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10 tax-filing myths that could cost you money

Written By Unknown on Senin, 29 April 2013 | 22.39

A certain amount of folklore has developed over the years around the income tax system and the filing of tax returns, but many of those age-old perceptions are no longer accurate.

Here are 10 tax-filing myths and the facts that could mean extra money in your pocket — or at least prevent you from running afoul of the Canada Revenue Agency's rules.

Myth 1: A big tax refund is a good thing.

Many taxpayers look forward to the month of May, because it's when they get a big fat refund from the Canada Revenue Agency (CRA). Because so many people contribute to charities or RRSPs, or have major child-care expenses or alimony or maintenance payments, most people end up getting tax refunds (59 per cent of all tax filers last year, according to the CRA).

But when the refund is large — and the average refund in 2012 was $1,669 — the experts agree: that money would be better off in your hands for all that time rather than the government's.

"Take steps to ensure you're not lending money to the government at zero per cent interest," says Jason Heath, a Certified Financial Planner at E.E.S. Financial Service in Markham, Ont.

"Tax refunds should be avoided by filing form T1213 with your employer to reduce your tax deductions at source if applicable."

Myth 2: Barter transactions are tax-free.

Dozens of barter networks have sprung up across Canada and the United States in the past few years. They can be a great way for people to swap something they have but don't need for something they need but don't have.

It's not just goods that can be bartered. Services can also be swapped. No cash changes hands in these arrangements; many clubs use credit units that have a nominal value. Barter networks that specialize in business-to-business deals have attracted many members.

But one thing these networks and barter clubs won't give you is a way to escape all taxation. The CRA takes the position that barter transactions are just like cash transactions — and therefore subject to tax. It's all spelled out in the CRA's Interpretation Bulletin 490.

Basically, the CRA says the value of any goods or any service you offer must be added into your income if they're the kinds of things you normally earn income from. So, if you're a dentist and you offer to extract some wisdom teeth in trade for a new set of snow tires, you must add the amount you would normally charge for a wisdom tooth extraction to your taxable income.

The good news is that if you offer to help your neighbour with a plumbing job in return for his first-generation iPad, the tax department isn't interested.

Myth 3: Income from joint accounts can be claimed just by the lower-income spouse.

Tax educator and author Evelyn Jacks, founder and CEO of the Winnipeg-based Knowledge Bureau, says many people think the lower income spouse can always claim all the interest or dividend income from a joint account.

Not true.

"The claim must be prorated," she says. "If only one spouse in a family works and is the source of all the deposits, then all of the interest earned on the account is taxable to that person."

So, if each spouse contributed half the money to the account, each should claim half the interest.

Jacks points out that this prorating rule applies no matter whose name is on the account or the T5 slip.

Myth 4: You can withdraw money tax-free from your self-directed RRSP.

Thousands of Canadians have faced costly reassessments over the years after falling victim to promoters' claims that there are easy ways to make tax-free withdrawals from an RRSP.

Typically, the sponsors of these schemes promise that people can use their self-directed RRSPs to purchase shares of a private company. The money used to purchase the shares is then loaned back to you at low or no interest.

The CRA warns that if you use your RRSP to purchase shares of a private corporation and the shares are not a qualified investment, then the value of the shares will be added to your taxable income.

"If you respond to these kinds of advertisements, you risk losing your retirement savings and the tax benefits of the RRSP," the CRA says in a tax alert.

The only ways to make tax-free withdrawals from one's RRSP are through the Home Buyers' Plan or the Lifelong Learning Plan. Both of these programs have strict rules, and both require people who take advantage of them to eventually repay everything they took out or face a tax hit. There's no free lunch here.

Myth 5: I don't need to file a tax return, because I don't earn enough money to pay income tax.

Unfortunately, many Canadians believe this and therefore miss out on what could amount to thousands of dollars in benefits and credits like the GST/HST credit and the child tax credit. These days, the tax return is also a benefits return — people need to file a return to be eligible for these credits.

Low-income seniors who qualify for the guaranteed income supplement should also file to ensure that they continue to get the supplement. Otherwise, they'll have to file a separate renewal application.

In the same vein, low-income earners who got working income tax benefit payments last year have to file a 2012 return to be eligible to receive them in 2013.

Teenagers with part-time jobs should consider filing, too.

"By filing returns in the case of kids only earning small amounts, you can establish earned income for future RRSP contributions," says Ernst & Young executive director

Gena Katz. She also points to refundable provincial credits that are available for no- or low-income earners. But again, no return filed, no credit.

