This will serve as a friendly reminder of 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.
RRSP Contributions:
The cut-off date for your RRSP contributions to count toward reducing your income for 2022 is Wednesday, March 1, 2023. The contribution limit for the 2022 taxation year was 18% of your taxable income up to a maximum of $29,210, whichever is less. The contribution limit for the 2023 taxation year is a maximum of $30,780. If you have unused contribution room from previous years, you may utilize this room as well.
TFSA Contributions:
If you would like to contribute to a TFSA for 2023 the limit is $6,500 for the year, unless you have not maxed out your contributions. The maximum one could have deposited into their TFSA account since 2009 is $88,000 as of 2023.
Our clients can make contributions 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.
Online Banking Transfer (Bill Payment): Add your Custodian (“Credential Securities” or “National Bank Independent Network” / “NBIN” – note it may show up as either, depending on your bank) 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.
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 (RRSP or TFSA) you would like it deposited to.
If you have any questions or would like to book a video or phone appointment to review your accounts, please contact our office at 780-490-4200.
Today we’re talking about another common question from clients – what is a RIF and how does it work?
A RIF is simply a conversion from your Registered Retirement Savings Plan (RRSP) to a Registered Retirement Income Fund. So the income version of the tax sheltering that you receive from a registered account. A RIF is set up so you can continue to enjoy growth on your assets without paying tax as the assets grow.
Of course, you are going to be taxed when you take money out of your RIF. So how does that work?
You have to convert your RRSP to a RIF at age 71, and you must begin to draw income out of the RIF at age 72.
You can convert to a RIF prior to that if you choose to. You can also convert partially to a RIF from your RRSP account if you choose to, which can be a great way for you to use the pension tax credit for example.
So how much do you take out of a RIF when it’s time to convert? You have to take out a designated amount that’s specified by the Government as a percentage of your assets. Your assets will be calculated on December 31 of the previous calendar year and a percentage applied to it based on what CRA determines. This will give the minimum amount that you have to take out of your RIF once it’s in RIF format. You can always take more out of your RIF if you choose.
When you take money out of your RIF, it is taxed as ordinary income. The RIF minimum will not be taxed immediately, but you need to consider it in your tax planning for the year. Anything over and above RIF minimum will incur a withholding tax, and that portion will be taxed as you go. You can ask to have your RIF minimum taxed as you go as well, but it’s not automatic.
Another common question we get asked is whether you are taxed twice on a RIF? And the answer to that is absolutely not.
When you make a contribution to your RRSP in your working years, typically you are at a much higher income than you are in your retirement years. Often this means you get a great tax benefit throughout your working career to make those RRSP contributions. Following that up, you pay a much lower rate of tax when you draw that money out from your RIF.
So are you taxed on your RIF? Absolutely, but you’re certainly not double-taxed. And typically, you are seeing a significant benefit in terms of tax planning from your working career to your retirement years.
If you have any questions about how your RIF fits into your financial plan, please contact your advisor or give us a call.
There are many methods you can use to creatively give to charity to reduce your tax bill and most effectively use your donation.
In this video, we’re discussing donating securities in-kind from your non-registered account. Watch this video to understand how these donations work and the tax advantages of this method.
There are multiple methods that we can choose to use to make donations creatively and to reduce your tax bill. Today we’re going to discuss donating securities in-kind from your non-registered account.
Donating securities in-kind allows you to make a donation in a dollar amount that you choose, and to do so directly from your non-registered account to your charity of choice.
When you decide that you would like to make this type of donation, you will receive a tax receipt for the full market value of any securities that you donate to your registered charity, and you bypass the requirement to pay capital gains tax on these securities, effectively double-dipping on your tax advantage. The CRA is fully amenable to this strategy as donors often make a bit of a larger donation to their charity of choice when donating in this matter.
If you would like to make a donation of securities, simply reach out to your financial planner. We will have a conversation to understand how much you would like to donate and then discuss this with your Portfolio Manager. They will determine the type of securities and will simply fill out a form for you to provide that information to your charity.
The charity will receive your securities directly, at which point they will sell those securities, providing you a receipt for the market value of those shares at the time of sale. Again, you receive the receipt for the market value and you do not need to pay capital gains tax on those securities that have appreciated.
This is a really effective way to make donations to a charity and cause that you support and can be another effective tool in your planned giving strategy.
If you have any questions or would like to discuss your planned giving with us, we’re more than happy to help. Please reach out to us.
As we approach the end of the year, some clients may have questions about capital gains and losses that have occurred in their portfolio.
Watch this video to understand what capital gains and losses are and how they may impact your taxes.
Today we are discussing capital gains and losses.
Capital gains and losses are in reference to a taxable account and today we are discussing them as they relate to stocks, although capital property is another variety of property that they can apply to.
Capital gains and losses occur when you dispose of a stock at higher or lower than your adjusted cost base (ACB).
Your adjusted cost base (ACB) is the total price that you have paid for your stock. In addition, you can add some of the cost that you had to acquire the stock, such as commissions, to the adjusted cost base.
A capital gain occurs when you sell your stock for more than your adjusted cost base. A capital loss occurs when you sell your stock for less than the adjusted cost base.
Capital Gain
Let’s say you paid $100 for your stock and you sell it for $150. You would have a capital gain of $50 – the difference between your sale price, and in this example, your adjusted cost base.
Halfof the $50 is taxable, so $25 would be taxable for you in the year that you dispose of the security.
Capital Loss
Conversely a capital loss would happen if you sold your security for $75.
You’ve incurred a loss of $25 and halfof that – $12.50,can be used to reduce any capital gains that you’ve experienced in the year that you’ve sold your security, three years prior, or essentially indefinitely going forward.
Capital gains and losses are in reference to a taxable account (Non-Registered Accounts). They do not apply to Registered Retirement Savings Plans (RRSPs) or Tax-Free Savings Accounts (TFSAs).
Capital gains and losses can be used for tax planning, so please reach out to our team if you have a tax planning situation that you need assistance with. Learn more about the tax planning services we provide here. If you have any further questions about capital gains and losses, contact us here.
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.
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.
