T a x - F r e e S a v i n g s A c c o u n t s :

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "T a x - F r e e S a v i n g s A c c o u n t s :"

Transcription

1 T a x - F r e e S a v i n g s A c c o u n t s : A N e w F l e x i b l e, T a x - a d v a n t a g e d I n v e s t m e n t O p t i o n. Tax-Free Savings Accounts (TFSAs) are a new investment vehicle introduced in the 2008 Federal Budget that enables Canadians investment earnings and capital gains to grow tax-free. Depending on your life situation and earning power, a TFSA account can have different applications but it is suitable for a wide range of investor types and time horizons. This guide provides an overview of the TFSA and explores how it can provide you and your family with greater flexibility within your overall investment strategy. Copies of our client publications are available from your PH&N Investment Advisor or by calling or by visiting

2 Tax-Free Savings Accounts and You In 2009, Tax-Free Savings Accounts will only save Canadians $5 million in taxes, but by the year 2013 it is estimated that TFSAs will save Canadians an estimated $385 million. Over the next 20 years, savings are estimated to grow to $3 billion annually. Effective January 2009, you now have a new way to grow your savings. In the 2008 Federal Budget, the Government introduced Tax-Free Savings Accounts (TFSAs). These new tax-advantaged vehicles allow Canadian residents age 18 and older 1 to contribute up to $5,000 per year into an investment account where investment earnings and capital gains can grow tax-free. Used together with other tax-efficient savings vehicles, such as your registered retirement savings plan (RRSP), TFSAs can be a powerful tool. While investors receive no tax deduction using TFSAs, there are built-in features that make TFSAs flexible enough to meet both short- and long-term financial goals. Tax-Free Savings Account Highlights Individuals over the age of 18 1 can contribute up to $5,000 per year. You are not required to have earned income to contribute Income, dividends and capital gains that accumulate within tax-free savings accounts are never taxed (unless you overcontribute) Amounts can be withdrawn for any reason without being taxed You don t lose the contribution room if you make a withdrawal, but you do need to wait until the following year to re-contribute the money You can provide funds to your spouse for him or her to contribute to a Tax-Free Savings Account without being subject to income attribution rules If you don t contribute the maximum amount, you can carry forward unused contribution room indefinitely. For example, if you contribute $3,000 to your TFSA in 2009, your contribution room in 2010 will be $7,000 ($2,000 carried forward from plus $5,000 for 2010) Contributions are indexed to the consumer price index, to help adjust for cost of living. The TFSA dollar limit is $5,000 in 2009, and will be indexed to inflation and rounded to the nearest $500 in later years The power of tax-free compounding Here s a closer look at the long-term compounding power of the TFSA. Investing in a tax-free savings account, assuming a conservative 5% rate of return and an average tax rate of 21%, results in a savings of $19,625 over a 20-year period compared to the growth of taxable savings. $200,000 $150,000 $100,000 $50,000 $ The advantage of tax-free compounding $73,596 $100,000 TFSA } $19,625 in tax savings $53,971 $100,000 Non TFSA Is the TFSA right for you? Investment Income, including capital gains Total Contributions This example is based on 40% interest, 30% dividends and 30% capital gains, and a middle-income earning account holder with an average tax rate of 21%. It also assumes a constant $5,000 contribution over 20 years. How the TFSA fits into your financial plan will depend on your personal situation and goals. With more choice than ever, you will want to make sure you use the appropriate tax-sheltered solution for you. Your investment advisor can help you to evaluate the options available and help you make the choices most appropriate to your investment goals. 1 In British Columbia, New Brunswick, Nova Scotia and Newfoundland, the age of majority is 19 for account set up. 1 Phillips, Hager & North Investment Management

3 When electing between the use of TFSAs and similar vehicles such as RRSPs and Registered Education Savings Plans (RESPs), there are some important considerations to keep in mind: Deductibility of Contributions A contribution to an RRSP is deductible for income tax purposes, whereas a contribution to a TFSA is not tax deductible. This is a key advantage of the RRSP. Tax-Free Compounding For both RRSPs and TFSAs, investment income accumulates tax-free, and hence they are equally beneficial in this respect. Withdrawals Funds withdrawn from an RRSP are taxable as income, whereas withdrawals from TFSAs are not included as income. RRSPs are a good tool if your marginal tax bracket is higher during your working years as compared to your tax rate during retirement. As TFSAs are not taxed as income, they will not have an impact on income-based programs such as the GST credit, Guaranteed Income Supplement and Old Age Security payments. On the other hand, withdrawals from an RRSP could potentially have an impact on eligibility for these programs. Flexibility Arguably, TFSAs are the more flexible vehicle if investments are needed to fund short-term goals. For example, if you wanted to make a large purchase during retirement, drawing from a TFSA would not have a tax impact. On the other hand, withdrawing from an RRSP or Registered Retirement Income Fund (RRIF) would have tax implications as it is considered income. In the case of a RRIF, withdrawals above the specified minimum amount would be subject to withholding tax. However, RRSPs are still considered superior vehicles for saving for retirement and RESPs for funding a child s education. Each vehicle has advantages and disadvantages depending on your situation, so it is best to speak to your Phillips, Hager & North investment advisor. RRSPs can be used to purchase an individual s first home through the First Time Home Buyer s Program or to finance a return to school through the Life Long Learning Program. In both of these instances, however, the funds must be paid back within a certain time frame. In the case of a TFSA, there are no restrictions on when money is withdrawn, how it is spent and when it must be repaid. Unlike the RRSP, amounts withdrawn do not have to be repaid. Young investors are good candidates for investing in TFSAs. As young investors are likely not yet earning an income or earning very little income they would not yet be able to take advantage of the income tax offsetting benefits of RRSPs. TFSAs are a good vehicle for a young investor to save until such time as they earn more and enter into a higher tax bracket. TFSAs and RESPs RESPs and TFSAs are comparable as neither contribution is tax deductible. However, RESPs are sweetened vehicles for education saving purposes as contributions attract Canada Education Savings Grants of 20% or higher, up to a $7,200 lifetime limit per beneficiary. Withdrawals from RESPs, however, are subject to restrictions that govern the use and taxation of these vehicles. It should be noted that in the past two federal budgets, amendments have been made to improve the flexibility of RESPs in order to be more responsive to the changing needs of families and students. Another idea that parents and grandparents may wish to consider is only contributing to RESPs up until the child reaches age 17. As there are no more CESG grants after age 17, it may be worth considering switching to a TFSA to accumulate additional education-related savings. Estate Planning The TFSA loses its tax-exempt status after the death of the investor, meaning that the investment income will become taxable. However, a rollover opportunity is possible when the spouse or common-law partner becomes the successor. This will not be affected by the spouse s contribution room and will not reduce their existing room. Tax-Free Savings Account 2