Myth 6: If you don't have the money to pay your tax bill, there's no point in filing before this year's tax filing deadline of April 30.

If you can't come up with the taxes owing by April 30, file on time anyway and pay later. The CRA imposes a five per cent penalty for filing late.

It also charges a one per cent interest on your balance owing for each full month that your return is late, for up to a maximum of 12 months.

Myth 7: I just found a charitable donation receipt from two years ago that I never claimed. I guess I'm out of luck.

Au contraire. You can claim a charitable donation receipt — once — going back five years.

Myth 8: I can't file my tax return until a missing T4 slip turns up.

All of your employment-related income slips have to be issued and sent by the end of February. If you never got a slip (or the dog ate it), you should contact whoever issued it and ask for a duplicate.

If that doesn't work, don't wait so long to file your taxes that you pay the five per cent late-filing penalty that kicks in after May 1. Estimate how much you think you made and attach a note to your return saying you weren't able to get your slip and giving the name and address of who should have given you that slip. The CRA can penalize employers who issue slips after the deadline.

Myth 9: I deliberately didn't declare a lot of income a few years ago, but if I come forward now, I'll risk a serious fine or jail time.

The Canada Revenue Agency has a Voluntary Disclosures Program that thousands of people with guilty consciences apply to take advantage of each year.

It says 15,167 applied in the 2011-2012 tax year, an increase of 18.4 per cent from the previous year. People disclosed approximately $863 million in unreported income.

The CRA has said in the past that the rise in voluntary disclosure reflects increasing pressure from Canada and other Western countries on tax havens to relax their laws relating to bank secrecy and to disclose information about accounts held by foreigners trying to evade tax in their home countries.

As well, a number of whistle-blowers from within these banks have disclosed records from these institutions to tax authorities in other countries.

People who haven't filed a return for years or those who didn't declare income can come clean and not be liable for penalties or prosecution (although they will have to pay interest and the taxes owed).

There are a few crucial conditions. For one thing, the disclosure must be complete. For another, it must be made before the tax department starts snooping into your affairs. Once you know they're on to you, it's too late to 'fess up. The program allows for "no name" disclosures through an authorized representative.

Myth 10: You can often make a deal with the CRA to pay less tax than you owe.

People may wish that they could negotiate to pay, say, half of their tax bill and call it a day. But the CRA says it generally doesn't allow people to do this.

Here's how the CRA put it in an email to CBC News: "While the CRA has a certain amount of leeway to help taxpayers who find themselves in particularly difficult circumstances, Canadian legislation allows for forgiveness of actual tax debts only in very precise and limited situations, and only as specified by law."

So, what are those situations? The CRA says they include:

Remission under Subsection 23(2) of the Financial Administration Act where "the collection of the tax or the enforcement of the penalty is unreasonable or unjust or that it is otherwise in the public interest to remit the tax or penalty."
A proposal made by a bankrupt or insolvent person, a liquidator, a trustee or a consumer debtor under Section 50 or 66.12 of the Bankruptcy and Insolvency Act.
A reorganization plan agreed to by a debtor company and its creditors under Sections 4 and 5 of the Companies' Creditors Arrangement Act.
A recovery plan agreed to by a farmer and his or her creditors made under paragraph 5(1)(a) or (b) of the Farm Debt Mediation Act.

The bottom line is that you likely won't get a break unless you're facing extreme financial hardship and are on your way to bankruptcy or something close. If you aren't, the CRA says you'll have to pay every cent of the principal you owe.

With files from David Simms

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Delay casts suspense over Bank of Canada governor selection

With the announcement due in days, the overwhelming odds remain that second-in-command Tiff Macklem will be appointed the next governor of the Bank of Canada.

Yet the nearer the date approaches to Mark Carney's June 1 departure for London, questions are being asked about what is taking Finance Minister Jim Flaherty so long to confirm what markets and economists have long considered a near slam dunk.

It's been a full five months since Flaherty has known his first appointee to the central bank was taking his leave early, and even though the finance minister said there would be no shortcuts in the search for a successor, few expected it would take this long.

"Handicapping this is like trying to handicap a Harlem Globetrotters game. I'd give it about 85 per cent probability," says Bank of Montreal chief economist Doug Porter.

But, he then adds: "I will say the fact it's dragged out this long makes me wonder if there is an issue, here. Why has it taken five months?"

Many in the Bank of Canada, who are said to be pulling strongly for the likable Macklem, are on pins and needles about the delay, according to insiders.

