Save, baby, save
Btchcoin News is entirely run by young women who are passionate about making financial news more accessible to our community. Consider supporting Btchcoin by buying us a coffee, or contributing on a monthly basis.
Canadians are sitting on a BIG pile of cash…
Believe it or not, saving rates have spiked and Canadians are sitting on a large cash balance.
According to Statistics Canada, despite mass job losses, Canadian households successfully saved $100 billion more in 2020 compared to 2019.
What explains this rise in savings? Three things – first, a reduction in spending. Canadians don’t have a lot of places to go right now and that has proven good for the wallet. Second, government sponsored relief payments have misplaced lost earnings and elevated savings. Third, rising housing prices and stock gains have increased Canadians’ net worth.
Yet, as is true with everything in this pandemic, the level of savings is not uniform. Most of the savings have been amassed by wealthier individuals that have successfully retained their jobs. Canadians in the service and entertainment sector, on the other hand, have either not been able to save or save as much.
That said, there is much uncertainty around how households will use this cash.
Bank of Canada’s Deputy Governor Lawrence Schembri commented: “The current level of savings is important because these are large enough to meaningfully affect the trajectory of the economy.” AKA, if Canadians spend a big chunk of these savings, GDP growth will accelerate and inflation will rise. If they continue to restrict spending, recovery will be slow.
Now, to spend or to save? THAT is the question.
A new COVID relief package is coming to America
What better way to commemorate one year of lockdown than with a new pandemic stimulus package?
US President Joe Biden’s $1.9 trillion COVID-19 pandemic relief bill received final approval from the House of Representatives last week. The bill has officially been signed into law and Americans can expect certain measures to be implemented right away.
So, what does this rescue plan promise to do?
The relief package contains a number of measures to support Americans financially, with health care, child care, and housing. Assistance for small businesses and a number of poverty reduction measures hope to reduce inequality as the country, and the world, recovers from the pandemic. The plan includes:
$1,400 stimulus cheques for individuals earning $75,000 or less and $2,800 for families earning $150,000 or less per year. Dependents are also eligible for aid payments.
The child tax credit will increase from $2,000 per child to $3,600 for children under 6 and $3,000 for children under 18. For low-income workers without children, the earned income tax credit will be higher and available to more people.
Pandemic unemployment assistance will be extended at least until the end of August 2021 and increased by $100 per week.
Increased food stamps and other food assistance programs will continue into September.
Nearly $35 billion will be given to states to provide rent and mortgage assistance along with other measures to reduce homelessness.
Over $170 billion will be provided to safely reopen schools from daycares to elementary and secondary schools to colleges.
Grant and loan programs for small businesses as well as an expansion of the Paycheck Protection Program.
Over $100 billion invested in vaccination delivery and research along with further COVID-19 testing and contact tracing.
What does the stimulus package mean for the US economy?
The package is expected to increase US gross domestic product (GDP) by up to 4% in 2021. The stock market immediately saw gains with the Dow Jones finishing 0.6% higher and the S&P 500 1% higher last Thursday after Biden signed the bill into law. The Organisation for Economic Co-operation and Development (OECD) anticipates that the American Rescue Plan will expand the global economy by 1% this year.
Tax Day is April 30th – Here’s what you need to know.
What’s different this year?
T4 Slips – tax slip provided by your employer – There will be an extra box near the end indicating what COVID-19 assistance (if any) you received during 2020
- Look out for a T4A if you received any assistance from the CRA
- Keep an eye out for T4E if you received any assistance from Service Canada (CERB, CESB, EI, etc)
Basic Personal Amount (BPA) – how CRA determines when to start taxing your income
- Increased to $13,229, an increase of over $1,000
- Does not apply to individual in the top two tax brackets
Line 31350 – Digital News Subscription Expenses
- Claim up to $500 for qualifying subscription expenses
- Too bad your subscription to Btchcoin doesn’t qualify!
What’s taxable and what’s not?
Government relief provided due to COVID-19 (CERB, CESB, CRSB, etc) are all treated as taxable income and should be reported on line 13000 as “Other Income”.
- This might mean you owe taxes for the first time
- Individuals with a total taxable income of $75,000 or less who received COVID-19 assistance do not have pay taxes owing for 2020 until April 30, 2022
Not taxable: one-time payments from the Government that do not need to be reported
- GST/HST Credit
- OAS Pension
- GIS Payment
- Payment to Persons with Disabilities
And what we’ve all been waiting for… Work From Home Deductions
- If you WFH for 50% of the time over at least 4 consecutive weeks due to COVID-19 you might be eligible for up to $400 in deductions that will not require receipts or paperwork
- WFH individuals with more significant expenses can use this CRA calculator to assess their work from home deductions
- But heads up: you need Form T2200(S) signed by your employer
- Self-employed? You are probably old hat, but that above calculator might come in handy for those of you who turned a side hustle into a full-time gig (you go!)
Btchcoin‘s Classified Section
Want to post an ad? DM or email us.
Stuff We Read and We Liked:
The headline here says it all “How Facebook got addicted to spreading disinformation”
Vindhya recommends this piece about how Shopify is launching a fund for female and non-binary founders.
“Hell hath no fury like a stationer scorned” – how the bankruptcy of Paper Source impacted (predominantly female) card makers.
Claire recommends this funny, cutting think piece on “How to become an intellectual in Silicon Valley”