The Benefits of Consolidation

When putting together your financial plan, there is no question about the benefits of consolidation. It’s common to have your finances all over the place. Savings at the bank, investments with several financial institutions, retirement savings at another. The importance of having a financial plan is the ability to coordinate, consolidate and be able to implement your plan to achieve your goals.

By putting it all together, it allows for better planning where there’s less confusion, more control over your finances, efficient investing and tax planning and creates a clear picture of what needs to be done to fulfill your financial goals.

Consolidation means you have an accountability partner on your side that will keep you on track and stay the course and address gaps in your plan and introduce you to specialists if needed.

Financial Planning issues that should be addressed are: 

  • Wealth Protection
  • Is your disability insurance adequate? 
  • What about your life insurance in case of premature death? 
  • What do you do in case of a critical illness? 
  • Estate Planning- what’s the primary goal of your estate plan? 
  • Wealth Accumulation
  • Are you looking to preserve or grow your investments? 
  • Is your investment mix suitable for you? 
  • Are your investments tax efficient? 
  • When do you plan to retire? 

These issues are just scraping the surface, talk to us and we can chat further on how we can help.  

Paying for Education

Post-secondary education can be expensive, however having the opportunity to plan for it helps with making sure that you’re capable to meet the costs of education. In addition, when you have a plan, it’s easer to make financial decisions that align with your goals and provide peace of mind. In the infographic, we outline 7 sources of funds for paying for post-secondary education:

 

 

  • Registered Education Savings Plan
  • Tax Free Savings Account
  • Life Insurance
  • Scholarships, grants, bursaries
  • Personal Loans, Lines of Credit
  • Government Student Loan
  • Personal Savings

Registered Disability Savings Plan (RDSP)

EXTENDING TEMPORARY PROXIES FOR REGISTERED DISABILITY SAVINGS PLAN (RDSP) HOLDERS

Helping people who lack contractual capacity create an RDSP even when they don’t have a substitute decision maker

Every estate planner recommends that you appoint someone to make decisions for you if you reach a point where you can’t make those decisions yourself. Typically, you do so by signing a power of attorney appointing a trusted person to make decisions about your property and personal care if you become unable to make those decisions.

If you don’t have a power of attorney, and if you become incapacitated, a trusted individual, like a family member, has to go to the Public Trustee’s office to secure the right to make decisions concerning your property, and before a judge to get the right to make decisions about your personal care. Both are time consuming processes.

Federal law provides that if you can’t establish an RDSP yourself, the plan holder has to be your legal representative, according to provincial or territorial law(subsection 146.4(1) of the Income Tax Act, c.f. “qualifying family member” and “qualifying person”)

Some provinces and territories have streamlined their provisions to let a trusted individual manage an incapacitated person’s property, while others have yet to develop such systems. For those provinces and territories that have yet to develop their systems, the federal government provides a temporary streamlined process that allows a family member (parent, spouse or common-law partner) to be an RDSP plan holder. This measure was set to expire at the end of 2018, but will be extended until the end of 2023, to allow all provinces and territories to amend their laws.

For more information on the 2018 federal budget, please visit www.budget.gc.ca

The Best Way to Buy Mortgage Insurance

Before buying insurance from your bank to cover your mortgage, please consider your options. What does the insurance cover?  

  • From the bank: only the balance of your mortgage
  • From us: whatever you need it to cover such as debts, line of credit

What happens as my mortgage balance decreases? 

  • From the bank: the coverage amount decreases as your balance decreases.
  • From us: the coverage stays the same for as long as you own your policy

What if I switch banks?  

  • From the bank: You might lose your coverage and need to reapply
  • From us: Your coverage stays the same, since it’s not tied to your mortgage

Who gets the benefit if I die? 

  • From the bank: The Bank
  • From us: You decide who gets the insurance and how to use it, such as to pay your mortgage, medical expenses or child’s education- whatever is best for your family

Talk to us, we can help.

The Importance of a Financial Plan

Working with us to create your financial plan helps you identify your long and short term life goals. When you have a plan, it’s easier to make decisions that align with your goals. We outline 8 key areas of financial planning:

  • Income: learn to manage your income effectively through planning
  • Cash Flow: monitoring your cash flow, will help you keep more of your cash
  • Understanding: understanding provides you an effective way to make financial decisions that align with your goals
  • Family Security: having proper coverage will provide peace of mind for your family
  • Investment: proper planning guides you in choosing the investments that fit your goals
  • Assets: learn the true value of your assets. (Assets – Liabilities)
  • Savings: life happens, it’s important to have access to an emergency fund
  • Review: reviewing on a regular basis is important to make sure your plan continues to meet your goal

2018 Federal Budget Highlights for Families

Several key changes relating to personal financial arrangements are covered in the Canadian government’s 2018 federal budget, which could affect the finances of you and your family. Below are some of the most significant changes to be aware of:

Parental Leave

The government is creating a new five-week “use-it-or-lose-it” incentive for new fathers to take parental leave. This would increase the EI parental leave to 40 weeks (maximum) when the second parent agrees to take at least 5 weeks off. Effective June 2019, couples who opt for extended parental leave of 18 months, the second parent can take up to 8 additional weeks, at 33% of their income.