Adding to the suspense — and doubts — is the fact that the last time Flaherty had a choice to make about the governor, he plucked a relative dark horse out of his department rather than do as expected by promoting then senior deputy Paul Jenkins.

The search process has been run by a separate board of directors of the central bank in secrecy so tight that until Macklem himself surprisingly let it be known at a committee meeting last week that "If asked, I will serve," nobody outside the inner circle even knew for certain who had applied. It is believed that Flaherty got a short list of the potential candidates a few weeks ago and has completed the interviews.

Still, the rumour mill has the 51-year-old senior deputy, who's full name is Richard Tiffany Macklem, the prohibitive favourite.

Macklem tops list

A recent Reuters poll of 16 analysts unanimously named Macklem a front-runner. Well back in second was Stephen Poloz, the head of Export Development Canada with seven votes and Jean Boivin, a former deputy governor currently at Finance in third with four. Others who made the list were deputy governors Timothy Lane and Agathe Cote, Andrew Spence, managing director at the Toronto-based OMERS pension fund, Bill Robson of the C.D. Howe Institute, and Darrell Duffie, an influential economist professor at Stanford University.

There are likely other candidates, such as respected McGill University economist Christopher Ragan, but few know for certain and the individuals themselves are not saying.

"If you think about all the qualities you are looking for in a governor of the Bank of Canada, Tiff Macklem has a check in every box. There are very few candidates you would be able to say that about," says Craig Alexander, chief economist at the TD Bank.

By qualifications, Alexander rhymes off: Strong economist, good understanding of monetary policy as it applies to the real world, effective leader and manager, and an understanding and experience of how Ottawa works. The only hole in the resume — private sector experience — is a desired not necessary qualification, he says. Besides, few past governors with the exception of Carney could have checked that box.

As well, Macklem would appear to have been groomed to the post.

Plenty of experience

Joining the bank immediately after graduating in 2004, he steadily worked his way up the ladder. He was twice seconded to Finance, including in 2007 as associate deputy minister, where he took over Carney's role of point-man for the G20, putting him at the centre of the response to the economic crisis of 2008. Importantly, that role would have put him in close proximity with Flaherty, whose choice will likely be accepted by the prime minister.

Macklem returned to the bank as second-in command and chief operating officer running a staff of 1,200 in July of 2010.

He has spoken out on a number of issues, including being the first at the bank to flag the poor record of investment by Canada's business community. Carney got all the attention, however, because of his use of the headline-friendly "dead money" phrase.

Those who know both men say that is typical and telling of the differences between them. If Carney is a media super-star and whip smart, as he has been called, Macklem may be able to match up in brain-power but not sizzle. The most common adjective used to describe him is "studious."

Porter, who studied economics for one year with Macklem at the University of Western Ontario, describes him as being at the top of the class, but remembers him specifically for one thing.

"What I remember about him is he sat at the very front of every class and was quite keen," he says.

Analysts say they see no light, or detected any different approaches in private conversations, between how Macklem is likely to conduct monetary policy and how Carney handled the task, or their views on the economy.

But although Macklem often flies under the radar, Porter believes Macklem would continue Carney's legacy of speaking out on important economic issues of the day, even if they are not directly related to monetary policy.

It remains to be seen if the Harper government, which has been widely accused of muzzling public servants and engaging in protracted battles with those who wouldn't be silenced — such as recently retired Parliamentary Budget Officer Ken Page — wants such a voice at the Bank of Canada.

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Big retailers meet with lobby group to discuss sweatshops

A number of Canadian retailers will meet today with the Retail Council of Canada to talk about working conditions in third-world sweatshops.

The issue jumped into the spotlight last Wednesday, when an eight-storey building housing garment factories collapsed in Bangladesh.

The death toll from the disaster has risen to at least 377 — and is expected to continue rising as crews dig deeper under the rubble.

Garment workers in the shattered building are said to have been paid only $38 a month.

Loblaw, which buys Joe Fresh clothes made in the building that collapsed, will be at today's meeting.

The company has expressed condolences to those affected by the tragedy.

Loblaw says it's committed to ensuring safe working conditions for those who produce the products it sells.

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Neil Macdonald: The 'monarchs of money' and the war on savers

Quietly, without much public fuss or discussion, a new ruling class has risen in the richer nations.

These men and women are unelected and tend to shun the publicity hogged by the politicians with whom they co-exist.

They are the world's central bankers. Every six weeks or so, they gather in Basel, Switzerland, for secret discussions and, to an extent at least, they act in concert.

The decisions that emerge from those meetings affect the entire world. And yet the broad public has a dim understanding, if any, of the job they do.

