Money123: Are Rate Hikes Over Now? (Tiff’s Version)

Bank of Canada on hold — what’s next?

The Bank of Canada held its benchmark interest rate steady at 5.0 per cent on Wednesday, the second consecutive time it left the cost of borrowing unchanged.

What’s behind the pause? Well, in short, policymakers think higher interest rates are working to chill inflation, which eased to 3.8 per cent in September. The Bank of Canada believes demand in the economy is slowing enough to restore price stability and lower inflation back to its two per cent target.

So, are we out of the woods yet? That remains to be seen. The Bank of Canada flagged slowing momentum in the decline of core inflation and some ongoing risks that could cause prices to flare higher again in the near term.

“We’ve made a lot of progress, but we’re not there yet. We need to stay the course,” Bank of Canada governor Tiff Macklem said in a speech on Wednesday.

He warned rates might need to rise higher still.

The interest rate pause comes as the Bank of Canada flags that a growing number of Canadians are falling behind on payments for auto loans — Global News’ Eric Stober has more on that.

And though the central bank says it’s not yet seeing many defaults among mortgage holders, economists tell Global News’ Craig Lord that if cracks form here, that could lead to more weakness in the housing market and a further decline in home prices.

Read more on what could be next for housing prices here.

Where you can get $10-a-day child care

Plenty of jurisdictions are making progress on reducing child-care costs for Canadian families, but a new report also reveals the cities that are falling behind.

Five jurisdictions — Quebec, Manitoba, Saskatchewan, Newfoundland and Labrador, and Nunavut — have already reached Ottawa’s long-term goal of $10-a-day-child care, three years in advance, according to the Canadian Centre for Policy Alternatives.

Provincial and territorial capitals as well as big cities in Ontario, Saskatchewan, Manitoba, Newfoundland and Labrador, the Northwest Territories, Yukon and Nunavut, have successfully met that target or exceeded it.

Meanwhile, big cities in Alberta, British Columbia, Nova Scotia, Prince Edward Island and New Brunswick have not been able to slash their child-care fees in half, the report showed.

Despite the progress in making child care more affordable in many cities, parents and advocates are still reporting challenges with securing daycare services. Blank spaces are hard to find on daycare wait-lists, for example, pointing to the need for more child-care facilities.

Global News’ Saba Aziz has more on what next steps Canada needs to take to expand child-care access.

In her billionaire era

Were you among the lucky fans who snagged tickets to Taylor Swift’s Eras Tour stops in Toronto next year? If so, you may have been one of the thousands who have helped push the music superstar’s net worth over the billion-dollar mark.

The Bloomberg Billionaire Index was updated this past week to include Swift among the ranks of celebrities and executives worth over a billion dollars.

What makes Swift richer than most of our wildest dreams? It comes down less to an extensive real estate portfolio or other business endeavours and more to an immense marketing machine that can convince fervent fans to pull out their credit cards even as the landscape gets tougher for other discretionary purchases.

Global News’ Kathryn Mannie crunches the numbers here on what separates Swift from other music moguls in the billionaire club like Jay-Z and Rihanna.

And if you weren’t lucky enough to secure a seat at the Eras Tour, hopefully you’re satisfied at home with Friday’s release of 1989 (Taylor’s Version).

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– THE QUESTION –

“We have been in our house 16 years, pleased to have purchased a home with a legal basement suite. (It was originally built in 1921 and then updated extensively in the early ’90s.) The rental income helped us with the mortgage, but that is now paid off. After our last tenant moved out, we decided it was time to do some renovations in the suite. Some of the renovations are simply maintenance, which has not been done in 16 years, like painting and replacing the carpet.

I understand that some renovations to a suite are considered upgrades and therefore would be considered capital expenses when I do our taxes. But some of the renovations can be argued to be maintenance — simply replacing what was there, that was worn out, and these are not capital expenses as far as income taxes are concerned. Any guidance would be appreciated.”

— A Money123 reader 

“The CRA generally views a current expense as the cost of repairs you make to keep a rental property in the same condition as when you acquired it. A capital expense is one made to improve your property beyond its original condition or extend the useful life of your property.

For instance, if you put vinyl siding on the exterior of a wooden house it would be viewed as a capital expense by CRA. If, however, you painted the exterior of the wooden house then that would be a current expense. Similarly, replacing wooden steps with concrete steps would be considered a capital expense, but repairing wooden steps is a current expense.

In your case, painting and replacing worn carpeting could likely both be considered current expenses.

The CRA provides additional guidance on this topic in its Rental Income Guide – Chapter 3.”

–  Jamie Golombek, managing director & head, tax & estate planning, CIBC Private Wealth

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