CERB Extended | Business Owners who did not qualify previously – expanded CEBA starts June 19th

June 17, 2020/in 2020 Only, Blog, Business Owners, Coronavirus, Coronavirus - Associates, Coronavirus - Practice Owners, Coronavirus - Students, corporate, Individuals /by Charter Wealth

CERB Extended 2 more months

Great news for Canadians out of work and looking for work. The CERB will be extended another 8 weeks for a total of up to 24 weeks.

As the country begins to restart the economy, the Federal government will be making changes to the program to encourage Canadians receiving the benefit to get people back on the job. From Prime Minister Justin Trudeau’s website:

“The Government of Canada introduced the CERB to immediately help workers affected by the COVID-19 pandemic, so they could continue to put food on the table and pay their bills during this challenging time. As we begin to restart the economy and get people back on the job, Canadians receiving the benefit should be actively seeking work opportunities or planning to return to work, provided they are able and it is reasonable to do so.

That is why the government will also make changes to the CERB attestation, which will encourage Canadians receiving the benefit to find employment and consult Job Bank, Canada’s national employment service that offers tools to help with job searches.”

READ ABOUT CERB EXTENSION

More small businesses can apply for CEBA $40,000 no-interest loans

Applications for the expanded Canada Emergency Business Account (CEBA) will be accepted as of Friday, June 19th, 2020. Small businesses that are:

“… owner-operated small businesses that had been ineligible for the program due to their lack of payroll, sole proprietors receiving business income directly, as well as family-owned corporations remunerating in the form of dividends rather than payroll will become eligible this week.”

Read about expanded CEBA

Apply online at the financial institution your business banks with:

There are restrictions on the funds can be used. From their website https://ceba-cuec.ca/:

“The funds from this loan shall only be used by the Borrower to pay non-deferrable operating expenses of the Borrower including, without limitation, payroll, rent, utilities, insurance, property tax and regularly scheduled debt service, and may not be used to fund any payments or expenses such as prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation.”

Guide to Covid-19: Government Relief Programs in Canada

May 4, 2020/in 2020, Blog, Coronavirus, Coronavirus - Associates, Coronavirus - Practice Owners, Coronavirus - Retired, Coronavirus - Retiring, Coronavirus - Students, Family, Individuals, Life Insurance /by Charter Wealth

The intention for our “Guide to Covid-19: Government Relief Programs in Canada” is to help businesses and individuals to cut through the noise and make sure they’re getting all the help they can receive from the federal and provincial programs.

Federal programs include:

Small Business Wage Subsidy
Canada Emergency Wage Subsidy
Canada Emergency Business Account
Canada Emergency Response Benefit
Student Loan Programs

Individual provincial programs include:

Utilities
Housing
Student Loan Programs

Download the Guide

Comparing TFSAs and RRSPs – 2020

January 30, 2020/in 2020 Only, Blog, Family, Individuals, Investment, Retirees, RRSP, Tax, Tax Free Savings Account /by Charter Wealth

If you are seeking ways to save in the most tax-efficient manner available, TFSAs and RRSPs can both be effective options for you to achieve your savings goals more quickly. However, each plan does have distinct differences and advantages / disadvantages. We’ve separated our comparisons into 2 different infographics: deposits and withdrawals.

In the Deposit phase, we look at:

Contribution Room
Carry Forward
Contribution
Tax Deductibility
Tax Treatment of Growth

Contribution Room

TFSA : $6,000 for 2020. If you never opened a TFSA, you can contribute up to $69,500 today.

$5,000 for each year from 2009 to 2012;
$5,500 for each of 2013 and 2014;
$10,000 for 2015;
$5,500 for each of 2016, 2017 and 2019
$6,000 for each of 2019 and 2020

RRSP : 18% of your 2020 pre-tax earned income or $27,230. So for example if you earned $60,000, then your deduction limit would be $10,800 (18% x $60,000). If you earned $200,000, then your deduction limit would be capped at the max limit of $27,230.

Carry Forward

TFSA : You can carry forward your unused contribution room indefinitely, as long as your a Canadian resident, older than age 18 with a valid social insurance number. Withdrawals will usually result in new contribution room.

RRSP : You can carry forward your unused contribution room until the age of 71 when you have to convert your RRSP to a RRIF. Any withdrawals made from your RRSP will not result in new contribution room.

Contribution

TFSA : You are contributing to your TFSA with After-tax dollars.

RRSP : You are contributing to your RRSP with Pre-tax dollars.