In fact, these individuals now wield at least as much influence over the lives of ordinary citizens as prime ministers and presidents.

The tool they have used to change the world so profoundly is one they alone possess: creating money out of thin air.

There is an economic term for this: quantitative easing. More colloquially, it's called printing money.

Since the great economic meltdown in 2008, these central bankers have probably saved the world's economy from collapse, and dragged it into the unknown at the same time.

The amounts they have created are so vast as to be almost incomprehensible — trillions of dollars in pounds and euros, among other currencies.

At the end of 2012, the balance sheets of the world's largest central banks, those of the G20 nations and the eurozone, including Sweden and Switzerland, totalled $17.4 trillion US, according to Bank of Canada calculations from publicly available data.

That is nearly a quarter of global GDP, and slightly more than double the $8.5 trillion these same institutions were holding at the end of 2007, before the financial crisis hit.

Stock markets have risen on this tide of cheap money. So has real estate. So, arguably, has everything else.

But there are two big concerns with what this new central banker elite has done.

One is that no one really understands the consequences of pumping such vast amounts of money into the world economy. It's already distorted the prices of certain assets, and some fear hyperinflation or market crashes are inevitable (the subject of tomorrow's column).

The other is that it's caused a massive shift in wealth, from savers to borrowers, and is taking money out of the pockets of almost everyone approaching or at retirement age.

A war on savings

Probably the most painful of the consequences of quantitative easing has been borne by the elderly.

Most of that generation grew up believing that if you save and exercise prudence that you will earn at least a modest return on your hard-earned money to keep you comfortable in your old age, perhaps along with a pension.

But the money-printing orgy of the last five years looks to have shot that notion to smithereens.

Very deliberately, the central bankers have punished savers, pushing interest rates so low that any truly safe investment — and older people are always advised to play it safe — yields a negative return when inflation is factored in.

British pensioners Judy White and her husband Alan, at their home in Teddington, south of London: 'I now have 50 per cent less.' (CBC )

The policy has savaged pension and savings returns worldwide, but particularly in Britain, a nation of savers and pensioners.

There is more money in British pension funds than in the rest of Europe combined, and now that money is just sitting, "dead," as some call it, not working for its owners.

Ask Judy White, a retiree in her late 60s who lives in Teddington, south of London, with her husband, Alan.

This year, the Bank of England shattered her retirement. Her pension benefit was effectively slashed by half.

"I don't understand what quantitative easing is, except that it's printing money," she says. "But I do understand that I now have 50 per cent less.

"What they have done is take money from people who have been really careful all their lives."

On the backs of the virtuous

Actually, by the Bank of England's own reckoning, the £375 billion of quantitative easing it has carried out since 2008 has cost British savers and pensioners about £70 billion, roughly $100 billion. (At the same time, the richest 10 per cent of British households saw the value of their assets increase over the same period, the bank reported.)

That cost to the elderly is largely because pension payouts in the U.K. are pegged to the yields on government bonds, and quantitative easing has forced those yields down to almost nothing.

Speaking for the Bank of England, Paul Fisher acknowledges that the bank has created a paradox: It does want people to save and be prudent — just not right now.

"We try," he says, "to get people to do things now to get out of this mess, which in the long run we prefer not to do."

In other words, might we please have some more of the wild consumer spending and borrowing that helped get us all into this situation, at least for a while?

Ros Altmann, a governor at the London School of Economics: 'A monumental social experiment.' (CBC)

The plain fact, though, is that central bank- and government-imposed solutions to disasters caused by irresponsible, greedy, foolish behaviour are almost always carried out on the backs of the virtuous.

So it was with the bank rescues in 2008, and so it is with quantitative easing.

As Ros Altmann, a longtime pension manager and director of the London School of Economics, puts it, quantitative easing has amounted to a "monumental social experiment" — a large-scale transfer of wealth from older people to younger people.

"Anybody who was a saver and has got some accumulated savings will have had a reduction in their income," she says.

While "anyone who had a big debt, particularly mortgage debts, would have had improvement in their income because their interest payments have gone down."

As stupid as it might sound, older people everywhere would probably be better off if they'd abandoned prudence and borrowed more.

That is obviously not what the central bankers or our political leaders want. But that's the situation they've created.

What's the alternative?

This transfer from savers to borrowers has also been taking place here in the U.S. and in Canada, to varying degrees.

Some U.S. pension funds are in danger of default, at least partially because of these artificially low interest rates, and Canadian pension funds that are heavily invested in safer debt have been injured, too.