4 Summary: When do I use a TFSA? For everyone Shelter highly-taxed income, i.e., bonds and foreign dividend-paying stocks After tax loss selling buy back the investment inside a TFSA to get tax-free benefit on its rebound (after the superficial loss period elapses) Contribute to your TFSA first, and your RRSP second, if your income is low today and expected to go up in later years Contribute to your RRSP first, and your TFSA second, if you are in a high tax bracket and expect to be in a lower tax bracket in retirement For young adults 18-year olds 2 can use a TFSA to save for their education since they don t get RESP grants after age 18 Save for a car, house or any other big ticket item Emergency fund While income is low, use the TFSA as a first retirement savings vehicle. Save RRSP room for later when income is higher. For individuals in peak earning years Income splitting contribute money to low-income spouse s TFSA with no attribution back to you Supplement RRSP invest your tax refund in a TFSA Supplement RESP to save for a child or grandchild s education Income smoothing (for people with variable incomes from year to year) to maximize tax deductions In lower income years, don t contribute to your RRSP to build up contribution room meanwhile, put money in a TFSA In higher income years, use TFSA assets to maximize carried-forward RRSP contribution room Set aside money in a TFSA to pay off a mortgage at the end of its term Estate Planning on death, TFSA assets transferred tax-free to a spouse s TFSA will not affect the spouse s contribution room Shelter private company shares (subject to complex rules, generally must be under 10% ownership. Please consult a tax professional on this option) For seniors / retirees Use TFSA as the first source of income before using RRSP/RRIF withdrawals you pay no tax on TFSA withdrawals Reinvest excess income or cash flow in a TFSA Minimize OAS clawbacks hold income-producing assets in a TFSA to reduce reported income Estate planning on death, TFSA assets transferred tax-free to a spouse s TFSA will not affect the spouse s contribution room TFSA Don ts Don t borrow to invest in TFSA interest cost on the loan is not tax-deductible Don t use TFSA for aggressive trading any capital losses incurred in a TFSA cannot be used to offset taxable gains from other investments. Getting started. Setting up a TFSA with PH&N 1) Contact your PH&N Investment Funds Advisor. 2) Complete a TFSA application form indicating the PH&N Funds and/or other securities that you would like to include in your TFSA account. 3) You will receive account statements and transaction confirmations as you normally would with an RRSP, RESP or other investment account that you hold with PH&N Investment Services. Advice at your fingertips Talk to your PH&N Investment Advisor, or consult your tax professional, to assess how a TFSA best fits your financial situation. 2 In British Columbia, New Brunswick, Nova Scotia and Newfoundland, the age of majority is 19 for account set up. 3 Phillips, Hager & North Investment Management

5 Frequently Asked Questions Q: How is a TFSA different from an RRSP? A: i. Withdrawals from a TFSA are tax-free and do not result in lost contribution room. ii. Contributions to a TFSA are not tax-deductible. iii. With a TFSA you don t need earned income to accumulate contribution room. iv. There is no requirement to convert the TFSA to an income payment option (i.e., RRIF) at any age. You can give money to your spouse to open a TFSA without being subject to the Canada Revenue Agency s (CRA) attribution rules. Q: What investment options are available for TFSAs? A: The investment options are similar to the investment options available for your RRSPs. For example: savings, GICs, mutual funds, stocks and bonds. Q: Can I transfer securities from another account to the TFSA as a contribution? A: Yes; however, like a transfer to an RRSP, it is done at market value and if you have a resulting capital loss, the transfer will be denied. In order to retain the capital loss you would need to first sell the security and then use the cash to contribute. Avoid the superficial loss rules by waiting 30 days before purchasing the same securities you sold at a loss. Q: Do I have to have a particular income level to take advantage of a TFSA? A: There is no minimum or maximum income level. Every eligible person will accumulate contribution room each year starting in Q: How much am I allowed to contribute per year? A: You can contribute up to $5,000 each year. With inflation, your contribution limit will increase in $500 increments (subject to government guidelines). Q: If I am earning no income, can I still make contributions to my TFSA? A: Yes. If you are eligible, you will accumulate contribution room each year even if you have earned no income. Q: What happens if I overcontribute for the year? A: Similar to an RRSP, a penalty will be assessed by the CRA of 1% per month on your excess contribution. Q: How will I know what my TFSA contribution room is for a given year? A: The CRA will track your contribution room. CRA intends to report this amount to individuals on their Notice of Assessment and through the My Account function on the CRA web site. Q: Is there a lifetime contribution limit? A: There will be no lifetime limit on the amount of your contributions. If you are eligible, you will accumulate $5,000 of contribution room every year, which will increase in $500 increments with inflation. Q: Can I withdraw the money I ve contributed to my TFSA for any purpose or for specific circumstances? A: You can withdraw amounts for any purpose. There are no restrictions. Q: How often can I withdraw from my TFSA? A: As often as you wish (depending on what you ve invested in) but some financial institutions may charge a withdrawal fee. There will be no withdrawal fees or annual administration fees with a TFSA from PH&N. Q: If I withdraw money from my TFSA, can I re-contribute this withdrawn amount later on in the tax year? A: Withdrawals you make in the current calendar year will be added to your unused contribution room. Amounts can t be re-contributed until the following calendar year or later. Q: Can I contribute to my spouse or common-law spouse s TFSA? A: You can give your spouse funds for them to contribute to a TFSA; such gifts will not be subject to CRA s attribution rules. Q: Can I open a joint TFSA account? A: No. Similar to registered retirement accounts such as RRSPs, government rules only permit individual accounts. Q: If I pass away, what happens to the income and capital gains of my TFSA? A: Earnings that accrue after the account holder passes away are taxable whereas earnings which accrued before death remain exempt. The tax-free status of the earning Tax-Free Savings Account 4