Gender Equality

The government aims to reduce the gender wage gap by 2.7% for public servants and 2.6% in the federal private sector. The aim is to ensure that men and women receive the same pay for equal work. They have also announced increased funding for female entrepreneurs.

Trusts

Effective for 2021 tax filings, the government will require reporting for certain trusts to provide information to provide information on identities of all trustees, beneficiaries, settlors of the trust and each person that has the ability to exert control over the trust.

Registered Disability Savings Plan holders

The budget proposes to extend to 2023 the current temporary measure whereby a family member such as a spouse or parent can hold an RDSP plan on behalf of an adult with reduced capacity.

If you would like more information, please don’t hesitate to contact us.

2018 Federal Budget Highlights for Business

The government’s 2018 federal budget focuses on a number of tax tightening measures for business owners. It introduces a new regime for holding passive investments inside a Canadian Controlled Private Corporation (CCPC). (Previously proposed in July 2017.)

 Here are the highlights:

Small Business Tax Rate Reduction Confirmed

Lower small business tax rate from 10% (from 10.5%), effective January 1, 2018 and to 9% effective January 1, 2019.

Limiting Access to the Small Business Tax Rate

A key objective of the budget is to decrease the small business limit for CCPCs with a set threshold of income generated from passive investments. This will apply to CCPCs with between $50,000 and $150,000 of investment income. It reduces the small business deduction by $5 for each $1 of investment income which falls over the threshold of $50,000. This new ­regulation will go hand in hand with the current business limit reduction for taxable capital.

Limiting access to refundable taxes

 Another important feature of the budget is to reduce the tax advantages that CCPCs can gain to access refundable taxes on the distribution of dividends. Currently, a corporation can receive a refundable dividend tax on hand (known as a RDTOH) when they pay a particular dividend, whereas the new proposals aim to permit such a refund only where a private corporation pays non-eligible dividends, though exceptions apply regarding RDTOH deriving from eligible portfolio dividends.

The new RDTOH account referred to “eligible RDTOH” will be tracked under Part IV of the Income Tax Act while the current RDTOH account will be redefined as “non-eligible RDTOH” and will be tracked under Part I of the Income Tax Act. This means when a corporation pays non-eligible dividends, it’s required to obtain a refund from its non-eligible RDTOH account before it obtains a refund from its eligible RDTOH account.

Health and welfare trusts

The budget states that it will end the Health and Welfare Trust tax regime and transition it to Employee Life and Health Trusts. The current tax position of Health and Welfare Trusts are linked to the administrative rules as stated by the CRA, but the income Tax Act includes specific rules relating to the Employee Life and Heath Trusts which are similar. The budget will simplify this arrangement to have one set of rules across both arrangements.

BC Budget Highlights 2018

BC Finance Minister Carole James delivered the province’s 2018 budget update on February 20, 2018. The budget anticipates a surplus of $219 million for the current year, $281 million for 2019 and $284 million in 2020.

Corporate and personal tax rates remain unchanged.

The biggest changes are:

  • Elimination of Medical Services Plan (MSP Premiums) effective January 1, 2020
  • Addition of the Employer Health Tax (EHT)
  • Provincial Property Taxes
  • Childcare

The Employer Health Tax and Medical Services Plan premiums:

Effective January 1, 2020, the Medical Services Premium (MSP) will be eliminated. In last year’s budget update, MSP was reduced by 50% effective January 1, 2018. Starting in 2019, the budget introduces the Employer Health Tax (EHT). The EHT is to help fund the elimination of the MSP premiums.

The Employer Health Tax will be calculated as a percentage of payroll:

Provincial Property Transfer Taxes

Effective February 21, 2018, the following will occur:

  • The provincial property transfer taxes (PTT) will increase to 5% (from 3%) on residential property values above $3 million.
  • The PPT applies to foreign purchasers of residential properties in BC will increase to 20% (from 15%) and the tax will extend to include the Fraser Valley, Capital, Nanaimo and Central Okanagan Regional Districts.
  • There is a new speculation tax on residential property in BC. This tax is targeted at foreign and domestic homeowners who don’t pay income tax in BC. Starting in 2018, it’s a rate of $5/$1,000 of assessed value, in 2019, this will increase to $20/$1,000.

Childcare

There will be a new affordable child care benefit that will reduce child care costs by up to $1,250 per month per child by 2020. The new benefit will apply in September 2018. Families with pre-tax incomes of $45,000 or less will receive the full benefit, (up to the cost of care) while those who make up to $111,000 will receive a reduced amount, scaling based on income. The government will be releasing an online benefit calculator to help parents budget.

The budget will provide up to $350/month directly to licensed child care providers to reduce fees. They will be the following:

  • Up to $350/month for group infant/toddler care
  • Up to $200/month for family infant/toddler care
  • Up to $100/month for group care for children aged 3-5
  • Up to $60/month for family care for children aged 3-5

To learn how these changes will affect you, please don’t hesitate to contact us.