In an interview in his Ottawa office, Bank of Canada governor Mark Carney defends quantitative easing elsewhere, and his own low-interest rate policy, though he does acknowledge that it has been hard on pensioners and savers.

Like all central bankers, he argues the (impossible to prove) negative: There have been consequences, yes, but if we hadn't done this, things would be far, far worse.

As for carrying out these solutions on the backs of the virtuous: "I don't see a world where the virtuous are rewarded if we suffered a second Depression," he says. "These are the stakes."

Carney would prefer not to talk about the enormous power central bankers have gained since 2008, saying only: "We have a tremendous responsibility … because of a series of mistakes that were made in the private sector and the public sector."

See the surge in central bank holdings, the printing of new money, beginning in the spring of 2008 with the bank bailouts and the acquistion of long-term securities to keep interest rates down. (International Monetary Fund)

As Canada has performed better than most Western nations, Carney has not ordered any new money printing.

But he has kept interest rates down, and that has fed the real estate booms over the last few years in Vancouver, Toronto, Calgary and elsewhere.

He scoffs at the suggestion that "the party" will end at some point. "I am not sure we are having a party right now," he says. "It doesn't feel like a party."

And, in fact, he has repeatedly expressed concern at the huge debt levels Canadians are accruing, at least partly because of his low-rate policies.

But surely he understands the anger of an older person watching their savings being eroded, I ask him.

Carney smiles grimly. That question is clearly a sore point. He gets a lot of mail on the topic.

Canadians, he says, must understand that the alternative is massive unemployment and thousands of businesses going under, and "my experience with Canadians is that they tend to think about their neighbours and their children and more broadly … they care a little bit more than just about themselves."

Asked whether central bankers are not in fact enabling irresponsible behaviour by speculators enamoured of cheap money, not to mention politicians who can't curb their borrowing and spending, Carney merely remarks that voters in a democracy get the governments they choose.

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Foreign worker program changes expected today

The federal government is expected to announce details today of changes to the temporary foreign workers program that will require employers to do more to find Canadian workers so they don't have to look elsewhere.

The expected changes come after a CBC Go Public story earlier this month on use of foreign workers by Royal Bank which sparked public outrage and brought renewed focus on the temporary foreign workers program. The controversy dominated Parliament Hill and had the government defending the program but also promising changes to it so that it is not abused.

One of the reforms expected is that employers will have to demonstrate that they have a plan to recruit, train and hire Canadians first before they can be granted a permit to hire foreign workers. If they have to hire foreign workers they will then need to have a plan to show how they will eventually hire Canadians for those positions.

Another change to the program will be a fee imposed on employers who want to hire temporary foreign workers.

There could also be changes to the current rule that allows for some temporary foreign workers to be paid 15 per cent less than Canadians.

Citizenship and Immigration Minister Jason Kenney and Human Resources Minister Diane Finley are expected to announce the changes late Monday afternoon in Ottawa.

The government said in its March budget that it would make reforms to the program, and they are expected to be included in the government's budget implementation bill that is on notice. It could be introduced after question period in the House of Commons today.

Finley's department oversees the program and issues labour market opinions (LMO) on how hiring foreign workers would impact the Canadian job market. Employers are only given permission to hire temporary foreign workers if they can't find Canadians to fill the jobs and only if bringing in foreign workers won't have a negative impact on the Canadian labour market.

To receive a positive LMO employers have to show what efforts they have made to recruit and train Canadian residents and the potential benefits that hiring foreign workers could have on the Canadian economy. Some work categories are exempt from the LMO requirement. Professionals and business people, for example, who come to Canada as part of international agreements or workers who come as part of an exchange program, do not need a LMO.

The total number of temporary foreign workers has doubled in the last decade, to 338,189 workers.

Some labour economists have been calling for a review of the program to determine if it is adequately addressing labour shortages or whether it is undermining wages and job opportunities in Canada.

Erin Weir, a labour economist with the United Steel Workers Union said in an interview earlier this month that some companies go through the motions of pretending to hire Canadians in order to get a positive labour market opinion.

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Don Pittis: An ethical shopping trip means more than comparing price tags

Written By Unknown on Sabtu, 27 April 2013 | 22.39

Amidst the anguish of the families in Bangladesh as they pull dead and injured out of a collapsed factory building, it seems trite to talk about the price of underwear.

But this is the place where the horrible reality of developing country manufacturing bumps up against the commonplace of our daily lives. Suddenly we are forced to realize that our search for cheap and cheerful fashions, or something as mundane as socks and t-shirts, is directly connected to the misery of others.

