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Alberta government reducing corporate tax

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The UCP government has reduced Alberta’s corporate tax rate from 11 per cent to 10 per cent as part of the ongoing Job Creation Tax Cut.

This scheduled tax reduction, effective Jan. 1, improves Alberta’s competitiveness and encourages businesses to invest and hire in the province, the government said in a release Wednesday.

“It will take time to reverse the damage done to Alberta’s economy, but we are seeing positive signs that the Job Creation Tax Cut is working,” said Finance Minister Travis Toews. “We expect more good news of increased investment as the rate continues to decrease and businesses make new plans. We will continue to work to attract investment to Alberta.”

Canadian Natural Resources Limited (CNRL) announced plans to expand its operations in response to the Job Creation Tax Cut. In early December, CNRL increased its 2020 capital budget by $250 million, which they estimate will create about 1,000 new full-time jobs for Albertans.

Telus also announced a $16-billion investment in Alberta over the next five years connecting businesses and homes across the province to fibre and preparing for 5G. The investment comes with an anticipated 5,000 jobs over the course of the project.

“By lowering taxes on job creators, the Alberta government is trying to get Albertans back to work the right way. These tax reductions will help Albertans get back on their feet and get ahead,” says Canadian Taxpayers Federation, Alberta director, Franco Terrazzano.

Alberta’s general corporate income tax rate is the lowest in Canada. Alberta’s combined federal-provincial corporate tax rate will be lower than that of 44 U.S. states when it reaches 8.0 per cent on Jan. 1, 2022.

The province says non-residential investment in Alberta’s business sector was up by 4.7 per cent year-over-year in the third quarter of 2019, the first annual increase since the second quarter of 2018.

With strong growth in housing starts through the summer, investment in residential construction has improved by more than 21 per cent in 2019 from the multi-year lows seen in late 2018, according to the UCP government.

Building permits, a leading indicator of construction activity, have improved in three of the last four months and were up 3.8 per cent year-over-year in October.

In October, home sales rebounded by more than 11 per cent since they reached an eight-year low in February. Compared to the same month last year, home sales were up by 8.8 per cent.

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Province steps up with $2.7M investment for 20 beds at OSMH – OrilliaMatters

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Earlier this week, the provincial government announced it would be providing $116.5 million to create up to 766 more beds at 32 hospitals and alternate health facilities across the province. 

Simcoe North MPP Jill Dunlop explained what that investment means to Orillia.

She said the province will be providing up to $2,718,000 to Orillia’s Soldiers’ Memorial Hospital (OSMH) for up to 20 total patient beds.

The goal of the funding is to help alleviate hospital capacity pressures and reduce wait times and surgical backlogs.

“A bed is such an important part of the hospital process for both staff and patients,” Dunlop said in a statement.

“This investment will help improve the ability for Orillia Soldiers’ Memorial Hospital to provide care for patients, even more so during such a difficult time as COVID-19, especially with the upcoming winter and flu season.” 

This week’s funding is in addition to the $234.5 million investment for 139 critical-care beds and up to 1,349 hospital beds included in Ontario’s fall preparedness plan. 

The new funding “will further strengthen our ability to meet the health needs of our community,” said OSMH president and CEO Carmine Stumpo.

“This funding announcement supports the surge planning already underway at OSMH,” he explained. “This includes maintaining current emergency services, addressing backlogs in scheduled surgical activity and creating new capacity for COVID and influenza surges this winter.”    

Stumpo said the $2.7 million in one-time funding, to March 31, 2021, “will support operating expenses such as additional staff and medical supplies.” 

According to the media release from Dunlop, this brings the total investment to $351 million for more than 2,250 new beds at 57 hospitals and alternate health facilities across the province – beds that will add more capacity for hospitals, help with occupancy pressures and support the continuation of surgeries and procedures. 

“Our government is making the necessary investments to quickly and effectively increase hospital capacity and reduce wait times for patients and families in Simcoe,” said Health Minister Christine Elliott.

“This additional investment will ensure our health-care system is able to respond to future waves of COVID-19 and help patients waiting for surgeries and other procedures get the care they need, faster.” 

The government is providing $2.8 billion for the COVID-19 fall preparedness plan. It focuses on addressing surges in COVID-19 cases and reducing health service backlogs by:

  • Extending hours for additional priority surgeries and diagnostic imaging;  
  • Helping up to 850 alternate level of care patients access proper care in a home or community setting to help free up hospital capacity;  
  • Expanding digital health and virtual services, which provide alternatives to in-person care that limit the transmission of COVID-19, while maintaining access to care;
  • Improving access to mental health and addictions services and supports; and 
  • Increasing home and community care service by adding 484,000 nursing and therapy visits and 1.4 million personal support worker hours. 

Ontario will release its 2020 budget and the next phase of Ontario’s Action Plan on Nov. 5.

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Sydney's Smart Shop to reopen amid surge in downtown investment – CBC.ca

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The construction of the new Nova Scotia Community College Marconi campus on the Sydney waterfront is spurring investment in the downtown.

