Canadian Banks - The Envy Of The World
Student Loans And Auditing - What To Do
Student files get audited every year. If it happens that your application form is among them, the information you have supplied will be checked for truthfulness and completeness. Penalties apply if your application contains false or inaccurate information. For example, your access to funds may be limited or denied.
You may be required to present some documents. Among them are rent receipts, receipts for tuition and textbooks, and child care receipts. You may have to supply T4 slips, copies of your income tax returns, and bank statements. Other documents include letters from your employer that confirm your income and a separation or divorce agreement. You may have to supply other documents that help verify the information contained in your application.
It is a good idea to create a file and keep the documentation supplied with your application in it. This includes a working copy of it. You may have to present and refer back to these documents if your loan application gets audited. Or you may need to refer to them during the academic year.
What happens if you fail to present the required documentation within the specified timeframe? Your student loan is likely to be revoked, and you will not have access to further financial assistance. It is also an offence to knowingly present false and misleading information. This applies to other documents as well, and you should be aware of the consequences. First, you may be required to pay off your student loans immediately. Criminal prosecution is another likely outcome.
Some three million returns get audited every year, and millions of students receive brown envelopes with a request or demand for information. Now you know the procedures if you get audited, but you should also know what to do to prevent this from happening. What if you have low income and a lavish lifestyle? Many tax payers are unaware that there is a procedure called net worth assessment. Such assessments are conducted by the Canada Revenue Agency if it is suspected that you work illegally and claim low income. If someone knows your income, and you annoy them by mistake, you may have some explaining to do. Then, you are likely to trigger an audit if you claim 90 percent of your car expenses and 80 percent of your home expenses for business use. Regarding these, be reasonable and open a log book. Getting into the cheating habit is a huge mistake. If you were caught submitting false information before, you may be audited more often. Forgotten T slips are another potential problem. If you do not report income from a T slip and fail to do it twice in 2 years, you can face substantial penalties.
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The Canadian banking system has been around for two centuries, and many consider the establishment of the first Canadian bank - the Bank of Montreal (BMO) in 1817 the beginning of the modern banking in Canada. In the next few decades many new financial institutions started doing business in Canada, competing for a share of the Canadian banking market. At the beginning each of those banks issued their own banknotes, which functioned as money, however with changes introduced to the British North America Act in 1866 and inception of the official Canadian currency - the Canadian dollar the bank currencies went out of circulation. Over a century after the inception of the Bank of Montreal, the Bank of Canada was established as the Canadian central bank in 1935.
The large banks are referred to as the 'Big Five': Bank of Montreal, Canadian Imperial Bank of Commerce, Toronto Dominion, Bank of Nova Scotia, and Royal Bank of Canada. Other banks of smaller size represent the second tier banks. At present, Canadian banks boost more than 8000 branches at home and abroad.
The Canadian banking industry is governed by 2 regulators - the Office of the Superintendent of Financial Issues and the Financial Consumer Agency of Canada. Frequent reviews of the Bank Act of Canada, ensure that the banking regulatory system reflects changes in the Canadian banking industry. Despite the fact that the global financial crisis, hasn't affected Canada severely, the government started scrutinizing the banks' capital. If a bank didn't meet the capital requirement, it had to raise more capital. Canada has a well-developed and stable banking system, which is considered to be one of the top in the world.
The Canadian banking system is also regarded as one of the safest banking systems around the world. Unlike other nations, Canadians did not have to bail out their banking institutions. In general, banks seem to be more stable in comparison to US and European banks. For instance, Toronto Dominion Bank was the fifteenth largest bank on the North American continent in 2007. In 2008, the bank became the fifth largest.
The Bank of Nova Scotia continues to expand its operations during the last couple of years. The bank was successful in acquiring the Chilean Banco de Desarollo in 2007 and some additional 20 percent of Scotiabank Peru in 2008. In 2009, Scotiabank completed the acquisition of E*Trade Financial Group and acquired a majority interest in the asset management entity Five Continents Financial Ltd.
Most Canadians are very proud of their banking system and regard it as safe and sound. This level of confidence has contributed greatly to the overall stability of the Canadian financial system and has kept credit flowing.
Various statistics support the fact that the Canadian banking system is solid. Canadian banks are one of the top Canadian employers with over 250,000 Canadians working for them. They also provide financing to well over a million small businesses. Canadian banking system contributed around 3% of Canada's FDP in 2009.