6 can be maintained provided the account holder names his/her spouse or common-law partner as the successor account holder. Q: Can I name my spouse or common law partner as a direct beneficiary? A: You can name you spouse or common-law partner as the successor holder of your TFSA. Upon your death, the successor holder will become the new plan holder and the TFSA will maintain its tax exempt status. Q: If there is a breakdown of a marriage or commonlaw partnership, what will happen to my TFSA? A: TFSA assets may be transferred between spouses or common-law partners on marriage or relationship breakdown but the transfer will not reinstate contribution room of the transferring spouse or reduce the contribution room of the receiving spouse. Q: Could I use my TFSA as security for a loan? A: Yes. Assets within your TFSA can be used as collateral for a loan. Please check with your financial institution to see if this is applicable. Information about the Tax-Free Savings Account is based on what is currently available from the Canadian government. 5 Phillips, Hager & North Investment Management

7 The TFSA at Work: A Case Study A strength of the TFSA is its flexibility. This makes it an ideal vehicle to fund a variety of expenditures throughout your lifetime. Here s a simple case study that illustrates how you can use TFSAs to finance a variety of goals. Assume that Eric started contributing to a TFSA at age 18. If he contributed $5,000 per year for six years, assuming a return of 5% per year, he would have $34,000 after six years. At age 24, after graduating from law school, he decides to take a trip to Europe and withdraws $20,000 of his TFSA savings. He would now have an extra $20,000 in contribution room. After returning from his trip, Eric starts his new job at a law firm. After four years, he is able to make up for his TFSA deficit by contributing $10,000 per year to the TFSA. At age 30, Eric marries Jane, also 30, who works at the same law firm. Eric and Jane withdraw $75,000 each from their TFSAs towards the down-payment on their new home. In the next decade, they are each able to contribute $10,000 per year to their respective TFSA to replenish the money they used for their down payment and continue saving for the future. When Eric and Jane turn 40, they decide to purchase a time share in Florida. They use $50,000 each from their TFSAs to purchase a share in an oceanfront condominium in Fort Lauderdale. And, in anticipation of funding their child s post-secondary education, between the ages of 41 and 47, Eric and Jane establish an RESP for their young child. After maximizing their RESP contribution to take advantage of the CESG grant, Eric and Jane contribute an additional $2,000 each per year to their TFSAs allocated for education-related expenses. When their child reaches university age, Eric and Jane are able to help fund their child s post-secondary education abroad at a U.S. university through a combination of RESP and TFSA withdrawals. The amount they each draw from their TFSA is $16,000 for four years. When Eric and Jane reach the age of 52, after their child s university education is complete, they continue contributing $15,000 each per year (by using a combination of current contribution room and previous years contribution room) until age 60 and then reduce their contributions to $12,000 each until age 65. The result is a nest egg of $1.2 million for retirement at age 65 all of which can be topped without tax consequences. With the money from their TFSAs, together with their RRSPs and other investments, they are able to fund a comfortable retirement. Note that contributions to their TFSAs do not interfere with RRSP or RESP limits. ($000 s) The TFSA at work over a lifecycle: Contribution activity from ages18-65 $40k (trip) Eric and Jane s TFSA Accounts Contributions (left-hand scale) Redemptions (left-hand scale) $10k $20k $20k Balance (right-hand scale) $150k (house) $24k $100k (time-share) $32k/yr (university tuition) $30k $24k ,250 1, ($000 s) This illustration assumes a 5% rate of return and a constant, $5,000 contribution limit for TFSAs. In reality, the TFSA limit is indexed to inflation, making the amount of sheltering even greater. For simplicity in this case, it is assumed that Eric and Jane begin contributing at the same time and make the same contributions and withdrawals.

8 Phillips Hager & North Investment Management (PH&N) is an operating division of RBC Global Asset Management Inc. (RBC GAM), an indirect, wholly-owned subsidiary of Royal Bank of Canada. RBC GAM is the manager and principal portfolio advisor of the PH&N Funds. The principal distributor of the PH&N Funds is Phillips, Hager & North Investment Funds Ltd. (PH&NIF), which uses the business name Phillips, Hager & North Investment Services. PH&N and Phillips, Hager & North are registered trademarks of Royal Bank of Canada. PH&N Investment Services is a trademark of Royal Bank of Canada. Used under licence. Copyright RBC Global Asset Management Inc., Publication date: January 19, 2009 PH&N Investment Services V A N C O U V E R Waterfront Centre 20th Floor 200 Burrard Street Vancouver, British Columbia Canada V6C 3N5 V I C T O R I A St. Andrew s Square I Suite Yates Street Victoria, British Columbia Canada V8W 1L6 C A L G A R Y Alberta Stock Exchange Tower Ave S.W. Calgary, Alberta Canada T2P 3C4 T O R O N T O 155 Wellington St. West 21st Floor Toronto, ON M5V 3K7 M O N T R E A L Tour McGill College Suite McGill College Avenue Montreal, Quebec Canada H3A 3M8 I N V E S T M E N T F U N D S A D V I C E & I N F O R M A T I O N Telephone: Facsimile: Website:

THE TAX-FREE SAVINGS ACCOUNT

THE TAX-FREE SAVINGS ACCOUNT THE TAX-FREE SAVINGS ACCOUNT The 2008 federal budget introduced the Tax-Free Savings Account (TFSA) for individuals beginning in 2009. The TFSA allows you to set money aside without paying tax on the income

More information

Your guide to the Tax-Free Savings Account

Your guide to the Tax-Free Savings Account INVESTMENTS Tax-Free Savings Account Your guide to the Tax-Free Savings Account An important part of any financial plan is savings. Short-term goals such as a vacation or long-term goals like retirement

More information

The Tax-Free Savings Account (TFSA) Frequently Asked Questions

The Tax-Free Savings Account (TFSA) Frequently Asked Questions TAX MANAGEMENT The Tax-Free Savings Account (TFSA) Frequently Asked Questions The Tax-Free Savings Account (TFSA) is a savings vehicle that started in 2009 and allows Canadian residents to earn investment

More information

Tax-Free Savings Account (TFSA) now available!

