How to deposit US cash into Tangerine’s USD Savings Account?

This can only be done indirectly as far as I know.  I opened an RBC U.S. High Interest eSavings account and deposited the American dollars into it by visiting an RBC branch (the teller would do this for you)

I already had a USD Savings Account with Tangerine. In the past I had funded this account via cheques that I received. This time I had some leftover USD cash from a vacation and I wanted to deposit that back into Tangerine (and collect some interest until my next vacation). The problem though is that Tangerine does not have physical branches and so I was stuck with the cash. 

I figured that I could transfer the money from the RBC U.S. High Interest eSavings account into the Tangerine’s USD Savings Account. To achieve this you need to add the RBC U.S. High Interest eSavings account as an external account in Tangerine. This is the link where you can do that: https://www.tangerine.ca/app/#/settings/external-accounts (you will need to log in with your credentials)

As part of the process Tangerine would make two small deposits into the RBC U.S. High Interest eSavings account and you’ll need to type those numbers into the linked-to-be external account in Tangerine. Be careful to enter the right numbers (do not make a typo) and a second later you would have added/linked the RBC account as an external account in Tangerine.

After this simply “Move Money” from the RBC U.S. High Interest eSavings account into the Tangerine’s USD Savings Account. It should take a few days for the money to be transferred from one institution to the other.

I know this works, because I did it myself a week ago. 

Why did I bother? Well the RBC U.S. High Interest eSavings account has an interest rate of 0.25% while the Tangerine’s USD Savings Account offers at this time 0.80%. Also, Tangerine offers US Dollar Guaranteed Investment (US$ GIC) that I wanted to use. I actually locked the cash for 6 months at an interest rate of 1.75%. I know I won’t need this cash for at least another 6 months; so that’s why I picked the 6 month term. Not sure why Tangerine does not publicly posts the rates of the US$ GICs under one year; but Tangerine offers those as well. 

They had as of today:
  • 90 days US$ GIC   – 1.00%
  • 180 days US$ GIC – 1.75%
  • 270 days US$ GIC – 2.00%
All other terms and interests rates can be found here: https://www.tangerine.ca/en/rates/index.html

If you do not have a Tangerine account and want to open one please consider using my Orange Key: 40030923S1. We could both be rewarded with some signing bonus cash if you do that. Click here to start the process of opening a Tangerine account.

Historical Yield Spread between the Government of Canada 10-Year Bond and the Government of Canada 2-Year Bond

The chart below represents the historical yield spread between the Government of Canada 10-Year Bond and the Government of Canada 2-Year Bond. I constructed the chart using the data freely available at the Bank Of Canada website and used Google Sheets to put it together.

This is an interactive chart: you can hover your mouse over the line to get the values of the yield spread on a given date. For a more detailed version of the chart CLICK HERE.

The Y-Axis is the  yield spread between the Government of Canada 10-Year Bond and the Government of Canada 2-Year Bond in percentage points. 

The Y-Axis represents time; each data point being a month.

Please, let me know in the comments section if you find this to be useful and I will keep updating the chart as time passes.

Personal Cloud Storage in Canada

I recently started using Sync.com [1] as my personal cloud storage. I decided to avoid the big names mainly because they can scan and read your files. Sync encrypts your files locally prior to the upload to the cloud; all the while your private encryption keys remain only accessible to you: the user. You can read more details in their privacy whitepaper.

Sync servers are located in Canada and as such Canadian privacy compliance is built-in (in addition to that of the United States, the European Union and the United Kingdom).

I signed up for the trial version which provides 5GB of free storage with the purpose of evaluating the PC and iPhone apps. Shortly after, I bought the cheapest personal plan that provides 500GB of storage for $49 CAD (plus tax) per year.  For more pricing alternatives read this

For the last two days I have been uploading the files; so far so good. I blame my ISP for the slow upload!

It is early to tell; but so far I don’t have any complaints. Plus I still have 30 days and I can get my money back if get any nasty surprises.

Should you decide to give it a try, I’d appreciate if you use my referral link [1]. Both you and I will get an extra GB of storage after a successful referral. 

Finally, I’ll update this post after my 30-days-money-back-period is expired. I will let you know whether I decided to keep using Sync or if I bailed.

[1] Yanniel's Sync Referral link: https://www.sync.com/?_sync_refer=11e8cf2e0

Filing previous years income tax returns in Canada (2016 and beyond)

By law you are only required to file income taxes in Canada if you owe money to the tax man. Nonetheless, even if you are in the clear with the CRA, it might make sense to file a return, because in some cases you can get a refund or credit while doing so.

If you realize that you need to file back a return, simply find a tax filing software for the corresponding tax year and proceed with the filing.

I have used TurboTax for the last 3 years and I can vouch for the simplicity and quality of this software. You can either use the online version or the desktop version. I don’t like the idea of having my tax information stored in a website; which is why I prefer the desktop version.

You can get TurboTax from Amazon or directly from the provider.

If you are in a situation in which you do owe money to the government because you failed to file a prior tax return, then you should consider getting some legal tax advice in order to sort this out with the CRA.

If you think this article might be helpful to others, please share it by clicking the Google Plus (G+) button at the beginning of this post.

How to Request to Reduce Tax Deductions at Source?

There is a withholding tax applied to each paycheck of salaried employees in Canada. By law your employer or payer is required to withhold a portion of your pay and send it directly to the government. The idea is that you will be paying off your income tax liabilities throughout the year and that upon income tax filling time you would owe zero tax dollars to the government. 

There are situations however in which it might be the government the one owing you money. A very common example of this is when people contribute to their own RRSPs with after tax dollars. RRSP contributions are tax deductible which means they don’t count for the purpose of calculating your income tax liabilities. In a case like this you would have paid too much tax to the government and once your income tax return is assessed; you should receive a cheque paying you back the excess tax.
 