Tax Deductibility

TFSA : Contributions are not tax deductible.

RRSP : Contributions are tax deductible.

Tax Treatment of Growth

TFSA : The growth inside a TFSA is tax free therefore it’s a great savings vehicle for immediate objectives such as a down payment for a home.

RRSP : The growth inside an RRSP is tax deferred, which means at withdrawal, you will need to pay tax, therefore it’s a good choice for long term goals such as retirement.

In the Withdrawals phase, we look at:

Conversion
Tax Treatment
Government Benefits
Contribution Room

Conversion

TFSA : With a TFSA, there’s no conversion.

RRSP : You must convert your RRSP to a Registered Retirement Income Fund by December 31st of the year you turn 71.

Tax Treatment

TFSA : You can make tax-free withdrawals.

RRSP : Your withdrawals are taxed as income except for withdrawals under the Home Buyers Plan, which you can withdraw up to $35,000 providing you pay within 15 years or Lifelong Learning Plan, which you can withdraw up to $20,000 ($10,000 per year) providing that the money is paid back within 10 years.

Government Benefits

TFSA : Your withdrawals doesn’t affect eligibility for income tested government benefit because TFSA withdrawals aren’t included as taxable income.

RRSP : RRSP withdrawals are treated as taxable income therefore withdrawals may affect income tested tax credits such as Canada Child Tax Benefit, the Working Income Tax Benefit, the Goods and Services Tax Credit and the Age Credit. Withdrawals may also affect government benefits you receive including Old Age Security, Guaranteed Income Supplement and Employment Insurance benefits.

Contribution Room

TFSA : You can carry forward your unused contribution room indefinitely, as long as your a Canadian resident, older than age 18 with a valid social insurance number. Withdrawals will usually result in new contribution room to the following year’s contribution.

RRSP : Contribution room is based on your previous year’s earned income. You can carry forward your unused contribution room until the age of 71 when you have to convert your RRSP to a RRIF. Any withdrawals made from your RRSP will not result in new contribution room.

An additional different to note is that:

You are able to specify your spouse as your beneficiary with both your TFSA and your RRSP, however there is a key difference with how your savings are treated upon your spouse’s death. With an RRSP, there will be taxes payable upon the monies left in the plan by your children who inherit it, whereas with a TFSA, tax is only paid on the increase in the value of the plan since the date of death in the year that it is inherited by your children. What’s more, no tax is payable if the value that they receive is less than the value of the TFSA at the time of death.

In summary, your unique financial needs will provide information on what makes the most sense for you.

Contact us and we can help.

2020 Financial Calendar

January 1, 2020/in Blog, Business Owners, corporate, Individuals, Investment, RRSP, Tax, Tax Free Savings Account /by Charter Wealth

2020 Financial Calendar

Financial Calendar for 2020 – All the dates you need to know to maximize your benefits!

2019 Tax Tips for Employees

November 22, 2019/in 2019 Only, Blog, Estate Planning, Family, Individuals, Investment, Retirees, RRSP, Tax, Tax Free Savings Account /by Charter Wealth

Now that we are nearing year end, it’s a good time to review your finances. With the federal election over and no major tax personal tax changes for this year, 2019 is a good year to make sure you are effectively tax planning. Below, we have listed some of the key areas to consider and provided you with some useful guidelines to make sure that you cover all of the essentials. We have divided our tax planning tips into 4 sections:

Tax deadlines
Family tax issues
Managing your investments
Retirement planning

Tax Deadlines for 2019 Savings

December 31, 2019:

If you reached the age of 71 in 2019, contributions to your RRSP
Use up your TFSA contribution room
Contribute to RESP to get the Canadian education savings grant and the income-tested Canada learning bond.
Contribute to RDSP to get the Canada disability savings grant and the income-tested Canada disability savings bond.
Medical expenses
Investment counsel fees, interest and other expenses relating to investments
Some payments for child and spousal support
Fees for union and professional memberships
Student loan interest payments
Deductible legal fees
Charitable gifts
Political contributions

January 30, 2020:

Interest on intra-family loans
Interest you must pay on employer loans, to reduce your taxable benefit

February 29, 2020:

Contributions to provincial labour-sponsored venture capital corporations
Deductible contributions to a personal or spousal RRSP
RRSP Repayment under Home Buyers Plan or Lifelong Learning Plan

Family Tax Issues

Check your eligibility to the Canada Child Benefit

In order to receive the Canada Child Benefit in 2020/21, you need to file your tax returns for 2019 because the benefit is calculated using the family income from the previous year. Eligibility depends on set criteria such as your family’s income and the number and age of your children and you may qualify for full or partial amount.