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What Is The Best Bank For Individual And Business Clients
The Canadian retail banking system is among the safest ones worldwide. Over the last three years, it has taken a top position in view of safety. Two of Canada's best-known banks rank in the top 15. Some 8,000 branches operate in Canada, and there is a dense network of ATMs. In addition, banks have increased their global presence after the government banned the merger of large banks.
There are five big Canadian banks - RBC, TD Bank, Bank of Montreal, Scotiabank, and CIBC. The Royal Bank of Canada has close to 100,000 employees and about 17 million clients globally. The bank is headquartered in Toronto and operates through 1,209 branches nationwide. It has two subsidiaries as well. The RBC Capital Markets has specialized in corporate clients while the Dominion Securities works as an investment brokerage firm.
The retail banking segment of the RBC, however, comprises just 22.6 percent of its total revenue. Bank of Nova Scotia is another big bank, offering the full range of investment, corporate, commercial, and retail services. The bank features a variety of financial products, including credit cards, mortgages, electronic banking, Western Union money transfers, and a lot more. With a large variety of services offered, the Bank of Nova Scotia takes pride in being one of the biggest banks on the North American continent. Savings and checking accounts are among the most popular products when it comes to retail banking. A lot of customers also use banks and other financial institutions for services like insurance, investment products, credit cards, and more.
A recent study shows that a lot of clients also use banks for borrowing, investment and insurance via an affiliated establishment. Some 76 percent of Top 5 bank clients have a loan at the bank where they also have a checking or savings account, 20 percent have some sort of an insurance product, and another 40 percent dispose of investment products. Regarding the middle market, about 70 percent of customers have both a deposit and a loan with a bank. In addition, 16 percent of clients have insurance products and 27 percent of them have investment products. Most banks aim to develop their relationships with customers through retail banking and eventually enhance them to include further bank services, thus giving clients an incentive to move all their financial assets and holdings to the bank in question. This is not difficult to achieve given the high level of safety and security offered by the bank sector in Canada.
Banks feature reliable products and innovative services, including electronic statements and no-fee banking, helping them enlarge their client base. According to the abovementioned study, Toronto Dominion has received the highest marks when it comes to satisfaction. Several factors have been used to measure client satisfaction, including fees, products, transactions, account setup, and problem resolution. In terms of middle-size retail banks, the highest marks go to President's Choice Financial. Learn more about wire transfer in Canada and how to do a bank draft.
What Is HELOC And What Purchases And Expenses To Do With It
A HELOC works similarly to a credit card, but you should not make withdrawals to cover your daily expenses or buy items like designer clothes, as you will be repaying the money for years after this.
Apply for HELOC - type of line of credit whereby the equity a borrower has in his home serves as a guarantee. Heloc lenders establish the maximum amount that can be withdrawn, and the full amount of the loan is not advanced. This is the difference between a HELOC and a regular loan.
To get a HELOC, you should first be approved for one. Once this is a fact, you should become familiar with two periods - the draw and repayment periods. You can withdraw money any time and up to the limit during the first period. Draw periods last up to 15 years, during which time all you pay is the interest. You are allowed to pay back the amount, in full or in part, and you will not be charged a penalty. At the end of this period you either pay the loan back in full or enter the repayment period. If you are required to pay the loan in full, you may have to refinance your home. If there is no such requirement, you will be paying back the interest and the principal. The interest you pay will be computed on a daily basis. Lenders use adjustable interest rate.
With that in mind, you must be aware that HELOCs are risky. It is the interest rate fluctuations that carry the greatest risk, and they affect mortgage payments. Moreover, there is always an annual fee on a HELOC even if you have not borrowed anything on the credit line.
Get a line of credit for home and use it for consolidating high-interest credit card debt, making home improvements, paying tuition and medical bills and emergencies. If you have racked up debt on a lot of high-interest credit cards, it would be a good idea to move the debt into a HELOC because of the low rate, thus lowering your monthly payment and the total amount you pay over time.
Homeowners with equity in their homes that is sufficient to pay back their mortgage can use a HELOC to this purpose. This is a good option for some homeowners compared to refinancing because credit lines do not usually go with closing costs. In order to qualify for a HELOC and use it to pay back your mortgage, you should have a decent credit score. Some persons also use home equity lines of credit for down payment when planning to purchase a new property. To be able to do this, you need to have a considerable amount of equity in your house.
The value of your home will increase if you make improvements and repairs and charge these to the line of credit. These are limited to basic repairs and are determined by your location and the real estate market, and do not include luxurious items such as a Jacuzzi.
