Currency exchange rates are intrinsically linked to the global economy. That’s why every week at theCurrent we bring you the world’s biggest business stories. This week: new tax rules could affect Canadian snowbirds, Oil exporters meet to address low oil prices, house prices in Canada push buying and renting out of reach for many.
Canadian snowbirds could face a tax shock after new plans were announced to share more information between Canadian and American border services. American and Canadian border agencies will share information to determine how long Canadians are really spending on either side of the border. (Source: http://www.cbc.ca/news/business/taxes/canadian-snowbirds-tax-season-2016-1.3451763)
The 183-Day Rule
Millions of Canadian snowbirds flock south of the border and many are aware of the so called “183-day rule” whereby Canadians (and all foreign visitors to the US) will be taxed by the IRS if they spend 183 days or more per year in the States. However, what many don’t know is just how those days are calculated. Every day spent in the States counts as one day – simple enough. But, every day spent in the US the previous year also counts as ⅓ of a day, and every day spent in the States a year before that counts as ⅙ of a day. So to stay under the “183-day rule”, make sure you don’t spend more than 120 days in the States for 3 consecutive years. 120 days a year (or about 4 months) would add up to 180 days. (Source: http://www.cbc.ca/news/business/taxes/canadian-snowbirds-tax-season-2016-1.3451763)
It isn’t just Snowbirds that have to be worried about the tax man. It is everyone’s favourite time of the year: tax season. Taxes are due April 30th for Canadians, but because it falls on a weekend, last minute filers will have until May 2. Middle class earners will benefit from the Liberal’s new tax cut which drops the rate from 22 to 20.5% for those earning $45,283 to $90,563 while those earning more than $200,000 will have their rate increased from 29% to 33%. (Source: http://www.ctvnews.ca/5things/tax-time-2016-a-look-at-seven-changes-this-year-1.2803706)
Leading oil exporters met in Qatar to discuss the low price of oil. Low oil prices have taken a huge toll on oil producing countries like Canada. Oil producing countries could decide to freeze oil production to raise prices. An oversupply of oil is primarily responsible for falling prices while diminished demand also affected prices to a lesser degree. Oil prices fell as low as $27 a barrel, but have rebounded to nearly $45 a barrel. Despite this slight resurgence, and the beginning of the talks, oil prices may still be in trouble. Talks have stuttered, and do not include Iran – a key oil producer. If talks restart then they could inspire OPEC to agree to cut production, but it remains unlikely. (Source: http://www.bbc.co.uk/news/business-36040711)
House Prices Rise
House prices in Canada rose 15.7% in March, compared to 12 months ago. According to the Canadian Real Estate Association the volume of homes being bought and sold is at an all time high. 45,137 houses were sold in March, up 12.2% from one year ago. The statistics are somewhat misleading however, as house prices outside of Ontario and Vancouver have actually fallen by 1%. (Source: http://business.financialpost.com/personal-finance/mortgages-real-estate/canada-homes-sales-hit-all-time-record-with-prices-soaring-at-fastest-pace-since-2008)
And so Does the Rental Price
According to a Toronto based group – Urbanation – the average rental price for a Condo in Toronto is up approximately 7% compared to this time last year reaching $1,891. Vacancy rates in Toronto area has averaged just 0.5% since 2005, and for the fourth quarter in a row the number of condo lease transactions outnumbered the number of listings. (Source: http://www.urbanation.ca/news/media-releases)
High rent and skyrocketing property prices have pushed millennials to try to jump on the property ladder before they are completely priced out of the market. The average price of a detached home in Toronto is now close to $1.2 million and semi-detached homes around $800,000. Millennials that can’t afford to buy their first property are moving back home in record numbers, and taking home more debt than ever before. (Source: http://www.cbc.ca/news/business/condo-rent-1.3535678)
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