Frequently Asked Questions:

Income Tax:

Your price is so low. What's the catch?
I had 3 jobs last year. Do you charge more just because I have three T4 slips?
Do you offer instant refunds?
What is a Notice of Assessment?
How do I repay my Home Buyers Plan (HBP)?
What if I get audited?
Disability Tax Credit, Form T2201, What is it, do I qualify and how do I apply for it?

Financial Planning & Investing:

My mutual funds are "no load funds". They don't charge a fee, right?
I have a brokerage account. I don't pay any fees. How can this be?
Should I invest my money in mutual funds?
What exactly is a "fee-only" financial planner?
What is a ladder strategy?
How safe will my investments be at Horseshoe Tax?
How do I move my investments to another account?

 


Your price is so low. What's the catch?
No catch! We offer good old fashioned value at a fair and reasonable price. Because we are a privately owned local company, we are able to keep our costs down and pass some of the savings on to our customers. Our prices are often lower than the base rates charged by our competitors.

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I had three jobs last year. Do you charge more just because I have three T4 slips?
No, unlike our competitors, we do not charge extra for every single slip. If you have many slips, you should definitely call us for a quote.

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Do you offer instant refunds?
No, effective March 1, 2011, we no longer offer immediate discounted tax refunds. We have done so in the best interest of our clients. Did you know that if you specify direct deposit, you'll likely receive your refund from CRA in about 5 to 7 business days? On a $500 refund, you'll save yourself about $20 for the short wait. If you do the math, you'll see that getting an instant refund is like taking out a short term loan with an astronomical annual interest rate of over 200%! That just doesn't make sense!

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What is a Notice of Assessment?
Your Notice of Assessment is a form that the Canada Revenue Agency (CRA) sends you after processing your return. It has a summary of amounts on your return and informs you of any corrections that CRA has made. It will also list your RRSP deduction limit for the current year. If you have a Home Buyers Plan (HBP), it will list how much you need to pay back to your RRSP for the current year.

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How do I repay my Home Buyers Plan (HBP)?
You have to start repaying your HBP the second year after the year of withdrawal. Just check your notice of assessment for the amount that needs to be repaid. You make the repayment by making a contribution to your RRSP as you normally would. When you come in to file your taxes, be sure to let us know that the contribution is a repayment to an HBP, so that it can be entered on the correct line on your tax return.

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What if I get audited?
In most cases our office receives the audit letter but there have been cases where the letter is sent to the client only! Contact our office as soon as possible and speak to a Tax Associate. We will assist you with your audit. Most audits are quickly dealt with and only require a few receipts/slips to be sent to Revenue Canada. In some cases there is a lot more involved and charges may apply. Your Tax Associate will go over everything in detail with you. We will be there every step of the way. Audit generally have a 30 deadline! 

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Disability Tax Credit, Form T2201, What is it, do I qualify and how do I apply for it?
The Disability Tax Credit is a very complex issue. Come in and speak to one of our Tax Associates and let us uncomplicate it for you. We can help you apply for the credit and help you amend your previous returns (if applicable). Free consultation! 

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My mutual funds are "no load funds". They don't charge a fee, right?
Even though you don't pay a fee to buy or sell no load funds, they still charge a management fee of about 2% each and every year. The fee is paid out of the fund before they calculate the unit price. Because the mutual fund companies have been smart enough to embed the management fees into the unit price, many people aren't even aware of the fees that they are paying. After all, they never actually send you a bill.

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I have a brokerage account. I don't pay any fees. How can this be?
Your broker is making money from your account by charging you full service commissions for every trade in your account. Some of our clients were paying around $200 per trade (thousands of dollars per year). Compare that to the less than $10 commission in the discount brokerage accounts that we recommend. The lower commissions allows for smaller trade amounts to be done economically. You don't require millions of dollars to create a diversified investment portfolio.

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Should I invest my money in mutual funds?
Mutual funds can be a good choice if your investment portfolio is relatively small. It will provide a diversified investment with professional management. On the other hand, they often get returns that are less than the stock market index due to the average 2% annual management fee (MER) they charge. So once your portfolio reaches a sufficient size, we recommend investing directly in a selection of stocks and bonds similar to what your mutual funds were invested in. This basically eliminates the middleman.

If you decide to hold mutual funds in a non-registered account, be aware that you may receive taxable capital gains distributions even if you don't sell any of your units. You may want to avoid buying mutual funds near the end of the year when distributions are normally made.

Consider holding your mutual funds in a direct investing account where you can purchase mutual funds that have a much lower MER. This will also allow you to avoid mutual funds that charge a deferred sales charge (DSC) should you decide you want to sell them.

Also, check what portion of your mutual fund is sitting in cash. You are still paying that 2% management fee on that portion of your investment even though it's just sitting there.

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What exactly is a "fee-only" financial planner?
The majority of financial planners get most of their income in the form of commissions for selling you mutual funds. However, a small group of planners have opted for the "fee-only" payment model, in which they get 100% of their income from their clients, and no money from mutual fund companies.
The main benefit of hiring a fee-only planner is that you know your planner won't have any conflicts of interest. For instance, your planner would have no reason to recommend life insurance if you didn't need it, since he or she wouldn't get a commission for selling it to you. It's also easier to keep track of what you're paying your planner.
Most of our clients were shocked when they found out the amount of money they were paying their old financial planners in fees that were embedded within the mutual funds that they were sold. We are saving many of our clients thousands of dollars per year in fees.

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What is a ladder strategy?
A ladder strategy is often used when investing in GICs. The goal is to stagger maturities so that  20% of your total investment matures each year. As each GIC matures, you reinvest for a five year term, which will usually be the highest interest rate available at the time. You will always have a GIC that matures each year just in case you need to use the money for something else. You will also minimize the effects of interest rate fluctuations on your investment portfolio.

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How safe will my investments be at Horseshoe Tax?
Horseshoe Tax does not provide investment accounts. We encourage you to open a discount brokerage account (available at many major financial institutions). These accounts are very versatile and have very low fees and commissions.

Also, the financial institutions offering the discount brokerage accounts are members of the Canadian Investor Protection Fund (CIPF) which provides coverage of your cash and securities up to a total of $1,000,000 for all your accounts. This coverage does not protect changes in the value of your investments due to market fluctuations. For more information on CIPF, visit www.cipf.ca.

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How do I move my investments to another account?
In general you would open the new account and have that financial institution move your investments from your old account. How easy it is to do this depends on what your investments currently are. You may need to wait for GIC's to mature before you can move them. Many companies charge a huge fee (DSC: deferred sales charge) if you haven't held their mutual funds for at least six years. Please come in and talk to us first so that we can help you come up with a plan. The transition could take some time to complete. But it will be worth doing.

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Page last updated 13 Jun 2014