It seems like a polar opposite philosophy: “Spend Money to Make Money”, but it’s true. Gone are the days of 8 – 10% deposit interest. Now you’re lucky if you make pennies on a thousand dollars, especially with the penny now obsolete.
If you have cash in the bank, there are options for investing beyond RRSPs and GICs. In 2009, the TFSA or Tax-Free Savings Account was introduced. The initial contribution limit was $5000 per annum, growing to $5,500 for a number of years. The inflationary increase in 2018 was high enough to push the maximum annual contribution to $6000. An added feature of the TFSA is that the annual contribution room accumulates so $63,500 can now be contributed overall.
There are a number of reasons why a TFSA may be the right choice for you. The first is the fact they truly are tax-free. Any income or gains from the accumulated funds are tax-free for life. Funds can also be withdrawn without penalty or taxes at any time. Because of this status, TFSA withdrawals do not negatively affect any other benefits available to you such as Old Age Security (OAS). If the account is set up correctly, in the tragic event of a loss of the primary account holder, the successor annuitant would receive the full value of the TFSA without going through the estate.
Age is not a factor. Other options such as RRSPs require the contributor to be under a certain age and be earning income. Anyone over the age of 18 can contribute to a TFSA. They are a popular choice for those in their Golden Years because they allow for continued tax-sheltering of money even after age 71. There are no forced withdrawals or tax consequences when amounts are withdrawn.
The flexibility offered with the TFSA allows for withdrawals to be recontributed in the following year without reducing the contribution amount. Meaning, if you withdrew $1000 in 2018 you are able to contribute the $6000 for 2019 and top it up with the $1000 withdrawn the prior year.
If you are an investor with money, maximizing your RRSP and TFSA would make the most sense. For those who don’t have a lot of money to spare but want to save for an event in their life such as a home or car, a TFSA offers a great way to protect, invest and grow your funds.
There are many options available when it comes to savings and long-term planning and the information available may become overwhelming. This is why working with a Certified Financial Planner (CFP) and having the RIGHT plan in place can make all the difference.
As Spring draws closer (hopefully), so does the time to prepare and file your 2017 taxes. Since we last posted, you should have received all the required paperwork from your employers and investments. Now it’s time to catch up on the latest changes to the tax laws as some of them may affect you.
Are you a caregiver of a family member with a physical or mental impairment? If so you may be eligible for the Canada Caregiver Amount tax credit. The government recognizes the extra financial responsibility being a caregiver can have on your finances. This year determining if you qualify for the credit will be much simpler.
It’s the time of year where the working world is split into those that look forward to tax refunds and those who dread seeing how much they owe. Yes, that’s right, it’s tax time. The buzz has begun with the distribution of T4s, which companies have until the end of February to deliver.
Tax returns are one of those things in life that are necessary, but are never really reviewed.
It’s a wonder there isn’t a life skills course offered in high school which covers real life lessons such as budgeting, tax requirements and filing, resume writing, interview skills and grocery shopping. Continue reading
For as long as memory serves, Canadians of retirement age have been moving south for the winter to escape the cold. This group of people are lovingly referred to as snowbirds. Despite the state of the dollar, Canadians are still holding to this practice. They are also one of the few groups of “foreigners” who are being welcomed by the United States. Tourism from Canada spurs job growth in the destination towns across the US aiding in their economy. Not to mention that Canadians purchase 6% of all homes sold in Florida, therefore injects nearly half a billion dollars in property taxes per annum. Continue reading