Tax-Free Savings Account (TFSA) now available! Tax-Free Savings Account (TFSA) now available! Customer-owners have a new way to save money with the Tax-Free Savings Account (TFSA), now available at Metro Credit Union. You can save or invest money without

More information

THE TAX-FREE SAVINGS ACCOUNT

THE TAX-FREE SAVINGS ACCOUNT THE TAX-FREE SAVINGS ACCOUNT BY READING THIS DOCUMENT, YOU WILL: Know the different features of the TFSA Master the differences between a contribution to an RRSP or a TFSA Identify target clienteles. Last

More information

Your guide to the Tax-Free Savings Account

Your guide to the Tax-Free Savings Account INVESTMENTS Tax-Free Savings Account Your guide to the Tax-Free Savings Account An important part of any financial plan is savings. Short-term goals such as a vacation or long-term goals like retirement

More information

The Proposed Tax-Free Savings Account

The Proposed Tax-Free Savings Account The Proposed Tax-Free Savings Account The Conservatives 2006 election promises included a proposal to eliminate capital gains taxes where the proceeds were reinvested within six months. Taxpayers and financial

More information

TAX-FREE SAVINGS ACCOUNT (TFSA)

TAX-FREE SAVINGS ACCOUNT (TFSA) TAX-FREE SAVINGS ACCOUNT () A practical addition to your client s savings portfolio Advisor s document Investment THE TAX-FREE SAVINGS ACCOUNT () The Tax-Free Savings Account () is probably the single

More information

Invest. Tax-Free (It will make you smile) Tax-Free Savings Account

Invest. Tax-Free (It will make you smile) Tax-Free Savings Account Invest. Tax-Free (It will make you smile) Tax-Free Savings Account A Saving & Investing Revolution The Tax-Free Savings Account (TFSA) is considered to be the most important personal savings plan introduced

More information

1.1 How can I plan for my retirement income?... 1. 1.2 Your retirement income needs... 1. 1.3 Converting your RSP... 1

1.1 How can I plan for my retirement income?... 1. 1.2 Your retirement income needs... 1. 1.3 Converting your RSP... 1 R e t i r e m e n t I n c o m e F u n d s I n f o r m a t i o n B o o k l e t. This booklet is intended to address questions commonly asked about Retirement Income Funds (RIFs). The booklet is not intended

More information

TFSA Tax Free Savings Account

TFSA Tax Free Savings Account TFSA Tax Free Savings Account Banking Insurance Planning Table of Contents WHAT is A TFsA? 1 Who can open a TFSA? Who Could Benefit from a TFSA? Non-resident holders Qualified investment in a TFSA contributions

More information

T h e R e t i r e m e n t S a v i n g s D e b a t e...

T h e R e t i r e m e n t S a v i n g s D e b a t e... T h e R e t i r e m e n t S a v i n g s D e b a t e............. I n s i d e o r o u t s i d e t h e R R S P s t r u c t u r e? RRSPs have traditionally been viewed as the most efficient, self-funding

More information

MEMBER TAX-FREE SAVINGS ACCOUNT A Fresh Approach To Your Savings

MEMBER TAX-FREE SAVINGS ACCOUNT A Fresh Approach To Your Savings MEMBER TAX-FREE SAVINGS ACCOUNT A Fresh Approach To Your Savings Tax-Free Savings Account: A Fresh Approach to Your Savings TFSA Dollar Limit (Contribution Limit) Contributions to your TFSA may only be

More information

How Can You Reduce Your Taxes?

How Can You Reduce Your Taxes? RON GRAHAM AND ASSOCIATES LTD. 10585 111 Street NW, Edmonton, Alberta, T5M 0L7 Telephone (780) 429-6775 Facsimile (780) 424-0004 Email rgraham@rgafinancial.com How Can You Reduce Your Taxes? Tax Brackets.

More information

TAX-FREE SAVINGS ACCOUNTS (TFSAs) Investor Guide

TAX-FREE SAVINGS ACCOUNTS (TFSAs) Investor Guide TAX-FREE SAVINGS ACCOUNTS (TFSAs) Investor Guide Introduction Since its introduction in 1957, the Registered Retirement Savings Plan (RRSP) has been one of the best tax shelters available. Aside from RRSPs,

More information

Tax-Free Savings Account

Tax-Free Savings Account Investing Tax-Free Savings Account Helping you reach your goals sooner 2 Investing For short-term and long-term goals, consider a Tax-Free Savings Account Everyone has different reasons for saving and

More information

Investor Guide. RRIF Investing. Managing your money in retirement

Investor Guide. RRIF Investing. Managing your money in retirement Investor Guide RRIF Investing Managing your money in retirement 1 What s inside It s almost time to roll over your RRSP...3 RRIFs...4 Frequently asked questions...5 Manage your RRIF...8 Your advisor...10

More information

Everything you need to know about Tax-Free Savings Accounts (TFSAs)

Everything you need to know about Tax-Free Savings Accounts (TFSAs) Tax, Retirement & Estate Planning Services TAX-FREE SAVINGS ACCOUNT THE FACTS Everything you need to know about Tax-Free Savings Accounts (TFSAs) Until 2009, many Canadians held their savings in Registered

More information

Introducing. Tax-Free Savings Accounts

Introducing. Tax-Free Savings Accounts Introducing Tax-Free Savings Accounts Tax-Free Savings Accounts A new way to save Tax-free savings accounts were introduced by the federal government in the 2008 budget as an incentive for Canadians to

More information

Tax-Free Savings Accounts (TFSAs) Investor Guide

Tax-Free Savings Accounts (TFSAs) Investor Guide Tax-Free Savings Accounts (TFSAs) Investor Guide Introduction Since its introduction in 1957, the Registered Retirement Savings Plan (RRSP) has been one of the best tax shelters available. Aside from RRSPs,

More information

Tax-Free Savings Account(TFSA) trademark of The Empire Life Insurance Company. Policies are issued by The Empire Life Insurance Company.