As someone said to me today, "it's obvious" bargain prices for clothing here in the first world inevitably lead to the kind of conditions that kill people in the developing world.

If that is true, the answer is also obvious. Stop buying cheap clothing and only buy relatively expensive stuff where people in poor countries are not exploited.

I was suspicious of this analysis, so I went on a research trip to the Hudson's Bay store at Toronto's Yonge and Queen.

The reason I focus on underwear is because there is a direct personal connection. It just so happens that shortly before the disaster in Bangladesh, I'd gone out and bought five pairs of inexpensive Joe Fresh underwear. They cost $6 a pair.

That made me think: had I unwittingly done harm to someone in a distant factory through my purchase?

So to do my research I went to the underwear section of the Bay.

The first ones I looked at were Calvin Kleins, two pairs for $30, or $15 a piece. They were made in Cambodia, the 186th richest country on earth out of the 229 recognized by the CIA Factbook. People in Cambodia make about $2,300 a year. They are only marginally richer than the people in Bangladesh.

Tommy Hilfigers,at $17.50 a pair, were made in Indonesia, 157th richest on the list, where people earn about $5,000 a year.

The most expensive ones I saw were branded Diesel at $40 a pair. They were made in India, 166th on the list, average income per person of $3,900 — less than Indonesia, but about twice the per capita income of Bangladesh.

Polo Ralph Lauren (Indonesia and China), Hugo Boss (Egypt), Jockey (Costa Rica), Joe Boxer (with Canadian flags; made in Thailand), were all manufactured in poor countries.

Most importantly, there was no clear relationship between price and the poverty of the country where they were made.

Nor was there any obvious correlation in quality.

The strange exception in my little informal survey was the section I visited last.

Stanfield's underwear were the cheapest of them all at $30 for a pack of three, or 10 bucks each. Their label said they were made in Truro, Nova Scotia, Canada, which has an average income $41,500 per person, 27th richest on the planet.

Price only part of equation

What my research shows is that contrary to the "obvious" expectation of my friend mentioned above, buying expensive clothing is no guarantee that clothes have been made in a country where workers are better paid.

In the supply chain for modern goods, the actual price of manufacturing is often a tiny portion of the final price.

Brand advertising, buying a good placement of goods in the store, fancy packaging, design, payments to executives and shareholders — it all adds up to many times the amount paid to developing country labourers.

In the case of underwear at least, the answer might be to buy Canadian. Following the most intensive price-quality survey I have ever done on underwear, I am tempted to do just that.

No simple answer

Unfortunately, the answers are really not so easy, especially when you move out of underwear into other kinds of clothing.

It is true that companies that manufacture in Bangladesh are exploiting a poor country. Bangladesh ranks at 192 on the CIA list, with a population of more that 160 million and an average income of $2,000 a year. With an average income so low, millions struggle on far less. People are destitute, their land being swept away by rising sea levels. They need work.

As my research showed, almost all manufacturers exploit low wages more or less. When we buy their brands, we are also exploiters.

But put in another way, Bangladesh is winning too. By putting their poor people to work they are taking jobs from Canada and Costa Rica and China. They are feeding their families. And not all Bangladesh factories are death traps.

That is why refusing to buy from Bangladesh is no solution.

The reason factory buildings rarely collapse in Truro, N.S., is that Canadians have become rich enough and democratic enough to force our governments to regulate and inspect. We have developed courts that are hard to bribe, and the courts make builders and factory owners more responsible for their actions.

Only a generation ago South Korea and Taiwan were the countries being exploited. Now they are rich as Europeans.

Bangladesh has yet to go through that process, and we can't afford to wait.

When bad things happen in the factories that make our goods, it is good to name names and point fingers. Joe Fresh goods, sold in Loblaws stores, were made in that factory. But Joe Fresh is not alone.

We don't want people killed making our clothes. And the only pressure we can bring to bear as ethical consumers is through the retailers who bring us those goods.

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Bank of Canada to reveal new $5, $10 bills Tuesday

Canada's central bank is set to introduce new $5 and $10 bank notes next week, the final additions to its series of polymer bills designed to thwart counterfeiters and last longer than paper currency.

The new bills will eventually join the $100, $50 and $20 polymer notes that are already in circulation.

Bank of Canada governor Mark Carney and Finance Minister Jim Flaherty will unveil the new notes during an event Tuesday at the bank's headquarters in Ottawa. Officials from Via Rail and the Canadian Space Agency will also be there to discuss the themes, as well as the security and durability features, of the new bills.

