IMPORTANT TAX FILING INFORMATION

IMPORTANT TAX FILING INFORMATION

The following is general tax filing information that may or may not apply to you.

 

If you have a Non-Registered account and there was activity in your Non-Registered account(s) in 2021 you can expect to receive a tax package from your Portfolio Management team. If you do not have a Non-Registered account you will not receive this.

This tax package usually includes a Statement of Annual Management Fees, Position Report, Foreign Asset Report, and a Realized Gain & Loss Report for Non-Registered accounts.

You will need to pair the Gain & Loss Report with the T5008 tax slip that you will receive from your Custodian. The Gain & Loss Report provides the book value of activity in the account, while the T5008 provides the proceeds of disposition. Please provide both documents to your tax preparer. If there was no activity in your Non-Registered account or you do not have a Non-Registered account, you will not receive these forms.

 

Special Reporting

Some of the Portfolio Managers invest in certain holdings which have a different type of reporting. The distributions for these in Non-Registered accounts are reported on CRA Form T3 and/or T5013. These forms are expected to be sent out near the end of March.

If you made an RRSP or Spousal RRSP contribution in the first 60 days of 2022, the deadline for mailing these slips is the end of March.

 

We advise you to wait until after March to file your return to ensure you receive all necessary slips.

 

If you are signed up for online access with your Custodian and have your preferences set to electronic delivery, your tax slips may be available online only. Therefore, you will need to login to your account to check for tax slips as there will not be a hard copy mailed.

NBIN Client Login

Credential Client Login

 

Please refer to the target tax slip mailing schedule below from National Bank Independent Network (NBIN)  and Credential Securities.

National Bank Independent Network (NBIN):

NBIN Registered Account Tax Slip Mailing Schedule

NBIN Non-Registered Tax Slip Mailing Schedule

 

Credential Securities:

Credential Tax Slip Mailing Schedule

 

If you have any questions, please contact our office. Find more information about the tax planning services we offer here.

HOW ARE MY ASSETS TAXED UPON DEATH?

HOW ARE MY ASSETS TAXED UPON DEATH?

One of the objectives of estate planning is to review and minimize potential taxes on your remaining assets.

Lets review how some common assets (RRSP/RIFs, TFSAs, Non-Registered Accounts, and Principal Residences) are taxed upon death.

RRSP (Registered Retirement Savings Plan) / RIF (Retirement Income Fund)

The accounts can be left to a spouse as a named beneficiary. This transaction will generate a tax slip, but this is not a taxable event. The spouse can receive the proceeds of the RRSP/RIF.

In some circumstances, the RRSP/RIF could also pass to a dependent child without triggering tax.

 

TFSA (Tax-Free Savings Account)

No tax and no reporting is necessary.

If a spouse is named as the successor owner, the full value of the TFSA can become the spouse’s with no tax impact (even if the successor owner spouse may have no TFSA room available).

You can name beneficiaries such as children, and the assets would be provided once appropriate legal requirements are met after death.

 

Non-Registered Account

Death is a taxable disposition and all assets are deemed disposed on the date of death (meaning they are considered sold). The applicable gain or loss must be considered and tax paid.

 

Principal Residence

No tax is owing on the sale of a principal residence, however it must be noted when filing taxes that the property was deemed disposed.

 

If you have a question pertaining to your specific financial situation or need some assistance with estate planning, please reach out and our financial advisors would be happy to assist you. You can learn more about the estate planning services we provide here.

 

QUESTIONS FROM CLIENTS: WHAT TAX SLIPS SHOULD I EXPECT TO RECEIVE?

QUESTIONS FROM CLIENTS: WHAT TAX SLIPS SHOULD I EXPECT TO RECEIVE?

In our new video series, we answer common questions from our clients. In this video, Kelley Doerksen, CFP® explains the tax slips generated by different investment accounts and which slips you may expect to receive this upcoming tax season. Learn about the tax planning services we can provide you here.

 

TFSA (Tax-Free Savings Account)

Clients often ask if they’re going to receive any sort of documentation for Tax-Free Savings Accounts. The answer is no, you don’t get any sort of slips or reporting for your TFSA contributions or withdrawals. But it’s important that either yourself or your advisor team is keeping track of those contributions and withdrawals. You can find your TFSA room on your CRA MyAccount to make sure that you’re on track for your contributions and withdrawals not going over; however, be aware that CRA doesn’t report on a regular basis for those contributions, so it’s a good idea to also keep track of these on your own.

