timing of the income deduction and inclusion depends on the year the interest is related to, when the interest is paid, and the method (cash vs. accrual) you regularly follow in computing your income.
Declaring a bonus before year-end.
If you are a business owner and require income, declare a bonus before the end of your corporation's tax year and pay the amount no later than 180 days after year-end. Assuming your corporation's year-end is Dec. 31, if your corporation declares a bonus on
Dec. 31, it will get a tax deduction for 2015 and the tax you will have to pay will be deferred if you receive it at the beginning of 2016.
Once again, this article is not meant to provide individualized tax or legal advice. Readers should consult their own professionals before implementing any of these ideas.
Mark Ryan is a financial advisor in Prince George with RBC Wealth Management, Dominion Securities (member CIPF) and can be reached at [email protected].