Most people are quite happy with this arrangement, but it is not financially wise. Why would you wait the whole year to get your money back? It is actually better not to have paid the excess tax at all. If you pay more tax than you should, you are actually giving the government an interest free loan. 

Why do you think the government withholds the tax to begin with? Well, because they can put that money to “work” immediately. You can do the same: you can choose not to overpay in taxes throughout out the year. By doing this your cash flow will increase as if you would have gotten a raise (really, your paycheck almost magically increases).

You might be wondering at this point how you can prevent your employer (payer) from withholding taxes from your income. Well, you cannot just “tell” your employer to stop sending Ottawa the tax, because the law requires this tax to be withheld.  

You can Request to Reduce Tax Deductions at Source. To do this, you need to fill form T1213 and mail it by postal mail to the Canada Revenue Agency (CRA). The CRA has the authority to tell your employer to withhold less tax from your salary. 

So, upon receiving your filled form T1213 (and other supporting documents), the CRA will issue a Letter of Authority that you can pass along to your employer effectively reducing the amount of income tax deducted from your remuneration.

The CRA can also decline to issue the Letter of Authority if it determines not enough tax will be withheld to cover your tax liabilities for the tax year or if there’s something wrong with the documentation mailed to them. In this case, you will still get a letter explaining your request was denied.

I went through this process myself and I got the Letter of Authority with no issues. The process of filling the form T1213 is different for everybody, but as an example I will quickly describe what I did in my case.

First some context:

 
I am a full time salaried employee and my employer withholds some tax from my pay. 

On top of that, I make some extra money from this blog. No tax is withheld from the income produced by the blog because it does not come from an employer. 

In addition to this, I set up a Pre authorized deposit (PAD) agreement with Questrade to fund my RRSP. The PAD was arranged in such a way that a fix amount of money is taken from my bank account on the same day I receive my paycheck and used to fund my RRSP at Questrade. 

Let’s make some numbers up to illustrate the above. Let’s imagine the PAD takes $300 biweekly from my bank account and contributes that amount to my Questrade RRSP.  The year has 52 weeks which means a total $7,800.00 (52 x $300 /2) will be contributed to my Questrade RRSP via the PAD. Finally let’s imagine I make $2,800.00 from my blog.

Start by filling the Identification section: provide your First Name, Last Name, Social Insurance Number, Address, City, Province or Territory, Postal Code, Residence and Business Telephone (Business Telephone if applicable).

Then proceed to the Employer/Payer section and type in your employer’s Name, Contact person and Telephone and fax numbers (I left the fax number empty since I don’t think my company has one). I think it is wise to provide a Contact person in the Payroll or HR department of the company. It is also wise to let this person know about your intention to use him/her as Contact person for this application.

Then move to the section Request to reduce tax on. In this section I just checked the Salary checkbox.  I am not familiar with the other option: Lump Sum, but I did not care since it does not apply to me. If the Lump Sum option applies to you and you want to share your insights about it, please drop us a line in the comments section below.

Next you move to the Deductions from income and non-refundable tax credits section. Using the numbers from our example, you will enter:
  • Registered retirement savings plan (RRSP) contributions (Line 1): $7,800.00
  • Total amounts to be deducted from income (Line 12): $7,800.00
  • Subtract income not under tax deductions at source (interest, net rental or self-employed income) (Line 13): $2,800.00
  • Net amount requested for tax waiver (Line 14): $5,000.00
There are other deductions and non-refundable tax credits that you can use to reduce your withholding tax at the source. Those are listed from line 2 to 11. Leave empty all the lines that do not apply to you. 

Line 12 is calculated by adding of all the numbers you have entered from line 1 to 11. In this particular example, I only filled Line 1; which is why the value of Line 12 matches the value of Line 1

Line 14 is calculated by subtracting the values in Lines 12 and 13.

Finally move to the Certification section and proceed to sign and date the form.

I mailed this application to the address specified at the end of the form T1213. Depending on where you live, the address will be different. Check the table at the end of the form T1213 to find out which address you need to send the application to.

My application included:
  1. My filled and signed form T121.
  2. My Pre authorized deposit (PAD) agreement with Questrade.
  3. A letter of my own explaining that the number I entered in Line 13 was just an “estimate”. (See the To Whom It May Concern letter at the end of the post). As you can imagine, I could not say exactly how much money I would make by blogging; so I just estimated the amount to enter in Line 13 to the best of my ability and I let the CRA know this was just an estimate.
I sent the whole application to the CRA on September 30th, 2017 and I got the Letter of Authority in the middle of November. You want to send the application well before the end of the year so that you give enough time to the CRA to assess you request and issue the Letter of Authority.

The Letter of Authority actually states that should you want to renew this application, a new form T1213 should be submitted each year by November 1st, thus giving enough time for the CRA to reply back.

If you have some questions drop me a line in the comments section and I’ll do my best to answer. You should not consider this to be legal advice of any kind. Should you use the information given in this post, you do so at your own risk.

If you think this article might be useful to others; share it by clinking the Google Plus (G+) button at the beginning of the post.

To Whom It May Concern:

September 30th, 2017

Dear Sir/Madam, 

I attached CRA Form T1213  (Request to reduce tax deductions at the source for year 2018). I also enclosed separate sheets containing further information about my employer’s contact person and a copy of the payment arrangement contract (RRSP pre-authorized deposit via Questrade).

Note that the value entered in row 13 ($2800.00CAD) of T1213 is an estimate done to the best of my ability. This portion of my income is variable (not fixed) and it is not subject to tax deductions at the source.

Sincerely,
--------------------------------
Yanniel Alvarez Alfonso