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Choosing Between Open And Fully Closed Mortgage
Mortgage lenders in Canada offer different types of mortgages, from open mortgages with predetermined notice or penalty and such with no penalty to partially open mortgages and fully closed mortgages. When you look into different mortgages, it is important to inquire whether the entire principal or a portion of it can be paid back before the mortgage term. This consideration is important as it reduces the cost of borrowing, by saving money in interest charges. The latter would have been paid over a longer period, which is shortened by repaying quicker.
A fully open mortgage with no penalty allows borrowers to pay back the principal or a portion of it at any time. No penalty is incurred for this. You can prepay a mortgage with a predetermined penalty but obviously, a prepayment penalty applies. It is specified at the time of taking out the mortgage loan. Then there is the partial variety, which is not fully open, allowing the borrower to return a fixed percentage to the financial institution. This amount may be between 10 and 20 percent, and varies from lender to lender. Partially open mortgages are offered with a predetermined penalty or no penalty. The fully closed mortgage is yet another type, and lenders offer no prepayment privileges with it.
Despite the limitations of closed mortgages, there are certain advantages. For example, this is the case if the borrower does not intend to prepay the mortgage, refinance it during the loan's term, or sell the property. Borrowers are offered a lower initial interest rate compared to fully open mortgages. Thus, those who do not plan to prepay the mortgage over its term may want to choose a closed mortgage rather than pay a higher rate of interest going with other mortgage types.
In addition to this, many mortgages of this variety are offered with a fixed interest rate. If the interest rates are low upon issuing the mortgage, this would be the rate paid over the mortgage term. Borrowers are thus protected against increasing interest rates.
There are some downsides to fully closed mortgages. If you expect money coming before the mortgage term, an open mortgage, partially open mortgage, or line of credit may be a good choice. For example, you may intend to sell a vehicle or vacation property, or you may get an inheritance or gift from a family member. If the funds you expect are sufficient to prepay a portion of your mortgage or the full amount, it makes sense to opt for an open mortgage. This way, you repay quicker and save on interest.
Other mortgage types include convertible mortgages in Toronto area, mutant or hybrid mortgages mortgages for investment and recreational properties, and variable rate mortgages. There are mortgages for persons with impaired credit as well. These are intended for clients who have defaulted on their loans or are otherwise not considered creditworthy by financial institutions. This mortgage makes it possible to rebuild credit, consolidate debts, and save on interest charges.
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Do You Qualify For Tax Debt Relief
At present, tax debt falls under the regulations of the CRA, and the agency has more authority compared to other creditors. Measures the Canada Revenue Agency can take include placing a lien on one's house, seizing money in investment and savings accounts, and more. Different factors affect tax debt, such as pensions of the newly retired, improper deductions, cashing a RRSP, working multiple jobs, and others.
Persons who look for information on applying for debt consolidation in Toronto often wonder if this is really possible - can you make a deal for any taxes owed? In certain cases, you can negotiate with them. Borrowers who owe taxed but are unable to pay the full amount may want to discuss the terms of payment. As a first step, you should visit an office of the CRA and explain your financial situation. Propose a payment plan which may include breaking down a larger amount into several monthly payments. It is up to the CRA to accept or reject your offer, taking further action as to collect the amount you owe them.
Keep in mind that even if the CRA accepts your proposal, you will still be charged interest and penalties until you pay your debt in full. If your offer gets rejected, the CRA may withhold your child tax credits and GST credits until you repay your debt now. In addition, they can garnish your wages and access money in your bank account. So, it is important to treat tax debt seriously.
The CRA does not accept payment plans that propose to pay less than the amount owed. This makes sense. If you are allowed to pay less, then everyone else will want the same deal. One option is a repayment plan where you work with the Canada Revenue Agency and a second option is to consider government programs such as the former CRA Fairness, now Taxpayer relief provisions. Under it, the CRA can waive interest and penalties, accept revoked, amended, and late-filed income tax elections, as well as offer income tax refunds. This can happen beyond the allowed 3-year period, but it is only offered to individuals and testamentary funds.
The Canada Revenue Agency makes this possible because there are cases in which the taxpayers face unforeseen events that prevent them from meeting their tax obligations. Among them are natural disasters like fire and floods, personal misfortunes such as sickness and death, service disruptions, and errors and incorrect information by the CRA.
