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A New Year’s Resolution You Shouldn’t Break – Saving For Retirement!

Many of us set New Year’s resolutions for ourselves and often those resolutions have to do with finances. January is the month we say, “Ok, this year I am going to save more and spend less”. This article won’t tell you how to spend less, but it will outline two government sponsored programs available to help you save for retirement or even just a rainy day! Of course these are not the only vehicles you can accumulate money with – those include anything from putting dollars under the mattress to the most sophisticated tax shelter schemes – but these two are the most popular.

Tax Free Savings Accounts (TFSA)

This is the new kid on the block established by the government as of January 1, 2009. Canadian residents age 18 or older could contribute up to $5,000 into a TFSA. The funds would grow tax free and although there is no tax deduction for the contribution, withdrawals can be made at any time without paying tax. Also, there is no earned income requirement for an individual to contribute. For those years where no contribution is made, it can be made in later years. Any withdrawals can be paid back in addition to current contributions. Be careful not to do this in the same year as the money was withdrawn so as to avoid a tax penalty for over payment. Read more

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TFSA or RRSP?

One of the most common investment questions Canadians ask themselves today is, “Which is better, TFSA or RRSP”?

Here’s the good news – it doesn’t have to be an either or choice.  Why not do both? Below are the features of both plans to help you understand the differences.

Tax Free Savings Account (TFSA) 

  • Any Canadian resident age 18 or over may open a TFSA. Contribution is not based on earned income.  There is no maximum age for contribution. 
  • Maximum contribution is $5,500 per year starting in 2013 ($5,000 per year for the period of 2009-2012).  In 2015, the maximum contribution was increased to $10,000 by the Harper government.  This increase may be short lived as the Liberals have stated they will reduce the maximum back to the previous limit. In the meantime, you can take advantage of the $10,000 limit. The contribution must be made by December 31st.

Read more

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Changes to the Taxation of Estates

Estate, trust and tax planners have long favoured testamentary trusts as vehicles to pass along assets to beneficiaries or heirs.   A testamentary trust is generally a trust or estate that is created the day a person dies.  Commonly, these trusts are established in a testator’s will.

A significant benefit to testamentary trusts had been that income earned and retained in the trust received the same graduated rate of income tax as an individual tax payer.  Unfortunately, under the terms of Bill C-43, after January 1, 2016, all income retained in the trust will now be taxed at the highest rate of tax applicable in the province in which the trust is resident.

There will be two exceptions to this new rule – The Graduated Rate Estate (GRE) and a Qualified Disability Trust (QDT). Read more

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A Lifetime Gift for Your Grandchildren

The Cascading Life Insurance Strategy

If you are a grandparent wishing to provide an asset for your grandchildren without compromising your own financial security you may want to consider an estate planning application known as cascading life insurance.

How does the Cascading Life Insurance Strategy work?

  • The grandparent would purchase an insurance policy on his or her grandchild and funds the policy to create significant cash value;
  • The grandparent would own the policy and name their adult child as contingent owner and primary beneficiary;

Read more

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The Best Way to Insure Your Mortgage

If you have a mortgage it makes good sense to insure it.  Owning a debt free home is an objective of any sound financial plan.  In addition, making sure your mortgage is paid off in the event of your death will benefit your family greatly.

The question is should you purchase this coverage through your lending institution or from a life insurance company?  A good rule of thumb to follow when searching for advice?  Ask an expert! Read more

ARTICLES OF INTEREST

11
Jan
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Tying the Knot

Marriage is the coming together of two separate lives, but it’s also the coming together of two separate financial histories and situations.

And while your financial past will continue to be a part of your life, you’ll also be contending with a lifetime of new financial experiences and decisions with another person. One key to success is to be ready to handle everything that comes up. And having the financial resources to deal with the unexpected will be as important as developing the communication skills needed to talk about financial matters. Read more »

14
Dec
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Six creative ways to teach your kids about money

Understanding financial issues is challenging enough for adults, so it’s no wonder many parents struggle when it comes to teaching them to kids.

According to a Harris/Decima Youth Financial Literacy Study  for the Canadian Institute of Chartered Accountants, 84% of Canadians believe young people are ill-prepared to manage their finances when they enter the workforce. While 78% of Canadian parents have attempted to teach their children financial management skills, 60% believe that they haven’t been successful. Read more »