A notable recent development is the purchase of Sydney’s iconic Smart Shop Place on the corner of Charlotte and Prince streets, which has been sitting vacant in recent years.

“We see Sydney as booming nowadays,” said Ajay Balyan, who recently purchased the three-level building along with his brother, Ankit.

Brothers Ajay and Ankit Balyan, former CBU students from India, have purchased downtown Sydney’s iconic Smart Shop building. (Holly Conners/CBC)

It was a different picture when he moved to Cape Breton from India in 2017 to study at Cape Breton University.

A lot has changed since then, with a boom in international enrolment at CBU and unprecedented public infrastructure investment in the area, including the new NSCC campus, health-care redevelopment and a potential new regional library.

“We know after NSCC, the Sydney downtown is going to be the main spot for the students to hang out or to eat,” said Balyan. “And we’re getting good support from the community, as well. So we find it to be a good opportunity for us.”

Smart Shop Place opened in 1904 as a clothing store and long served as a retail anchor in Sydney. The Balyans plan to rename the building Western Overseas, after their family’s business in India.

Ajay Balyan, shown in the lower level of the former Smart Shop Place, which he plans to reopen as a fine-dining restaurant. (Holly Conners/CBC)

Construction is underway to convert the main floor into a small food court and the lower level into a fine-dining restaurant. The upper level will become apartments.

The brothers, with family partners in India, have similar plans for the former Cape Breton Post building on Dorchester Street, which they bought last year.

The two also own Swaagat, an Indian restaurant they opened on Prince Street in 2019.

Craig Boudreau is among a group of investors who have been buying up properties in downtown Sydney. (Holly Conners/CBC)

Meanwhile, on Charlotte Street, local entrepreneur Craig Boudreau and a group of partners recently bought four buildings and are negotiating a fifth.

Two years ago, Boudreau purchased the former Jasper’s Restaurant site on George Street. It’s currently being used as a parking lot, but he hopes to start construction next fall on a multi-story commercial and residential development.

NSCC students will need housing and the community could use more dining options, said Boudreau.

“It’s really spinoff,” he said. “It’s kind of the perfect scenario.”

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Don't let fear drive you into a fee trap when working with an investment advisor – BNN

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Spiking market volatility and a renewed threat of global economic stagnation caused by COVID- 19 has sent stressed-out investors flocking to advisors.

Many advisors have been reporting a rise in new clients since last spring’s lockdown, and a new survey commissioned by Manulife Investment Management backs it up. It shows 63 per cent of respondents plan to seek investment advice in 2020 compared with half in 2019. And more than half of respondents in Canada indicated they were interested in retirement planning and investing advice.

It’s good that more people are looking for long-term retirement plans managed by professionals, but fear can lead investors into fee traps that consume their investment dollars.

The path to those fee traps typically begins with investors looking to coordinate a mishmash of investments in their registered retirement savings plans (RRSP), and tax-free savings accounts (TFSA). For the vast majority of Canadians, the only route to a diversified, professionally-managed portfolio is through mutual funds.

The price investors pay for diversification and professional management in a mutual fund is an annual fee based on a percentage of the money they have invested called the management expense ratio (MER). MERs vary depending on the fund company and asset class, but a typical MER on a Canadian equity fund purchased through an advisor is about 2.5 per cent.

That might not seem like a lot at first glance, but on a $500,000 portfolio of mutual funds, it adds up to $12,500 annually whether the fund makes money or not. That’s $12,500 each year not invested and not compounding, and potentially hundreds of thousands of dollars over a lifetime of investing.

Baked into the MER is a hidden trailing commission, or trailer fee, to compensate the advisor who sold the fund for “ongoing advice.” A typical trailer fee is one per cent annually – or $10,000 on a $500,000 portfolio of mutual funds each year.

Trailer fees are banned in most of the developed world due to the inherent perception of conflict of interest. You have to wonder if an advisor is selling a fund because it is right for the investor or because it provides the best trailer fee from the mutual fund company. 

And it get’s worse. 

Some advisors will direct investors toward segregated funds, which are essentially mutual funds wrapped in an insurance product. Seg funds have the potential to make money from the investments they hold but are insured, or partially insured, against losses on the principal amount invested over long terms – often 19 years. Investors pay for that extra security through higher MERs. Manulife – the company that commissioned the survey – for example, sells segregated funds with MERs above three per cent.  

Segregated funds have certain advantages for small business owners wanting to protect their savings in the event of bankruptcy, but sometimes appear in workplace defined contribution pension plans. 

Advisors sometimes push seg funds on unsuspecting clients through a regulatory loophole known as “the-know-your-client rule,” which requires advisors to document a questionnaire relating to return goals and risk tolerance, and only sell investments in line with the client’s answers.  

Some clients might not understand that all investments have some degree of risk and say they expect their savings to grow risk-free. Only segregated funds fit that bill.  

Payback Time is a weekly column by personal finance columnist Dale Jackson about how to prepare your finances for retirement. Have a question you want answered? Email dalejackson.paybacktime@gmail.com. 

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