Tax-Free Savings Account(TFSA) trademark of The Empire Life Insurance Company. Policies are issued by The Empire Life Insurance Company. Tax-Free Savings Account(TFSA) Registered trademark of The Empire Life Insurance Company. Policies are issued by The Empire Life Insurance Company. Tax-Free Savings Account Canadians need all the help

More information

Module 5 - Saving HANDOUT 5-7

Module 5 - Saving HANDOUT 5-7 HANDOUT 5-7 Savings Tools (detailed) 5 Contents High interest savings account This is a type of deposit account. The bank pays you interest. The rate changes with the prime rate set by the bank. This is

More information

US Citizens Living in Canada

US Citizens Living in Canada US Citizens Living in Canada Income Tax Considerations 1) I am a US citizen living in Canada. What are my income tax filing and reporting requirements? US Income Tax Returns A US citizen residing in Canada

More information

Table of Contents. Page 2 of 10

Table of Contents. Page 2 of 10 Page 1 of 10 Table of Contents What is an RRSP?... 3 Why should you put money into an RRSP?... 3 When should you start an RRSP?... 3 The convenience of regular RRSP deposits... 3 How much can you contribute?...

More information

MEMBER TAX-FREE SAVINGS ACCOUNT A Fresh Approach To Your Savings

MEMBER TAX-FREE SAVINGS ACCOUNT A Fresh Approach To Your Savings MEMBER TAX-FREE SAVINGS ACCOUNT A Fresh Approach To Your Savings Tax-Free Savings Account: A Fresh Approach to Your Savings TFSA Dollar Limit (Contribution Limit) Contributions to your TFSA may only be

More information

The Canadian Retirement Income Guide 2014 Edition. Maximizing your retirement income while minimizing your taxes

The Canadian Retirement Income Guide 2014 Edition. Maximizing your retirement income while minimizing your taxes The Canadian Retirement Income Guide 2014 Edition Maximizing your retirement income while minimizing your taxes Introduction When you retire, not only does your daily routine change, but your pay cheque

More information

pensions backgrounder #4

pensions backgrounder #4 pensions backgrounder #4 Private Retirement Savings Part 4 in a Series The full series of pension backgrounders are contained in the National Union s Pensions Manual, Fourth Edition available from the

More information

Taxation of Students

Taxation of Students MITCHELL & PEARCE PROFESSIONAL CORPORATION Chartered Professional Accountants. Taxation of Students If you re a student, you want to stretch your budget as far as you can. When it comes to personal income

More information

>Most investors spend the majority of their time thinking and planning

>Most investors spend the majority of their time thinking and planning Generating Retirement Income using a Systematic Withdrawal Plan SPECIAL REPORT >Most investors spend the majority of their time thinking and planning around how best to save for retirement. But once you

More information

US Estate Tax for Canadians

US Estate Tax for Canadians US Estate Tax for Canadians RRSPs, RRIFs and TFSAs). The most common US situs assets are US real estate (e.g. vacation home) and shares in US corporations. Please see Appendix A for a list of other common

More information

Common-law (including same-sex) partners taxation information

Common-law (including same-sex) partners taxation information Tax & Estate Common-law (including same-sex) partners taxation information Under the Income Tax Act (Canada), all common-law relationships, either opposite- or same-sex, are treated equally. For tax purposes,

More information

& Estate Planning. Tax-Free Savings Account. The Facts

& Estate Planning. Tax-Free Savings Account. The Facts Tax, Retirement & Estate Planning Services Tax-Free Savings Account The Facts Everything you need to know about Tax-Free Savings Accounts (TFSAs) Until 2009, many Canadians held their savings in Registered

More information

Understanding RSPs. Your Guide to Retirement Savings Plans

Understanding RSPs. Your Guide to Retirement Savings Plans Understanding RSPs Your Guide to Retirement Savings Plans Getting Started Some retirement basics Getting Ahead Setting your retirement savings goals Getting the Most Maximizing your RSP growth Getting

More information

Understanding (and choosing between)

Understanding (and choosing between) Tangerine guides to personal finance Understanding (and choosing between) RSPs & TFSAs A guide for Canadians While RSPs have been around for a long time, TFSAs are relatively new and not always well understood

More information

year-end tax planning opportunities

year-end tax planning opportunities year-end tax planning opportunities These important tax and financial planning moves can help prepare you for the upcoming tax season and better align your portfolio with your short- and long-term goals.

More information

Put more money in your pocket with your group tax-free savings account

Put more money in your pocket with your group tax-free savings account Put more money in your pocket with your group tax-free savings account A tax-free savings account (TFSA) is a flexible investment savings plan that allows you to earn investment income tax-free and pay

More information

This strategy gives a person the ability to take advantage of the tax-sheltering ability of a life insurance policy.