Consider family income splitting

The CRA offers a low interest rate on loans and it therefore makes sense to consider setting up an income splitting loan arrangements with members of your family, whereby you can potentially lock in the family loan at a low interest rate of 2% and subsequently invest the borrowed monies into a higher return investment and benefit from the lower tax status of your family member. Don’t forget to adhere to the Tax on Split Income rules.

Contribute to Registered Education Savings Plan (RESP)

The Registered Education Savings Plan (RESP) is a savings plan for parents and others to save for a child’s education. The Canada education savings grant (CESG) will match up to 20% of contributions up to $2,500. That means the CESG can add a maximum of $500 to an RESP each year. Grant room accumulates until the child turns 17, therefore unused basic CESG amounts for the current year are carried forward for possible use in the future years. The income-tested Canada learning bond (CLB) is paid directly to the RESP by the Canadian government to low-income families. There are no personal contributions required to receive the CLB.

Contribute to Registered Disability Savings Plan (RDSP)

The Registered Disability Savings Plan (RDSP) is a savings plan for parents and others to save for the financial security of a person who is eligible for the disability tax credit (DTC). The Canada disability savings grant will pay matching grants of 300%, 200% or 100% depending on the beneficiary’s adjusted family net income and amount contributed. The income-tested Canada disability savings bond is paid directly to the RDSP by the Canadian government to low- income Canadians with disabilities. Before December 31 of the year you turn 49 years old, you can carry forward up to 10 years of unused grant and bond entitlements to future years, as long as you met the eligibility requirements during the carry forward years.

Managing Your Investments

Use up your TFSA contribution room

If you are able, it’s worth contributing the full $6,000 to your TFSA for 2019. You can also contribute more (up to $63,500) if you are 28 or older and haven’t made any previous TFSA contributions.

Contribute to Registered Education Savings Plan (RESP)

The Registered Education Savings Plan (RESP) is a savings plan for parents and others to save for a child’s education. The Canada education savings grant (CESG) will match up to 20% of contributions up to $2,500. That means the CESG can add a maximum of $500 to an RESP each year. Grant room accumulates until the child turns 17, therefore unused basic CESG amounts for the current year are carried forward for possible use in the future years. The income-tested Canada learning bond (CLB) is paid directly to the RESP by the Canadian government to low-income families. There are no personal contributions required to receive the CLB.

Contribute to Registered Disability Savings Plan (RDSP)

The Registered Disability Savings Plan (RDSP) is a savings plan for parents and others save for the financial security of a person who is eligible for the disability tax credit (DTC). The Canada disability savings grant will pay matching grants of 300%, 200% or 100% depending on the beneficiary’s adjusted family net income and amount contributed. The income-tested Canada disability savings bond is paid directly to the RDSP by the Canadian government to low- income Canadians with disabilities. Before December 31 of the year you turn 49 years old, you can carry forward up to 10 years of unused grant and bond entitlements to future years, as long as you met the eligibility requirements during the carry forward years.

Donate securities to charity

Make a donation by year end will provide you tax savings. If you donate eligible securities or mutual funds, capital gains tax does not apply, and you can receive a tax receipt for their full market value. Also, the charity gets the full value of the securities.

Think about selling any investments with unrealized capital losses

It might be worth doing this before year-end in order to apply the loss against any net capital gains achieved during the last three years. Any late trades should ideally be completed on or prior to December 24, 2019 and subsequently confirmed with your broker.

Conversely, if you have investments with unrealized capital gains which are not able to be offset with capital losses, it may be worth selling them after 2019 in order to be taxed on the income the following year.

Consider the timing of purchasing of certain non-registered investments

If you are considering purchasing an interest-bearing investment like a guaranteed investment certificate (GIC) with a maturity date of one year or more, you may consider delaying the purchase to the following year, so you don’t have to pay tax on accrued interest until 2021. You should also consider this with mutual funds that make taxable distributions before the end of 2019, consider delaying this until early 2020. Don’t pay taxes earlier than necessary.

Check if you have investments in a corporation

The new passive investment income rules apply to tax years from 2018. They state that the small business deduction is reduced for companies which are affected with between $50,000 and $150,000 of investment income, therefore the small business deduction has been stopped completely for corporations which earn passive investment income of more than $150,000. At a provincial level, Ontario and New Brunswick have indicated that they are not following the federal rules to limit access to the small business deduction.