RRSP (Registered Retirement Savings Plan) and RIF (Retirement Income Fund)

You will receive receipts for these accounts. For an RRSP contribution, you’ll receive a receipt for January 1 to December 31 as well as one for the first 60 days which is that period from January 1 to the end of February in the year following. You can use your RRSP receipts to reduce your taxable income. Watch for these to arrive around mid-March, especially for the first 60 days receipt.

When you withdraw from a RIF or from an RRSP, you will also receive a receipt. This will be a T4, so T4RRSP if you’ve taken from your RRSP or a T4RIF if you’ve withdrawn from your RIF. This is going to be added to your income and you’ll use that receipt to report your income from that registered account.

For more information about TFSA vs. RRSP accounts, refer to our infographic.

Non-Registered Accounts

For Non-Registered accounts, there is a lot more taxation involved and documentation to be aware of. You might receive a T3, which is a Statement of Trust Income, if you hold mutual funds. You could receive a T5, which is a Statement of Investment Income, which could be earned interest or dividends, etc. You may also receive a T5008, if there’s been a disposition of securities in your Non-Registered account. That slip will provide you the information that you need to file on that disposition, but make sure that you have the Adjusted Cost Base (ACB) on that form as well, otherwise you’re going to need to find out what that ACB is.

Another receipt that some of our clients receive is a Schedule K-1. This is a form for the IRS, so if you file a U.S. tax return, you’re going to need this Schedule K-1. If you’re a Canadian citizen only filing a Canadian tax return, that Schedule K-1 may or may not be important for you, and likely you’re not going to need to use it at all.

Some of these slips don’t come until mid to late March, so you should always wait until you’ve received all of your tax slips before filing your tax return.

If you need some assistance regarding your tax slips or filing your tax return, please feel free to reach out to us and/or your accountant/bookkeeper.

WHAT IS THE DIFFERENCE BETWEEN A TFSA & RRSP?

WHAT IS THE DIFFERENCE BETWEEN A TFSA & RRSP?

We often get asked what the differences are between a TFSA (Tax-Free Savings Account) and RRSP (Registered Retirement Savings Plan) account.

We’ve put together this summary to review the primary differences and rules pertaining to each account. If you have any questions, please reach out to us here.

TFSA vs. RRSP Accounts

 

TFSA (Tax-Free Savings Account):

  • There is no deduction available, but no tax on withdrawals
  • TFSA contribution limit is cumulative, less contributions; withdrawals provide room back (including growth) in the new calendar year
  • Can be used for short-term savings, mid-long term, and estate planning
  • Can name spouse as successor owner, and beneficiaries for estate planning
  • Withdrawals do not generate a tax slips; drawing money out does not impact income-tested benefits
  • You must be 18 years old in order to open a TFSA, and can contribute and withdraw based on the plan rules for your lifetime
  • Can invest using many of the same types of investments as within an RRSP or Non-Registered account
  • You might be required to pay non-resident withholding tax on US situated investments
  • There is no need at any time to convert your TFSA to an income plan, it can be held as-is until your death if desired

 

RRSP (Registered Retirement Savings Plan):

  • Deduction provided against T4 earnings; suitable if you are earning employment income, not dividends
  • Contribution room is limited to 18% of previous years’ earned income, less adjustments for pension contributions, up to a maximum specified by CRA each year. Accumulates if you don’t use it
  • Access available through the Home Buyers Plan or Lifelong Learning Plan without immediate tax consequences
  • Naming beneficiaries on an RRSP other than your spouse can have unintended tax consequences and it’s important to speak with your Financial Planner, Accountant, and Lawyer to determine your best course of action
  • Withdrawals are taxed as ordinary income
  • On death, an RRSP may be eligible for a “spousal rollover”, shifting taxation of the RRSP to the death of the recipient spouse
  • When withdrawing from RRSP assets once retired, most individuals are in a lower tax-bracket than during their working years which could result in favourable tax outcomes
  • Depending on your situation, a spousal RRSP could be used to accomplish long-term income splitting
  • You must convert your RRSP to a RRIF (Registered Retirement Income Fund) by age 71, and you must begin to withdraw a CRA mandated minimum at age 72

 

Both TFSA & RRSP Accounts:

  • You can’t deduct interest costs related to borrowing to invest in either a TFSA or RRSP
  • You can’t deduct investment management fees in either a TFSA or RRSP
  • You can’t claim a capital loss in either a TFSA or RRSP

 

Please reach out to us for further information regarding these accounts, or if you have a specific question pertaining to your individual situation.

