Posts Tagged ‘Finance’

Tax, Tax, and More Tax

Thursday, January 15th, 2009

You had a $10 bill in the wallet and joyfully walked into a store and grabbed a $10 item. Little did you know that the total bill came out to be more than expected, $11.30! 13% more than the figure stated on the price tag. Huh? It’s called the HST (harmonized sales tax) in New Brunswick. Along with Nova Scotia, Newfoundland and Labrador, 13% of HST replaces the GST (goods and services tax) and PST (provincial sales tax). For the rest of the provinces, the federal tax, GST of 5% is applied to majority of the goods for domestic use or consumption. Some items such as basic groceries, prescription drugs and exports are exempted from the GST.

An overview of the PST rates across Canada:

  • British Columbia: 7%
  • Saskatchewan: 5%
  • Manitoba: 7%
  • Ontario: 8%
  • Quebec: 7.5%
  • Prince Edward Island: 10%

HST doesn’t apply in Alberta, Northwest Territories, Nunavut, and Yukon. It should be noted that in all provinces, except Quebec and Prince Edward Island, PST is charged based on the price of item before GST is applied. In other words, GST is calculated on the basis of the sum of selling price of item and PST, in these two provinces. How much more complicated can this get? :P

Does this matter? OF COURSE!! You might not notice much of a difference as a regular consumer, purchasing groceries and basic electronics; but think of this, what if you’re getting a car or a house? It does make a VAST difference, doesn’t it?? A difference in 1% on a $100,000 purchase can save you $1,000, depending in which province you reside. For instance, you’ll be paying $105,000 in Alberta, instead of $113,000 in New Brunswick, on a $100,000 purchase. Hmm… are you getting the big picture now?

Additionally, the variable income tax rate across Canada is an useful piece of information too; especially if you’re considering to relocate to a different province :) In general, Nunavut, Northwest Territories, and Yukon have the lowest tax rates. However, how many people would actually consider living in the freezing world (pardon my expression)? Back to the reality, tax rates in British Columbia and Ontario are considerably lower, and those of Nowfoundland and Labrador, as well as Prince Edward Island don’t look too bad either. Surprisingly, New Brunswick is one of the provinces that has high tax rate for the low income bracket (i.e. annual income below $36,000). Hmm…

Many friends who graduated from the same university as me, have either gone back their home countries for good, or moved to different provinces for better job opportunities. What do you think? Besides the location, living environment, and job prospective, would the tax rates (sales tax and income tax) be one of the many criteria that you’ll look into before making a final decision for relocation?

Is your brain bombarded with tons of information now? Other aspects you may want to consider, of course, is the minimum wage (which I previously commented about) or the average income of your job, as well as the cost of living in the specific province you’re considering. Why? The answer is simple and straightforward. If you don’t make enough to cover your expenses or unable to purchase a home after 5 to 10 years of work, then you should really pause and think: is the standard of life satisfactory? Am I really enjoying what I’m doing and will have a bright future?

I admired those who have made up their minds to relocate for better opportunities in life.  To my friends who are residing outside of N.B., wishing you all the very best in your future endeavours!

Tipping Culture Around the World

Thursday, January 15th, 2009

What’s tipping all about? In most Asian countries, Malaysia for example, tipping is optional and generally practiced only when you’re in an upscale environment. For instance, dining in a posh restaurant or staying in a five-star hotel. Having said that, gratuity (or known as service charge) is usually added to the bill at air-conditioned restaurants and hotels, of course. Hence, it’s quite clear that tipping is required; and in this case, it’s mandatory ;)

It’s interesting to examine the different tipping culture, in various countries around the world. Some countries, such as Japan and Australia, not only tipping is uncommon, it’s considered rude and insulting too. In Japan, tipping is implying that servers must be paid extra to ensure they perform their duty; whereas in Australia, tipping the gaming staff in a casino is thought as bribery. Likewise, tipping government servants in most countries is a crime and therefore, is prohibited.

