It’s in the name! Tax. Free. Savings. A TFSA is a great tool to save for both short- and long-term goals and is not to be underestimated. Interest, capital gains, dividend income, and withdrawals are all tax-free. The bonus is that withdrawals from the account create new contribution room!
The Canada Pension Plan was created by the federal and provincial governments in 1965 in response to growing levels of poverty among retirees dating back to the onset of the industrial revolution. Thanks to the CPP and other programs like Old Age Security and Guaranteed Income Supplement, Canadian retirees have a family of programs working to secure income for them after retirement.
3. Pension income splitting
This tax saving strategy is unique to Canada. It allows eligible pension income to be shared between spouses or common-law partners reducing the overall family tax bill. This strategy has the power to eliminate or reduce Old Age Security and Age Amount Credit income sensitive clawbacks.
As wonderful as CPP and other pension benefits can be, they may not be able to provide you with full retirement income. An RRSP can fill the gaps. RRSP contributions are tax deductible and grow in the account tax free. This makes RRSPs best used for long term savings as income and taxes are deferred to a later date.
5. Shift to independent advice and fee-only planning
Fee-only, Certified Financial Planners operate as fiduciaries, meaning they are required to place the client’s interests ahead of their own. When receiving independent financial advice there is no conflict of interest or pressure to sell products. Clients are provided with genuine advice with their best interest in mind. Now all we need is for the government to make the cost of this advice tax deductible so more Canadians are motivated to plan.
Established in 1974, RESPs are the best way to save for a child’s post-secondary education. Contributions trigger generous matching contributions from the government and are held in a tax-sheltered account. When the funds are withdrawn, the beneficiary/student is taxed, often at a lower rate or not at all compared to the account holder.
7. Capital gains exemption on principal residence
Any capital gains made through the sale of your primary residence are not subject to tax. Whether this residence is in downtown Toronto, Prince Edward Island or Victoria Island, gains on its sale are not taxable. Just make sure you include the sale details on your tax return!
8. No inheritance taxes
When someone dies in Canada, any tax that is owed to the government is paid by the estate, not the beneficiaries. Once you receive an inheritance, taxes will have already been paid.
9. Universal Health Care
Our health care system may not be perfect, but Canadians don’t have to liquidate their retirement savings to pay for high cost, essential medical care, such as surgery, cancer treatment and childbirth.
10. Financially independent children
After all your hard work getting your children off on the right path, you are now able to watch them become financially independent. As much as you are proud, you are also relieved. No more allowance! No more cell phone bill!
And what are we grateful for? The trust of our clients. Some are new, some have been with us 25 years. They all mean the world to us and allow us to have a career of meaning and inspiration.
- Rona is registered through Caring-for-Clients for financial planning services. Financial Planning is not the business of or under the supervision of Queensbury Strategies Inc. and Queensbury will not be liable or responsible for such activities.
This information is of a general nature and should not be considered professional advice. Its accuracy or completeness is not guaranteed and Queensbury Strategies Inc. assumes no responsibility or liability.