This strategy gives a person the ability to take advantage of the tax-sheltering ability of a life insurance policy. Insuring the Future In this Newsletter: Supplementing Retirement Income Who should be looking at this strategy? The Registered Savings Problem John Jordan, CFP CERTIFIED FINANCIAL PLANNER Phone: (519)

More information

Newcomer Finances Toolkit. Investments. Worksheets

Newcomer Finances Toolkit. Investments. Worksheets Newcomer Finances Toolkit Investments Worksheets Ottawa Community Loan Fund Fonds d emprunt Communautaire d Ottawa 22 O Meara St., Causeway Work Centre, Ottawa, ON K1Y 4N6 Tel: 613-594-3535 Fax: 613-594-8118

More information

Wealth Management Essentials for Oil and Gas Professionals

Wealth Management Essentials for Oil and Gas Professionals Wealth Management Essentials for Oil and Gas Professionals Presented By Sean Baylis Investment Advisor Disclaimer Flow-through investments may not be suitable for all investors. Please read the prospectus

More information

Income Splitting CONTENTS

Income Splitting CONTENTS June 2012 CONTENTS The attribution rules Family income splitting Business income splitting Income splitting through corporations Income splitting in retirement Summary Income Splitting With Canada s high

More information

> The Role of Insurance in Wealth Planning

> The Role of Insurance in Wealth Planning > The Role of Insurance in Wealth Planning Executive retirement solutions A S S A N T E E S T A T E A N D I N S U R A N C E S E R V I C E S I N C. Executive retirement solutions Everyone wants enough retirement

More information

Total Financial Solutions. Practical Perspectives on Tax Planning

Total Financial Solutions. Practical Perspectives on Tax Planning TM Trademark used under authorization and control of The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF. All insurance products are sold through ScotiaMcLeod Financial

More information

TAX-FREE SAVINGS ACCOUNT (TFSA)

TAX-FREE SAVINGS ACCOUNT (TFSA) TAX-FREE SAVINGS ACCOUNT (TFSA) DO YOURSELF A FAVOUR! Like paying less tax? Don t we all! And just think of what you could do with the extra money: Travel the world Take time off work Retire early Spoil

More information

Retirement Enhancer. A tax-efficient way to enhance your retirement income using universal life insurance

Retirement Enhancer. A tax-efficient way to enhance your retirement income using universal life insurance Retirement Enhancer A tax-efficient way to enhance your retirement income using universal life insurance Will you have enough retirement income to fulfil your dreams? Today, many of us are living longer

More information

Registered Retirement Income Funds

Registered Retirement Income Funds Registered Retirement Income Funds The Income Tax Act states that a Registered Retirement Savings Plan (RRSP) matures by December 31 of the year in which the planholder (annuitant) reaches age 69. At the

More information

This article, prepared by PARO s auditors Rosenswig McRae Thorpe LLP, outlines some points to consider in preparing your income tax returns.

This article, prepared by PARO s auditors Rosenswig McRae Thorpe LLP, outlines some points to consider in preparing your income tax returns. 2014 Edition for 2013 Returns This article, prepared by PARO s auditors Rosenswig McRae Thorpe LLP, outlines some points to consider in preparing your income tax returns. Remember that: RRSP Contribution

More information

ANSWERING YOUR RRSP QUESTIONS

ANSWERING YOUR RRSP QUESTIONS November 2014 CONTENTS What is an RRSP? Contributing to your RRSP Investing and managing your RRSP Making withdrawals from your RRSP Summary ANSWERING YOUR RRSP QUESTIONS RRSPs are an important component

More information

2015 Year-end Tax Tips

2015 Year-end Tax Tips TAX & ESTATE PLANNING October 2015 2015 Year-end Tax Tips As year-end approaches, here s our updated, annual look at some year-end tax tips you may wish to keep in mind as we enter the final weeks of 2015.

More information

P H & N M o n t h l y I n c o m e F u n d :

P H & N M o n t h l y I n c o m e F u n d : P H & N M o n t h l y I n c o m e F u n d : A dependable source of income in all markets It s now been over two years since many investors fled to safety shifting their holdings into savings accounts,

More information

MUTUAL FUND TAX GUIDE. For your 2013 Tax Return

MUTUAL FUND TAX GUIDE. For your 2013 Tax Return MUTUAL FUND TAX GUIDE For your 2013 Tax Return LESS = MORE THE LESS TAX YOU PAY, THE MORE YOUR INVESTMENTS WILL EARN February 2014 Did you know that taxes are probably the biggest expense you ll face over

More information

INSURED RETIREMENT PROGRAM

INSURED RETIREMENT PROGRAM INSURED RETIREMENT PROGRAM www.financialhorizons.com INSURED RETIREMENT PROGRAM One of the challenges faced by individuals who earn a higher income is finding tax efficient ways to save for retirement.

More information

NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE. Tax-advantaged IRAs. Invest in your retirement savings while reducing taxes

NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE. Tax-advantaged IRAs. Invest in your retirement savings while reducing taxes NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE Taxadvantaged IRAs Invest in your retirement savings while reducing taxes Find the answers inside Why invest for retirement? p. 1 Discover three good reasons

More information

Registered Retirement Income Funds

Registered Retirement Income Funds Registered Retirement Income Funds Registered Retirement Income Funds Most Canadians are familiar with registered retirement savings plans (RSPs). Many spend decades accumulating wealth in these tax deferred

More information

financial planning & advice

financial planning & advice financial planning & advice Tips for successful investing. Start early and invest regularly Do your homework take the time to become an informed investor Develop an investment strategy you are comfortable

More information

The Estate Preserver Plan. Advisor Guide

The Estate Preserver Plan. Advisor Guide The Estate Preserver Plan Advisor Guide Table of Contents Introduction to the Estate Preserver Plan 2 The Opportunity 3 The Solution 4 Tax Considerations 5 Probate and Executor Fees 7 Case Study 8 Underwriting

More information

The Corporate Investment Shelter. Corporate investments

The Corporate Investment Shelter. Corporate investments September 2012 The Corporate Investment Shelter Many successful business owners retire with more assets than they need to live well. With that realization, their focus can shift from providing retirement

More information

TAX, RETIREMENT & ESTATE PLANNING SERVICES. Registered Retirement Savings Plan (RRSP) THE FACTS

TAX, RETIREMENT & ESTATE PLANNING SERVICES. Registered Retirement Savings Plan (RRSP) THE FACTS TAX, RETIREMENT & ESTATE PLANNING SERVICES Registered Retirement Savings Plan (RRSP) THE FACTS Table of contents What is an RRSP?... 3 Why should I contribute to an RRSP?... 4 When can I contribute?...