The $100 polymer bank note was first issued in November 2011, with the $50 and $20 notes following over the next year. The Bank of Canada says the new $5 and $10 notes will begin circulating before the end of this year.

The redesign was spurred by a dramatic rise in fake bank notes in the early 2000s. In 2004, during the peak of counterfeiting activity, more than 550,000 fake notes were passed in Canada, according to RCMP data.

The polymer material, along with holography and transparency, are meant to make the notes more difficult to replicate.

The new bank notes are also designed to last 2.5 times longer than paper currency.

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Revenue Canada says BitCoins aren't tax exempt

Just in time for tax season, the Canada Revenue Agency says the users of Bitcoins will have to pay tax on transactions in the upstart digital currency.

BitCoins are a fringe online currency that entered the mainstream this year after speculators rushed in and caused their value to more than quadruple in value. Originally designed as a virtual currency alternative to conventional money, the cash value of a BitCoin jumped from under $50 US to above $250 and back earlier this month, as speculators flooded the market after awareness of them grew.

Price swings like that mean some BitCoin buyers and sellers likely made or lost a lot of money, which raises the question of how that will be handled come tax time.

The issue is not just academic. Saskatoon realtor Paul Chavady said he has listed a house priced in BitCoins, and has found clients willing to pay his fees in the electronic currency.

"When you sell [the BitCoins], they will deposit that in your account," said Chavady. "As soon as it turns into Canadian dollars, it's back in the eyes of the CRA and everybody else. If you get a big deposit of $10,000, or $100,000, [CRA is] going to say, 'Hey, where did that come from?'"

Indeed, the tax man has already thought of that.

The CRA told the CBC there are two separate tax rules that apply to the electronic currency, depending on whether they are used as money to buy things or if they were merely bought and sold for speculative purposes.

"Barter transaction rules apply where BitCoins are used to purchase goods or services," Canada Revenue Agency spokesman Philippe Brideau said in an email.

Barter is the exchange of one good for another good without the use of cash, such as when a farmer who grows vegetables trades with another who raises chickens. Many Canadians don't realize such exchanges are taxable, but they are.

Paragraph 3 of the CRA's Interpretation Bulletin IT-490 clearly states that in a barter transaction between arm's-length persons, "we generally consider that the value of whatever is received is at least equal to the value of whatever is given up."

In the above example, that means whatever you've received in exchange for your $1 worth of vegetables must be documented as a taxable gain of at least $1 somewhere.

Investing gains

When it comes to trading BitCoins for profit, the tax man says there are tax implications there, too.

"When BitCoins are bought or sold like a commodity, any resulting gains or losses could be income or capital for the taxpayer depending on the specific facts," ruled the CRA.

That section is covered in paragraphs nine through 32 of the CRA's section IT-479R, Transactions in Securities, "which provide general comments for purposes of determining whether transactions are income or capital in nature."

Regina currency trader Jeff Cliff already had that figured out. He's been trading BitCoins for three years and said he claims them on his taxes by converting it to the Canadian dollar equivalent. But, Cliff said, it is an honour system.

"It's fairly anonymous system," he said. "I'm not so much into the privacy side of it, so that's why I claim it."

Some advocates of the electronic currency, which only exists as unique codes in complex crytpographic algorithms, have said one of its advantages is that it can be traded and moved across national boundaries without governments being aware.

But as the CRA statement shows, governments are starting to pay attention.

With files from CBC reporter Bonnie Allen

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Retailers feel consumer fallout over Bangladesh factory collapse

As rescuers continued to pull corpses and survivors from the rubble of a collapsed garment factory in Bangladesh, some consumers in Canada were shocked to learn that items from their favourite brands were made there.

The building collapsed Wednesday, killing more than 300 people, many of them poorly paid workers who were forced to keep producing clothes even after police ordered an evacuation due to deep, visible cracks in the walls.

Canadian clothing line Joe Fresh was among the customers of the garment factories operating in the building.

Natalie Erb, 24, shops at Joe Fresh at least once a week for everything from yoga clothes to office wear, she said. The news out of Bangladesh has the loyal customer disturbed about her purchases.

Condolences offered

"To be honest, I had never really done much research into where Joe Fresh manufactures their clothing, but knowing what I do now, I'm hugely disappointed in the company," said the Halifax woman.

"I don't know if I'll be buying from the line any time soon, or ever again for that matter."

Joe Fresh parent company Loblaw released a statement Thursday saying some Joe Fresh items were made in the factory and offered its condolences to the victims and their families.

The company said it requires vendors to ensure products are being manufactured in a socially responsible way, prohibiting child harassment, abuse and forced labour, as well as ensuring fair pay, benefits and health and safety standards.

