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Canada Post hikes stamp prices amid uncertain future

The cost of sending a letter got more expensive this week, but Canada Post itself is warning that it’ll take more than a few extra cents on postage to turn the postal service’s business around.

In a bid to boost revenue flows heading into the postal service’s coffers, Canada Post confirmed a previous announcement Monday that the cost of a single stamp would rise seven cents to just under a dollar when bought in a booklet.

That came days after the company reported a steep annual loss of $748 million, its sixth consecutive year in the red.

People are simply receiving fewer letters in the mail than they did a few decades past, and competition in the lucrative parcels business is eating away at Canada Post’s bottom line.

“Canadians understand our business model must change. They can see it in their mailbox,” president and CEO Doug Ettinger said in a statement.

Read more on the challenges facing Canada Post and how the mail carrier’s services might have to evolve if it wants to keep delivering.

Renters feeling the burn of higher interest rates

While many homeowners have felt the pain of higher interest rates from the Bank of Canada when renewing their mortgages, a new report this week from the central bank shines light on how renters are feeling the pinch.

The Bank of Canada’s annual financial stability report showed that, overall, signs of financial stress were rising back to normal levels after “sharp declines” during the COVID-19 pandemic.

But these signs of stress are most concentrated among Canadians who don’t have a mortgage, particularly renters. People without a mortgage are falling behind more on credit card and auto loan payments, the Bank of Canada said.

Governor Tiff Macklem told reporters Thursday that renters typically have less of a “buffer” built up to absorb the higher costs associated with inflation and rising interest rates, making them more likely to miss debt payments in times of stress.

But the Bank of Canada also warned that with half of mortgage holders still set to renew in the coming two years, this cohort of homeowners could be in for a bigger payment shock than those who have already renewed in the higher rate environment.

Read more on what the Bank of Canada is watching as it gauges where it will take interest rates next.

Insurer pilots wildfire protection

As forecasts for a particularly volatile wildfire season stoke fears for some homeowners, the country’s largest property and casualty insurer is testing a pilot project to help eligible Canadians protect their homes.

Intact Financial Corporation this week announced a partnership with Montana’s Wildfire Defense Systems to provide eligible Albertans and British Columbians with loss prevention and suppression services when their homes are threatened by wildfires less than five kilometres away.

If a fire gets that close to the home, trained fire personnel will undertake tasks including the removal of materials around the property that could fuel a fire — like firewood or propane tanks — and covering exterior vents and closing exterior windows and doors.

The crews may also set up temporary sprinkler systems, which would potentially temper fire activity nearby, but also fire retardant if necessary to prevent further damage to a home.

Read more about who is eligible for the pilot program.

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– THE QUESTION –

“My question pertains to quarterly payments to the CRA. Being self-employed, last year, 2023, was the first time I made over $70,000.00. It was an unusual year, where I had a different set of circumstances. I usually make about $30,000.00 and I will earn close to $30,000.00 in 2024. The CRA is asking for $12,000.00 in quarterly payments starting this September 2024 for the 2024 tax year. As I know my taxes will be much lower, what do I do about these quarterly payments?”

— A Money123 reader 

“You may be able to reduce the instalments you pay for 2024. That’s because there are three options that may be used to determine how much you need to pay in instalment payments each quarter to CRA: the no-calculation option, the prior-year option and the current-year option. Taxpayers are free to choose the method that results in the lowest payments. But if you do choose to pay less than the no-calculation option, you could face instalment interest and a penalty if your instalment amounts are too low or paid late.

Under the no-calculation option, the Canada Revenue Agency calculates your March 2024 and June 2024 instalments based on 25 per cent of the net tax owing from your 2023 assessed return. The Sept. 15 and Dec. 15, 2024 instalments are then calculated based on the net tax owing from your 2023 return, less the March and June payments. This is why the Sept. and Dec. 15 payments are each $12,000 under CRA’s no-calculation option.

The prior-year option bases the calculation solely on last year’s income, so your 2024 instalments are based on your paying one-quarter of the 2023 tax owing on each instalment date.

Finally, the current-year method lets you base this year’s instalments on the amount of estimated tax you think you will owe for the current year, and you pay one-quarter of the estimated amount on each instalment date. You could choose this option as you estimate that your 2024 income will be significantly less than 2023. If your income is more than you estimate this year, and you don’t make sufficient instalment payments, you can end up being charged instalment interest, compounded daily at the prescribed interest rate (currently, 10 per cent for overdue taxes), and even an instalment penalty if the instalment interest is more than $1,000.

Bottom line – go for the current-year method, but be forewarned that if you’ve underpaid, you may owe some interest come next year!”

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

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