IMPORTANT TAX FILING INFORMATION

ANNUAL RRSP & TFSA LIMITS + DEADLINES

Here are the contribution limits and cut-off dates for RRSP and TFSA contributions if you are planning to make one this year and have not already done so.

 

What is the contribution limit and deadline for RRSP accounts?

The cut-off date for your RRSP contributions to count toward reducing your income for 2021 is Tuesday, March 1, 2022. In order to meet this deadline, you should make your contribution by February 25 to allow for your deposit to clear your bank account. The contribution limit for the 2021 taxation year was 18% of your taxable income up to a maximum of $27,830, whichever is less. The contribution limit for the 2022 taxation year is a maximum of $29,210. If you have unused contribution room from previous years, you may use this room as well.

 

What is the contribution limit for TFSA accounts?

If you would like to contribute to a TFSA for 2022 the limit is $6,000 for the year, unless you have not maxed out your contributions. The maximum one could have deposited into their TFSA account since 2009 is $81,500 as of 2022. Please note that the Portfolio Managers will be processing these contributions between January 15 – February 11.

 

How To Make an RRSP or TFSA Contribution? Contributions can be made through one of the following methods:

Transfer from Non-Registered Account: If you have a Non-Registered account set-up with enough funds in it, you can simply send your Financial Advisor an e-mail indicating the amount you would like transferred from this account to your RRSP or TFSA. Instructions must be sent to us by 11:00am on Friday, February 25 in order to meet the deadline.

Online Banking Transfer (Bill Payment): Add your Custodian (“Credential Securities” or “National Independent Network”/”NBIN”) as a “Payee” through your online banking and enter your account number as the bill account number. If you need assistance finding your account number or are unsure who your Custodian is, please contact your Financial Advisor. If you choose this method, please also notify us with the amount you are contributing, so we can have your Portfolio Manager watch for it. Please note this must be submitted before midnight on Monday, February 28 in order to meet the deadline.

EFT from your Bank: You will just need to sign an EFT form if you have not already done so, which allows your Custodian (Credential or NBIN) to take the money directly out of your account with your consent. Once you have signed the form, you will need to email your Financial Advisor to indicate the one-time amount you are authorizing the Portfolio Manager to withdraw from your bank account and which account (RRSP or TFSA) you would like it deposited to. We must receive these instructions by Friday, February 25 at 3:00pm at the latest in order to process before the deadline.

If you have any questions or would like to book a video or phone appointment to review your accounts, please contact our office.

IMPORTANT TAX FILING INFORMATION

2020 RRSP & 2021 TFSA Contributions

Here is a friendly reminder of the contribution limits and cut-off dates for RRSP and/or TFSA contributions if you are planning to make one this year, and have not already done so.

RRSP Contributions:
The cut-off date for your RRSP contributions to count toward reducing your income for 2020 is Monday, March 1, 2021. In order to meet this deadline, you should make your contribution by February 25th to allow for your deposit to clear your bank account. The 2020 contribution limit was 18% of your taxable income up to a maximum of $27,230, whichever is less. The 2021 contribution limit is $27,830. If you have unused contribution room from previous years, you may contribute more than the maximum, but one needs to be careful not to over-contribute.

TFSA Contributions:
If you would like to contribute to a TFSA for 2021 the limit is $6,000 for the year, unless you have not maxed out your contributions. The maximum one could have deposited into their TFSA account since 2009 is $75,500 as of 2021.

Contributions can be made through one of the following methods:

Transfer from Non-Registered Account: If you have a Non-Registered account set-up with enough funds in it, you can simply send us an e-mail indicating the amount you would like transferred from this account to your RRSP or TFSA. Instructions must be sent to us by 11:00am on Thursday, February 25 in order to meet the deadline.

Online Banking Transfer (Bill Payment): Add your Custodian (“Credential Securities” or “National Bank Financial”) as a “Payee” through your online banking and enter your account number as the bill account number. If you need assistance finding your account number or are unsure who your Custodian is, please contact our office. If you choose this method, please also notify us with the amount you are contributing, so we can have your Portfolio Manager watch for it. Please note this must be submitted before midnight on Friday, February 26 in order to meet the deadline.

EFT from your Bank: You will just need to sign an EFT form if you have not already done so, which allows your Custodian (Credential or NBIN) to take the money directly out of your account with your consent. Once you have signed the form, we will require an email from you indicating the one-time amount you are authorizing them to withdraw from your bank account and which account you would like it deposited to. We must receive these instructions by Thursday, February 25 at 3:00pm at the latest in order to process in time.

If you have any questions or would like to book a video or phone appointment to review your accounts, please contact our office.