Newsletter April 2020-2

April news:

1. Prime Rate remained unchanged in April. What is happening with mortgage interest?
2. Could you deduct expenses for 2020 if you are working from home during the pandemic?
3. 2.6% savings account.
4. As of April 20th, “Sun Life” insurance company has increased premiums on life and health insurance coverage.
5. Celebrating May 9th in 2020 will likely be postponed to September 2020.
6. Tele-marathon – congratulating veterans with May 9th all day. Looking for volunteers…
7. May 9th at noon, there will be an all Canada broadcast of celebration of Victory and of Immortal Regiment in online format.

Now in little more details:

1. Prime Rate remained unchanged in April. What is happening with mortgage interest?

Many are aware that the Prime Rate remained unchanged in April, as was predicted by experts. In the future, which can actually be a fairly prolonged period of time, changes to bank’s lending rate and as a result changes to Prime Rate are not foreseen.
As I already reminded, in March, banks have collectively modified the formula for calculating variable rates, switching from minus to plus. But I would like to bring some positive news, we are seeing some progress and there are more offers with discount to Prime Rate for variable rates.
Fixed rate has also decreased a little in comparison to the beginning of April.

2. Could you deduct expenses for 2020 if you are working from home during pandemic?

Financial Post, April 25th, featured an article titled “Could you deduct expenses if you’re forced to work from home in the pandemic?”
It has been almost two months since millions of people have been working from home and many have been asking the question, would they be able to deduct expenses that were a result of having to work from home.
Some employees received a “Technology Allowance” or a financial assistance to upgrade their home computer and are also wondering, will this assistance received from the employer have to be shown as an income for the year of 2020.
Expenses associated with performing your professional work from home.
In order for an employee (full-time) to deduct expenses, the employer has to fill out a T2200 form. Your place of work, if you are working from home as per request of your employer, has to have sufficient equipment and you have to spend there more than 50% of your time or meeting with clients (does not apply at the moment for obvious reasons). Many are asking a question, can a video-conference be qualified as meeting with a client?
Canada Revenue Agency (CRA) has not yet responded to that question, as well as the second question – 50% of what specific work time frame, annual or monthly. It is understandable why there haven’t been much clarification, this is not a standard situation and in the future, you should refer to those filing your taxes.
But even if you are able to deduct expenses, what will be considered appropriate in the eyes of CRA?
Electricity, heat, home maintenance – allowed.
Interest on mortgage, property tax, home insurance, capital expenses, depreciation (capital cost allowance) – not allowed.
Capital expenses can also include buying a bigger monitor and a new amazing desk chair for work, so not everything is deductible.
Some employers offer an allowance “Technology Allowance” or a compensation to improve computer system at home in a form of reimbursement.
In normal situation allowances and compensations are considered taxable benefits, but with the pandemic CRA is prepared to interpret expenses up to $500 as a benefit to the employer, and as a result will not be taxable to the employee.
For now, there are still uncertainties with the taxing, it is better to keep all the receipts and consult your accountant when you are filing your taxes for the year 2020.

3. 2.6% savings account.

Opening of the long-awaited savings account has again been postponed temporarily, but today there are other, very attractive, alternatives.
At the time the Central Banks reduces rates on lending and Prime is down to 1.5%, all banks, large and small, also reduced interest paid in the savings accounts.
Rates on savings accounts today are around 0.05% to 0.3%.
At the same time, banks have started to offer very attractive interest income for a few months for new clients (promotional rates). Unfortunately, existing accounts with these banks will not qualify for these rates.
Manulife Bank is also joining with a very interesting offer: for the next 5 months, the bank is offering an interest of 2.6% on all new accounts opened prior to May 22nd, 2020.
You can open a new savings account with Manulife Bank and obtain the promotional rate of 2.6% for the next 5 months from the opening by filling out a request at the following link: https://client.manulifebank.com/edo/#/productCatalogue/BANK_ID=MNL&LANG_ID=001&PROMO_ID=AMay260&REF_ID=82609.
Of course the interest will then be reduced to the standard 0.3% but I am certain that we would be able to find other attractive offers in the future at the end of current promotion. No minimal deposits in order to open the account but there is a maximum, which is $250,000 and there can only be one account per person.
Most importantly, everything we offer requires no expenses and all transactions, even future transfers to another bank, will be free for you.