More information

Blinded by the Refund : Why TFSAs may beat RRSPs as better retirement savings vehicle for some Canadians by Jamie Golombek

Blinded by the Refund : Why TFSAs may beat RRSPs as better retirement savings vehicle for some Canadians by Jamie Golombek January 2011 Blinded by the Refund : Why TFSAs may beat RRSPs as better retirement savings vehicle for some Canadians by Jamie Golombek With the introduction of Tax Free Savings Accounts (TFSAs) in 2009,

More information

Easy Guide to Retirement Income Options

Easy Guide to Retirement Income Options Easy Guide to Retirement Income Options Contents PAGE 1: Your retirement income choices... 2 1. Convert your RSP into an annuity... 2 a. Life Annuity... 2 b. Term Certain Annuity to Age 90... 2 2. Convert

More information

Advisor Guide. The BMO. Insurance Insured Retirement Plan

Advisor Guide. The BMO. Insurance Insured Retirement Plan Advisor Guide The BMO Insurance Insured Retirement Plan Table of Contents Introduction to The BMO Insurance Insured Retirement Plan 2 The Opportunity 3 The Solution 4 The BMO Insurance Insured Retirement

More information

Tax-Free Savings Account (TFSA), Guide for Individuals

Tax-Free Savings Account (TFSA), Guide for Individuals Tax-Free Savings Account (TFSA), Guide for Individuals RC4466(E) Rev. 11 Before you start Is this guide for you? This guide is intended for individuals who have opened or who are considering opening a

More information

BEING FINANCIALLY PREPARED FOR RETIREMENT The Scary Facts! $1.00 item in 1972, costs $3.78 today At the average rate of inflation, the price you pay for an item today will be double in 20 years almost

More information

> The Role of Insurance in Wealth Planning

> The Role of Insurance in Wealth Planning > The Role of Insurance in Wealth Planning Tax-sheltered investing using life insurance A S S A N T E E S T A T E A N D I N S U R A N C E S E R V I C E S I N C. Tax-sheltered investing using life insurance

More information

2014 Year-End Tax Planning Tips for Seniors, Employees, Families and Students

2014 Year-End Tax Planning Tips for Seniors, Employees, Families and Students 2014 Year-End Tax Planning Tips for Seniors, Employees, Families and Students While the end of 2014 is approaching, there is still an opportunity for individuals to review their financial situation with

More information

Death and taxes. Tax & Estate

Death and taxes. Tax & Estate Tax & Estate Everyone knows that life has two certainties: death and taxes. Fewer know that the two often coincide. Canada has no official death, estate or inheritance taxes. However, without proper planning,

More information

The Great Divide: Income splitting strategies can lower your family s taxes by Jamie Golombek

The Great Divide: Income splitting strategies can lower your family s taxes by Jamie Golombek March 2015 The Great Divide: Income splitting strategies can lower your family s taxes by Jamie Golombek While the new Family Tax Cut credit, which provides a form of income splitting, has been getting

More information

Your Guide to Retirement Income Planning

Your Guide to Retirement Income Planning Your Guide to Retirement Income Planning Your Guide to Retirement Income Planning 3 Your retirement income plan How to create secure income in retirement Your retirement will be as unique as you are. Travel,

More information

The Individual Pension Plan. An opportunity to have your cake and eat it too!

The Individual Pension Plan. An opportunity to have your cake and eat it too! Special Report An introduction to: The Individual Pension Plan An opportunity to have your cake and eat it too! Gerard Hass, CA, CFP, CFA Portfolio Manager Raymond James Ltd. 1 What is an Individual Pension

More information

lesson twelve saving and investing overheads

lesson twelve saving and investing overheads lesson twelve saving and investing overheads pay yourself first (a little can add up) example 1: Save this each week At % Interest In 10 years you ll have $7.00 5% $4,720 14.00 5% 9,440 21.00 5% 14,160

More information

Tax-Free Savings Account (TFSA), Guide for Individuals

Tax-Free Savings Account (TFSA), Guide for Individuals Tax-Free Savings Account (TFSA), Guide for Individuals RC4466(E) Rev. 12 Before you start Is this guide for you? This guide is intended for individuals who have opened or who are considering opening a

More information

INVESTMENT HOLDING COMPANIES

INVESTMENT HOLDING COMPANIES INVESTMENT HOLDING COMPANIES > RBC DOMINION SECURITIES INC. FINANCIAL PLANNING PUBLICATIONS At RBC Dominion Securities Inc., we have been helping clients achieve their financial goals since 1901. Today,

More information

There are no changes to personal federal income tax rates or income brackets for the 2015 tax year.

There are no changes to personal federal income tax rates or income brackets for the 2015 tax year. The 2015 Federal Budget was the first for Finance Minister Joe Oliver, and it tabled a number of proposals that will impact the financial, tax and estate plans of Canadians. The following is a summary

More information

You and Your SEVERANCE: Mackenzie Tax & Estate Planning

You and Your SEVERANCE: Mackenzie Tax & Estate Planning You and Your SEVERANCE: PUT YOUR MONEY TO WORK Mackenzie Tax & Estate Planning 1 2 Are you facing a change in your employment? Severance, early retirement, extended layoff? Transitions like these can be

More information

Incorporating your farm. Is it right for you?