Spokeswoman Julija Hunter said the standards are audited on a regular basis and align with those of the industry around the world.

"However, in light of the recent tragedies in Bangladesh we recognize that these measures do not address the issue of building construction or integrity," she said in a statement.

"We don't have all the answers today," she wrote. "But we are committed to taking the necessary steps to drive change, and find better solutions to ensure safe working conditions for production facilities with which we do business."

In another statement released Friday, Loblaw said it would provide aid and resources to people in the area affected by the collapse.

"Senior representatives from Loblaw Companies' sustainable supply chain team will be enroute soon [to Savar] to meet with local officials in Bangladesh to get a precise response on what caused this tragedy," the statement said. "We are committed to supporting local authorities in the rescue and care of affected families."

The company also said it had plans to meet Monday with other retailers and the Retail Council of Canada to discuss "how to address this unfortunate situation and be a part of the solution." It said it was also getting assistance from Canada's foreign affairs ministry.

Politicians react

NDP foreign affairs critic Paul Dewar said most Canadians were shocked when they saw the working conditions in Bangladesh.

"We have trade offices and missions all over the world and we should be using those assets we have to ensure that when it comes to Canadian companies engaged overseas, that there's basic labour standards... actually being followed," he said.

Worker Rights Consortium, a labour-rights monitoring organization, first circulated a photo of a Joe Fresh label amid the rubble in Bangladesh. The country is the "worst place in the world for apparel workers," said the group's executive director.

But it's certainly not alone, said Scott Nova, and that should come as no surprise to no one.

"It has been well known for many years that most of the apparel bought and worn by people in Canada and the U.S. and Europe is made in developing countries where the industries are defined by low wages and poor working conditions," he said from Washington, D.C.

"You can try to buy stuff that's made in Canada or made in the U.S., you can buy from a handful of niche brands that generally produce under better conditions, but 99.9 per cent of the apparel that's offered for sale to consumers is made in sweatshops."

Everyone wants high-quality products at a good price, said Dara O'Rourke, a professor at the University of California, Berkeley and co-founder of GoodGuide, an online resource that gives products health, environmental and ethical ratings. But there are costs to those low prices, he said.

"If you walk into a Joe Fresh or Wal-Mart or a Sears or a Target or whatever and you see a polo shirt and it's $5.99...the next thought should be: 'What is the company doing to lower their cost of production so much? Are they outsourcing the responsibility on treating workers fairly? Are they outsourcing and externalizing the environmental costs of this?"' he said.

Many shoppers interviewed Thursday outside a Joe Fresh store in Toronto said even if they wanted to only buy clothing manufactured in Canada, they wouldn't necessarily have the means to do so.

"I feel terrible, like most people do, I think," said Katrina Gataveckas, 26. "I find that I don't have the money right now to shop for clothing at stores where they actually do have good working conditions."

In addition to money, her friend Jaclyn van Vlymen, 25, said it would take a lot more time to research the origins of any clothing she wanted to buy.

"I think it probably will require a lot more consideration on the consumer's part, but ultimately you're shopping for the season's trend and maybe you don't really care," she said. "Sad, isn't it?"

Among the clients of garment makers in the building were The Children's Place and Dress Barn, Britain's Primark, Spain's Mango, Italy's Benetton and Wal-Mart.

Primark acknowledged it was using a factory in Rana Plaza, but many other retailers distanced themselves from the disaster, saying they were not involved with the factories at the time of the collapse or had not recently ordered garments from them.

Wal-Mart said it was investigating, and Mango said it had only discussed production of a test sample of clothing with one of the factories.

The disaster in Bangladesh is the worst ever for the country's booming and powerful garment industry, surpassing a fire five months ago that killed 112 people and brought widespread pledges to improve the country's worker-safety standards.

Instead, very little has changed in Bangladesh, home to about four million garment workers whose wages are among the lowest in the world.

The country's minimum wage is now the equivalent of about $38 a month.

"There is a very close connection between sub-poverty wages and the lax regulation that perpetuates poor working conditions and the ability of factories to offer the extremely low prices that brands and retailers crave," Nova said.

"Indeed it is the relentless drive of North American and European brands and retailers for ever-lower prices and ever-faster delivery times that gives these factories overwhelming incentives to operate unsafely."

With files from The Associated Press

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10 tax-filing myths that could cost you money

A certain amount of folklore has developed over the years around the income tax system and the filing of tax returns, but many of those age-old perceptions are no longer be accurate.