4. As of April 20th, “Sun Life” insurance company has increased premiums on Life and Critical Illness insurance coverage.

“Sun Life raises select premiums” – this article was published in “Financial Post” on April 21st, 2020.
The article says that as of April 20th, Sun Life will increase premiums on some insurance products (Life Insurance and Critical Illness Insurance) up to 27% in order to ease its financial situation as a result of low rates after year 2001 and more so 2008 (right now we are also likely to end up in a similar situation)
It mentions that the increase is not related to COVID-19.
The increased premiums are on Universal Life by a minimum of 5% (on average 23% depending on age) and 7% on Whole Life (up to 27%).
Manulife has not yet reacted to the questions of increasing premiums on insurance products.
Great-West Life has not increased prices now but has already done so on Universal Life in February of this year, again due to low interest environment for a prolonged period of time.
The increase will likely come to all insurance companies. As usual, when we receive news like this we try to hurry up and lock in at the current, lower price.
We are able to process contracts for you with various companies so we are always able to offer you the best solution in today’s market.
The most important thing is to pick a plan that will be most suitable for your current situation. For this, we are always able to organize a phone consultation during which we can discuss different options and pick a program that will be of most interest for you.
Today, all of this can be done without coming to our office: we use the program called ZOOM, which allows me to show you everything that happens on my screen, applications are sent to you via e-mail. In majority of cases you do not need to meet with the nurse, this is no longer a requirement by the insurance companies.
Call us and let’s set up a consultation appointment over the phone.

5. Celebrating May 9th in 2020 will likely be postponed to September 2020.

With strong disappointment, due to Corona Virus, all mass celebrations have been cancelled and Victory Day is no exception. It is not yet certain, but it is possible, if the situation permits, the celebrations of the 75th anniversary of the Victory Day will be postponed to the beginning of September of this year, for the time of 75th anniversary of the end of Second World War. We will let you know in advance, for now please see below what events will be organized on May 9th, 2020.

6. Tele-marathon – congratulating veterans with May 9th all day. Looking for volunteers…

Volunteers that have been with us for years have managed to come up with a solution in this tough situation. They decided to organize a tele-marathon starting at 9 a.m. and until 9 p.m. on May 9th of 2020 in recognition of the 75th anniversary of fall of Nazi.

The idea for this tele-marathon is simple – call and congratulate all veterans with this important day. During the call, each volunteer will offer our war veterans to sing a celebratory song, as a small gift, play a guitar, piano or accordion or read a poem with the Victory Day theme.

We are looking for volunteers for this project! No age limit, most importantly – desire and ability to sing, tell a poem or being able to play an instrument. We ask anybody that is interested to contact Andrei through https://www.victoryday.ca. You have to message him or call using information provided in the “Events” section, “Tele-marathon of Victory “Call a Veteran”.
Let’s all together give our veterans an amazing day, filled with warm wishes and care!

7. May 9th at noon, there will be an all Canada broadcast of celebration of Victory and of Immortal Regiment in online format.

The broadcast will be simultaneously live on the youtube channel and a facebook page. All information on the broadcast and participation can be found on the https://www.victoryday.ca website under the “events” section, “Immortal Regiment of Canada Online”.
The broadcast will consists of several segments.
Minute of silence. Followed by a speech from the Ambassador of the Russian Federation, Alexander N. Darchiev, veterans of the Great Patriotic War from various cities in Canada, organizers of the Immortal Regiment from various cities in Canada. The program includes concerts as well as trivia of knowledge of the history of the Great Patriotic War with prizes for correct answers.

The main theme of this Telethon will be the Immortal Regiment of 2020.
Organizers of the Immortal Regiment from all of Canada, especially from Toronto, Ottawa, Montreal, Vancouver, Calgary, Quebec City, Edmonton and Windsor, decided to do this project together.
Through the whole program, there will be a presentation of photos of people that send us pictures with portraits of their heroes and pictures of front veterans.
The pictures can be sent in the next few days to the address available at https://www.victoryday.ca, “Events” section, “Immortal Regiment of Canada Online”.

Happy Victory Day to all of you!
We wish you financial prosperity and good health!!!

Serguei Totrov
Financial Advisor, CFP, CLU, EPC
Mortgage Broker, AMP
416-222-0533
www.totrov.com

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