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Financial Planning

What you should know about TFSAs

Tax Free Savings Accounts (TFSAs) are registered savings plans with the ability to earn investment income that is tax free. These funds can provide security for the future and financially prepare you for retirement. Other registered savings plans include Registered Retirement Savings Plans (RRSP) and the Registered Education Savings Plans (RESP). Anyone who is 18 years of age or older, is a Canadian resident and has a Social Insurance Number can open a TFSA.

Contributions

Did you know that as of January 1, 2015, the annual contribution was increased from $5,500 to $10,000? Only 14% of Canadians are aware of this fact. Contributions of up to $5,000 per year for 2009-2012; $5,500 for 2013-2014; and $10,000 for 2015 can be deposited. Unused contribution room (the maximum amount you can contribute to your TFSA) can be carried forward to following years. More than half of Canadians who have a TFSA only contribute once a year; however, there is no limit to the number of contributions made in a year as long as you do not exceed your contribution room. Penalties will be assessed for over-contributions.

Withdrawals

When a withdrawal is made, you are able to replace the amount within the same year if you have available TFSA contribution room. You can determine your TFSA contribution room through the Canada Revenue Agency. Any income earned in the account whether it be interest income, dividends or capital gains is sheltered from tax as long as it stays in the TFSA. Government benefits and credits such as Old Age Security (OAS), Guaranteed Income Supplement (GIS), Employment Insurance (EI) and Age Exemption Tax Credit are not affected or reduced as a result of income earned in a TFSA. The income earned also does not affect your eligibility for federal credits such as the Canada Child Tax Benefit (CCTB), Working Income Tax Benefit (WITB) and Goods and Services Tax/Harmonized Sales Tax Credit (GST/HST). If you are interesting in learning more about Tax Free Savings Accounts, contact YourStyle Financial.]]>

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Financial Planning

So you’re getting married?

You’ve found “the one” and have decided you will spend the rest of your lives together. You may have talked about growing your family, a new house and other plans for the future but have you thought about how you will achieve those goals? Marriage is a partnership and you need to know how you can achieve those goals together. Discussing your finances may not be a conversation that you want to have but it is necessary to avoid issues that may arise later. Debt, for example is one of the most important things a couple should discuss. Do you or your partner have any outstanding debt? If yes, does your partner know about it? Are you aware of each other’s income? Whatever the case may be, you need to communicate with each other and be open about your finances. A recent BMO survey shows that most married Canadians wish they had discussed their financial matters with each other before walking down the aisle. While 98% of Canadians agree they should be on the same page as their spouses, when it comes to finances, most of them aren’t! A whopping 40% of these couples say they have different investing styles from their partners. It’s not surprising then, that more than half of Canadian married couples have financial regrets, with 62% saying they wish they had discussed their financial plans and pasts before getting married. Use our Marriage Preparation Checklist to discuss with your partner to ensure your plans for wedded bliss include financial matters. For help with your financial planning, give us a call.]]>