Archive for March, 2010

CBC’s Canada’s Worst Cellphone Bill

March 9, 2010

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A recent episode of Marketplace on CBC featured cellphone customers who claimed to have Canada’s worst cellphone bills (you can watch it here). Cellphone customers had racked up thousands of dollars in charges either in air time, texting or, what appears to be fairly common, roaming charges while traveling abroad.

The typical phone horror story also involved a dispute with the phone company: the customer claims she was misinformed in the phone store and the phone company points to the contract, which says something else. The customer is in tears, the phone company sticks to its guns and it makes for great TV. Especially, when Wendy Mesley, the show’s host adds to the debate by saying those rapacious phone companies are charging 15 cents for a text that costs them a third of a cent to provide.

I’ve had my share of complaints with service providers and while I found myself sympathizing with most of the customers, it was hard to say the phone company was entirely at fault (except the lady who was incorrectly charged airtime and the phone company gave her the runaround). The hidden charges may be buried deep in the fine print but it is there and the client signed a contract agreeing to pay and the phone company is within its rights to demand payment.

I was secretly glad that we’ve ditched our pricey monthly plans and gone the pre-paid route. Our annual cell phone bills with an el cheapo plan from Speak Out Wireless available through 7-Eleven costs us less than $50 per year not including the price of a phone. Granted, not everyone can be a light cellphone user but everyone can easily find ways to cut down on their monthly bill.

Auto & Home Insurance Premiums going up in Ontario

March 7, 2010

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Our auto and home insurance renewal documents arrived in the mail the other day. The bad news is that insurance premiums are going up sharply in Ontario. Our auto and home insurance premiums went up by 22 and 14 percent respectively even though we did not have any claims in the past year. The hikes were not really surprising because Nordic Insurance Company, our auto insurance provider, obtained approval from the Financial Services Commission of Ontario (FSCO) for two rate increases that averaged 6.71% and 9.40% in the past year alone.

James Daw of The Star reported that the main reason for premium increases is the rapid rise in the cost of accident benefit claims. While the Ontario Government has announced changes that will allow consumers the choice to lower the medical benefits, the insurance companies are saying that they are awaiting greater clarity on the details of the reforms.

It’s possible that there is little you can do about the rise in premiums but it is worth trying to find ways to soften the blow. First, you can always shop around. Last year, I found that switching from Co-Operators to belairdirect reduced our auto premiums by a staggering 35 percent. If you find that other insurers are quoting similar numbers, it may be worth calling your current provider to try and find some savings. Maybe your driving patterns have changed or the insurance provider offers a discount that you’ve been missing out all these years. It may not amount to much but at least you’ll know you tried your best.

Budget 2010 provides Relief for Stock Option Tax Deferral Elections

March 4, 2010

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One of the measures in Budget 2010 (Pages 356 to 358) will be of special interest to Ottawa-area residents who elected to defer taxes on stock options. Some taxpayers who took advantage of tax deferral on stock options experienced financial difficulties when the value of the stock they received when exercising stock options declined in value. Budget 2010 proposes a special elective treatment to ensure that the tax liability on a deferred stock option benefit does not exceed the proceeds of disposition of the optioned securities taking into account tax relief resulting from the use of capital losses on the optioned securities against capital gains from other sources.

For example, let’s say you exercised options in 2001 to buy ABC at $50 and your strike price was $10. You elected to defer the taxes on the stock option benefit of $40 to the future. Your ABC stock only worth $5. If you sell ABC today, you’ll owe a tax on the stock option benefit of $40 but you’ll also have a capital loss of $45. Budget 2010 will allow you a deduction equal to the stock option benefit ($40). You’ll also declare an amount equal to half of the lesser of the stock option benefit and the capital loss on the optioned securities (1/2 of the lesser of $40 or $45) in your income as a capital gain. Essentially, the capital gain will wipe out the capital loss on the optioned securities.

If you disposed your optioned securities before 2010, you have to make an election for this special treatment on or before April 30, 2011. If you have not disposed of optioned securities before 2010, you must do so before 2015. Also, the Government has repealed the tax deferral election effective today.