This year has been a roller coaster for many people – but, as 2020 draws to a close, we must turn our attention to end-of-year tax planning. Consider these year-end tax tips for your clients.
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Learn how Employment Insurance (EI) benefits and the new Canada Recovery Benefit (CRB) are replacing support offered by the Canada Emergency Response Benefit (CERB).
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Descriptor: An attorney designated in a power of attorney cannot make testamentary dispositions on behalf of a grantor, and this can pose problems in certain situations involving registered plans.
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A registered education savings plan (RESP) is an effective vehicle for funding post-secondary education expenses, although the complex withdrawal rules can be confusing. Parents with children who are currently attending or who will be pursuing post-secondary education want to make sure tuition and living expenses are well funded through RESP withdrawals. Parents whose children have already completed their post-secondary education or who have decided not to pursue post-secondary education at all, want to wind down the RESP in the most tax-efficient way. In this article, we go back to basics and review the three types of withdrawals available from an RESP, along with offering some strategic considerations when making a withdrawal.
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Our final blog post in this series covers beneficiary entitlements and creditor protection as they relate specifically to locked-in plans.
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Picking up from last month’s blog post, let’s continue our look at locked-in plans. Similar to Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs), locked-in plans also consist of pre-retirement plans and post-retirement plans. In addition, specific rules relate to unlocking amounts from these plans.
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This is a three-part series focused on locked-in plans. In this series, you’ll learn the basics to help clients with these less-understood plans, explore pre-retirement and post-retirement plans and unlocking options, and get an overview of issues surrounding beneficiaries and creditors. Let’s first understand the basics in this part.
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Learn about the measures the federal government has introduced to help Canadians manage the impact of the COVID-19 pandemic.
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The 25 per cent reduction in mandatory Registered Retirement Income Fund (RRIF) minimums for 2020 was one of a handful of tax relief measures the Canadian federal government implemented as part of its COVID-19 economic stimulus. The government has made similar changes in the past, with the RRIF minimums temporarily reduced by 25 per cent in 2008 amid the global financial crisis. RRIF minimums also came into focus in 2015, with the government lowering the prescribed factors it uses to calculate minimum withdrawals. Reducing RRIF minimums is aimed at increasing financial longevity for individuals in retirement who are living longer. The government has also changed the age at which Registered Retirement Savings Plans (RRSPs) mature several times over the years. Originally set at age 71, it changed to age 69 in 1996 and changed back to age 71 in 2007.
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Updated March 25, 2020
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The Thursday, April 30 tax filing deadline for individuals is coming up fast. Here’s a summary of new limits, new rates, tax changes and new services.
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Learn how to maximize long-term tax benefits using tax-sheltered or tax-deferred registered plans.
One of the biggest benefits of registered plans in Canada is the tax-deferral opportunity on the compound growth inside the plans. In other words, registered plans generally allow investors to avoid the periodic tax on investment income generated; non-registered plans, in contrast, expose investors to annual taxation of income distributions. Without the annual “tax-drag,” investments in registered plans can grow faster than investments in non-registered plans. Given that, which registered plan is best to use? Here are key factors to consider when deciding whether to invest in a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA).
RRSP contributions are deductible against income, and RRSP redemptions are 100% taxable as income. TFSA contributions are made with after-tax money, and TFSA withdrawals are tax-free. Funds grow inside both plans on a tax-deferred basis.
RRSPs and TFSAs are, in fact, designed to be tax neutral, assuming a constant marginal tax rate (MTR). When an investor has a constant MTR throughout his or her working and retirement years, there should be no difference between an RRSP and a TFSA in net after-tax income.