What about in Canada? I didn’t experience much culture shock when I first arrived here. Nevertheless, the tipping etiquette was something new to me. So, what now? I knew I had to tip, but how to tip and how much to tip? It’s inappropriate not to tip your service providers. In restaurants, tips can be given directly to the server, by leaving it on the table, or even have it added to your final bill ( most restaurants have the “tip amount” option available on bill when paying with a credit card). Sounds convenient? Err… what about the tip amount? The general rule of thumb is to leave 10-15% of the pre-tax bill as tips. In most case:

  • 10%  means below average service
  • 15%  means average service
  • 20% or more means exceptional service

For a large group event, usually 6 to 8 people or more, gratuity (about 10-20%) is automatically added on the bill.

Tipping is a social custom with no set rules. It’s a measure on the satisfaction on the service you received. What are the tips for, you may wonder. Service providers, such as waiters and waitresses are usually paid minimum wage or slightly above that. They are dependent on the amount of tips received to generate a handsome paycheck. Therefore, tipping to them is a token of appreciation, and even a motivation to provide better service to his/her patrons. However, keeping in mind that tips to them are taxable since they’re treated as income. There’s no way to get around with paying tax, is there? :P

The Latte Factor

Sunday, October 26th, 2008

“A latte spurned is a fortune earned”

~ People Magazine
What’s a latte factor?! I first came across with this term while reading “The Automatic Millionaire” by David Bach. Every one’s latte factor varies, it can be lotto ticket, Starbucks coffee, cigarettes etc. It’s something than we invest in, on a regular basis; and yet, we don’t realize the large amount we end up putting into it. Why?? It simply because we feel like it’s costing nearly nothing when we spend on the purchase!

Lotto tickets? $8 a week. A cup of Starbucks latte? Oh well, it’s only $5 a day. But do the math:

Lotto ticket
One week: $8
One month: $32
One year: $416
Ten years: $4,160!
One week: $35
One month: $140
One year: $1,820
Ten years: $18,200!

It turns out to be a staggering number! Let’s save up this amount and see what happens…
Assuming 3% interest per annum, compounded monthly over 10 years. Using the monthly compound interest formula, you’ll end up with a value of more than $700 (lotto ticket) and $3,000 (coffee) from the interest alone! Well, perhaps you’re not convinced… you question about inflation: what’s the point of saving up? At the end of the day, it may not mean much after all…. And I don’t mean to boycott the Lotto 6/49 or Starbucks, the message I’m trying to get across is to identify your latte factor and realize how much you can do by avoiding it!
Think about this: the above example is merely a 3% interest p.a., if you invest that amount in something that has a higher return rate, i.e. mutual funds, stock market etc., you’re looking at a return of double or even triple of the above figures. Please bear in mind that lotto ticket or coffee is just an insignificant expenditure in our daily life. Imagine how big an impact would be when you sum up all your latte factors over the years… It’s a stunning figure, I can assure you!
Then you may ask: why are we making life so difficult by saving up? Shouldn’t we enjoy life while we can? Well, it’s important to enjoy life, but do it in a responsible way and sensible manner. Do you know that 18,000 children die everyday because of hunger and malnutrition and 850 million of people go to bed every night with empty stomachs (Statistics from the United Nations, 2007)? We could have used that money to benefit others and spread the love of God!
To be rich, it’s not about how much you earn; but how much you save and how much you’re willing to give. I always admire those who live a joyful and contented live. They may not have the best thing in the world and a lavish lifestyle, but they’re able to savour the goodness of life by avoiding the spendthrift attitude. It’s never too early to start saving for old age, or any financial crisis down the road. Better still, if we can share it with people who are in need.
Money is not the root of all evil, but the love of money is.

“For the love of money is root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.”

~ 1 Timothy 6:10 (NIV)
It’s never easy to cultivate a desciplined life, especially when it involves finance. It’s just like teaching a newborn child, it requires lots of efforts and patience. Once the child is disciplined, the temperament is going to stay for good for the rest of his/her days. Likewise, we shall make an impact on our future and change the world, as the calling is within us, if you ever pay attention to the small voice deep down the soul…