When would the CRA cancel penalties and interest? This is the case with natural and human-made disasters, for example, flood and fire. Serious accidents and illnesses form another category, including serious mental and emotional distress. Finally, disruptions in services and civil disturbances are a third category. The CRA also cancels penalties and interest when they result from the agency's own actions, such as processing errors as a result of which people are not aware of certain obligations.
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Types Of Secured Loans Banks Offer
Borrowers can choose from 4 different types of secured loans: repossession, foreclosure, non-recourse loans, and mortgage loans. With mortgage loans, financial institutions require that some property serves as collateral. In case of failure to repay the loan, the borrower risks losing the property. There are different types of mortgage loans, including biweekly mortgages, wraparound mortgages, lifetime mortgages, reverse mortgages, participation mortgages, and others. A participation mortgage, for example, is a type of loan extended to multiple investors. A wraparound mortgage represents a type of seller financing, which is secondary financing. Commercial real estate mortgages are secured by commercial real estate, and they usually have different contracts, risks involved, and interest rates than those of personal loans. With a biweekly mortgage, borrowers have to make payments every two weeks. Financial institutions also offer flexible mortgages which allow borrowers to prepay or skip payments. An equity release mortgage or lifetime mortgage is another mortgage type, giving homeowners access to some portion of their home’s equity.
A non-recourse loan is another type of secured loan whereby collateral is offered. The collateral is usually some immovable property or real estate, but borrowers are not personally liable. Stocks, expensive jewelry, and vehicles can be offered as collateral as well. The issuer/ lender can repossess the collateral, but only it is available for claim. A non-recourse loan is usually limited to up to a 60 percent loan-to-value ratio, meaning that the collateral provides overcollateralization. Borrowers looking for a secured loan can use this type of loan to finance projects with uncertain revenue streams, long repayment periods, and high capital expenditures. Non-recourse loans are usually taken out to finance commercial real estate. Foreclosure is another type of secured loan whereby the money lost is recouped by reselling the property. Foreclosures are applicable to properties only. A fourth type of secured loan is repossession, as part of which the lender can seize the property pledged in case of default. A court order may be required depending on the jurisdiction.
These types of secured loans serve two general purposes. First, the financial institution that extends the loan takes less financial risk because it can seize the property if the loan is not properly serviced. Then, the borrower is offered more favorable conditions and interest rate than those available for unsecured loans. Moreover, creditors offer secured loans under circumstances in which unsecured loans would not be offered. The financial institution may offer financing with an attractive repayment period as well. Some borrowers complain that there is a difference between the interest rate offered and the rate advertised. The APR or interest rate advertised by financial institutions is the standard interest rate. The rate of interest offered depends on the credit standing of the borrower, the value of the property pledged, and some other factors. Applicants for a secured loan may be offered a higher rate of interest in case of delay in accepting the bank’s offer. Borrowers cannot demand that financial institutions offer interest rates similar to the rate earlier offered.
The Difference between Unsecured Loans and Subsidized Loans
An unsecured loan is a type of monetary loan, which is not secured against real estate or other assets. Unsecured loans are offered under different marketing packages and can be in the form of bank overdraft, personal loan, line of credit or credit facilities, credit card debt, or corporate bonds. The latter can be unsecured or secured. Unsecured loans come in two varieties –personal loans and unsecured business loans. Financial institutions extend business loans to companies that seek to expand their operations because of a larger client base or an increase in products sold on the market. To get approved for this type of loan, businesses should have a good credit history and a detailed business plan: http://www.canadabanks.net/default.aspx?article=Get+Unsecured+Loan
Note that whether applying for a business or personal loan, the interest rate is often higher than that on mortgage loans and other forms of secured loans. The reason is that the options for recourse against borrowers who default are rather limited. In other words, the loan carries a higher risk for the lender because the debt is uncollectible in the event of insolvency.
The subsidized loan is another type of loan whereby the interest charges are reduced by a hidden or explicit subsidy. With student loans, which are one variety, interest charges are not accrued while students are in college. Other types of subsidized loans are offered with zero interest rate or an artificially low interest rate. Compared to unsecured personal loans, subsidized loans are a cheap form of financing. Subsidized loans, however, are always provided on the basis of financial need, meaning that not everyone qualifies. For a housing loan, for example, there are income and residence requirements. Some loans require that the applicant lives in a certain region or area and earns less than a specified dollar amount.
Financial institutions normally charge interest according to the APR or annual percentage rate. With subsidized loans, interest is paid by the government or another party. Depending on the loan type, it may be a charity, organization, or another group that subsidizes loans. In fact, loans can be subsidized by anyone.