Incorporating your farm. Is it right for you? Incorporating your farm Is it right for you? RBC Royal Bank Incorporating your farm 2 The following article was written by RBC Wealth Management Services If you have considered incorporating your farm,

More information

TO HELP YOU MAKE THE MOST OF YOUR RETIREMENT DAYS

TO HELP YOU MAKE THE MOST OF YOUR RETIREMENT DAYS RETIREMENT GUIDE TO HELP YOU MAKE THE MOST OF YOUR RETIREMENT DAYS Whether it s a long-term project or a dream that s about to come true, you likely have no shortage of ideas to fill up this exciting period

More information

The Tax-Free Savings Account An Analysis of the Legislation

The Tax-Free Savings Account An Analysis of the Legislation The Tax-Free Savings Account An Analysis of the Legislation The Department of Finance predicts that Tax Free Savings Accounts (TFSAs) are set to become a major component of Canadians financial plans so

More information

Solut!ons for financial planning

Solut!ons for financial planning Understanding your options this RRSP season 16 Solut!ons for financial planning Consider mutual funds and segregated fund contracts You ve likely heard it before: you should regularly contribute to a Registered

More information

Making the right choice

Making the right choice GROUP RETIREMENT SAVINGS SOLUTIONS Simply let our experts guide you Desjardins & Co. Making the right choice Reference Guide for Employers Group Retirement Savings Products At Desjardins Group, we excel

More information

Clients want to know: How can I keep more of my retirement income?

Clients want to know: How can I keep more of my retirement income? Clients want to know: How can I keep more of my retirement income? After reading this, you should understand: The strategies that enable pensioners to pay less tax Regardless of the source of retirement

More information

GROUP LIFE INCOME FUND (LIF) FOR MCGILL FACULTY & STAFF

GROUP LIFE INCOME FUND (LIF) FOR MCGILL FACULTY & STAFF GROUP LIFE INCOME FUND (LIF) FOR MCGILL FACULTY & STAFF MY GROUP LIF/RIF PLAN... IN BRIEF At the earlier of your retirement date and attaining age 65, you will be eligible to start receiving a retirement

More information

Universal Life. What is Universal Life? The Structure of a Universal Life Policy. A Flexible, Tax-Sheltered Investment Program

Universal Life. What is Universal Life? The Structure of a Universal Life Policy. A Flexible, Tax-Sheltered Investment Program Many Canadians consider their Registered Retirement Saving Plan (RRSP) to be their best tax shelter. However, Universal Life (UL) insurance has become an increasingly popular long-term financial planning

More information

Early Retirement Strategies

Early Retirement Strategies If you or a member of your family is facing a permanent lay-off, voluntary early retirement or forced early retirement, there are many important decisions to be made decisions that can have a significant

More information

Your group tax-free savings account

Your group tax-free savings account Your group tax-free savings account What s a TFSA? It s a flexible investment savings plan that allows you to earn tax-free investment income. A tax-free savings account (TFSA) is a new type of savings

More information

Tax-Free Savings Accounts versus Registered Retirement Savings Plans

Tax-Free Savings Accounts versus Registered Retirement Savings Plans Tax-Free Savings Accounts versus Registered Retirement Savings Plans In January 2009, the federal government created an additional tax-effective vehicle for Canadians to save called the Tax-Free Savings

More information

Tax-Free Savings Account (TFSA), Guide for Individuals

Tax-Free Savings Account (TFSA), Guide for Individuals Tax-Free Savings Account (TFSA), Guide for Individuals RC4466(E) Rev. 13/11 Is this guide for you? T his guide is for individuals who have opened or who are considering opening a tax-free savings account

More information

Responsible leveraging. A wealth creation strategy

Responsible leveraging. A wealth creation strategy Responsible leveraging A wealth creation strategy What is leveraging? Borrowing to invest is a wealth-building strategy that has been used for thousands of years. The financial term for borrowing to invest

More information

Traditional and Roth IRAs. Invest for retirement with tax-advantaged accounts

Traditional and Roth IRAs. Invest for retirement with tax-advantaged accounts Traditional and s Invest for retirement with tax-advantaged accounts Your Retirement It is your ultimate reward for a lifetime of hard work and dedication. It is a time when you should have the financial

More information

John and Jane Client June 2015

John and Jane Client June 2015 John and Jane Client June 2015 Table Of Contents About This Plan 2 Assumptions 3 About You 4 Your Goals & Objectives 5 Opportunities, Concerns & Notes 6 Net Worth Statement 7 Sources of Income 8 Lifestyle

More information

TAX-EFFICIENT INVESTMENT STRATEGIES FOR EVERY LIFE STAGE: THREE CASE STUDIES

TAX-EFFICIENT INVESTMENT STRATEGIES FOR EVERY LIFE STAGE: THREE CASE STUDIES Page 1 of 5 TAX-EFFICIENT INVESTMENT STRATEGIES FOR EVERY LIFE STAGE: THREE CASE STUDIES March 06, 2012 Jordan Dancey has just started his first full-time job. Bill and DeeDee Williams are in their 50s,

More information

Charitable Donations of Securities

Charitable Donations of Securities The Navigator RBC WEALTH MANAGEMENT SERVICES Charitable Donations of Securities Gifting shares instead of cash could enhance your tax benefit To encourage individuals to increase their charitable giving,

More information

Investment Account Application

Investment Account Application Social Housing Investment Funds Investment Account Application Before you send us your investment account application, please ensure you have: Attached a completed Resolution of Directors form (Section

More information

Traditional and Roth IRAs. Invest for retirement with tax-advantaged accounts

Traditional and Roth IRAs. Invest for retirement with tax-advantaged accounts Traditional and Roth IRAs Invest for retirement with tax-advantaged accounts Your Retirement It is your ultimate reward for a lifetime of hard work and dedication. It is a time when you should have the

More information

Your investment options

Your investment options Your options Contents Introducing RBC Global Asset Management i Serving Clients with a Winning Strategy i Investing Starts with Understanding Your Goals ii Guaranteed Investment Certificates 1 Group Savings

More information

Income Taxes module. After covering the topics in the module booklets or web pages and this workshop, learners will be able to:

Income Taxes module. After covering the topics in the module booklets or web pages and this workshop, learners will be able to: Income Taxes module Trainer s Introduction Most people are aware that they must file an income tax return in Canada, if only to claim back any excess taxes that were withheld from their income. Filing

More information