Retirement Planning

Make the most of your RRSP

The deadline for making contributions to your RRSP for the year 2019 is February 29, 2020. There are three things that affect how much you may contribution towards your RRSP, as follows:

18% of your previous year’s earned income
Up to a maximum of $26,500 for 2019 and $27,230 for 2020
Your pension adjustment

Remember that deducting your RRSP contribution reduces your after-tax cost of making said contribution.

Check when your RRSP is due to end

You should wind-up your RRSP if you reached the age of 71 during 2019 and your final contributions should be made by December 31, 2019.

Convert to RRIF before year end

If you’re 65 or older in the year, you’re entitled to a pension credit that can fully or partly offset the tax on the first $2,000 of eligible income annually. Consider setting up a RRIF before year-end to pay out $2,000 annually if you don’t have any other eligible pension income.

Contact us if you have any questions, we can help.

Financial Advice

June 1, 2019/in Blog, Estate Planning, Family, Individuals, Retirees /by Charter Wealth

An advisor can help you determine where you are today financially and where you want to go. An advisor can provide you guidance on how to reach your short, medium and long term financial goals.

Why work with a Financial Advisor?

Worry less about money and gain control.
Organize your finances.
Prioritize your goals.
Focus on the big picture.
Save money to reach your goals.

What can a Financial Advisor help you with?

Advisors can help you with accumulation and protection

Accumulation:

Cash Management – Savings and Debt
Tax Planning
Investments

Protection:

Insurance Planning
Health Insurance
Estate Planning

How do you start?

Establish and define the financial advisor-client relationship.
Gather information about current financial situation and goals including lifestyle goals.
Analyze and evaluate current financial status.
Develop and present strategies and solutions to achieve goals.
Implement recommendations.
Monitor and review recommendations. Adjust if necessary.

Next steps…

Talk to us about helping you get your finances in order so you can achieve your lifestyle and financial goals.
Feel confident in knowing you have a plan to get to your goals.

Critical Illness

March 22, 2019/in Blog, Business Owners, Individuals, Insurance /by Charter Wealth

The objective of this brief paper is to help you understand how to protect your greatest worldly asset on behalf of your family and your business, if you own one. The greatest asset that is referred to in this paper is your ability to earn income. Three major things that reduce or eliminate your ability to do this are illness, disability and death. The following statistics are gathered from sources listed at the end of this paper and are current to Dec 31st 2018.

2019 Federal Budget

March 21, 2019/in 2019 Only, Blog, Business Owners, corporate, disability, Individuals, Investment, pension plan, Retirees, Tax /by Charter Wealth

2019 Federal Budget

The 2019 budget is titled “Investing in the Middle Class. Here are the highlights from the 2019 Federal Budget.

We’ve put together the key measures for:

Individuals and Families
Business Owners and Executives
Retirement and Retirees
Farmers and Fishers

Individuals & Families

Home Buyers’ Plan

Currently, the Home Buyers’ Plan allows first time home buyers to withdraw $25,000 from their Registered Retirement Savings Plan (RRSP), the budget proposes an increase this to $35,000.

First Time Home Buyer Incentive

The Incentive is to provide eligible first-time home buyers with shared equity funding of 5% or 10% of their home purchase price through Canada Mortgage and Housing Corporation (CMHC).

To be eligible:

Household income is less than $120,000.
There is a cap of no more than 4 times the applicant’s annual income where the mortgage value plus the CMHC loan doesn’t exceed $480,000.

The buyer must pay back CMHC when the property is sold, however details about the dollar amount payable is unclear. There will be further details released later this year.

Canada Training Benefit

A refundable training tax credit to provide up to half eligible tuition and fees associated with training. Eligible individuals will accumulate $250 per year in a notional account to a maximum of $5,000 over a lifetime.

Canadian Drug Agency

National Pharmacare program to help provinces and territories on bulk drug purchases and negotiate better prices for prescription medicine. According to the budget, the goal is to make “prescription drugs affordable for all Canadians.”

Registered Disability Savings Plan (RDSP)

The budget proposes to remove the limitation on the period that a RDSP may remain open after a beneficiary becomes ineligible for the disability tax credit. (DTC) and the requirement for medical certification for the DTC in the future in order for the plan to remain open.

This is a positive change for individuals in the disability community and the proposed measures will apply after 2020.

Business Owners and Executives

Intergenerational Business Transfer

The government will continue consultations with farmers, fishes and other business owners throughout 2019 to develop new proposals to facilitate the intergenerational transfers of businesses.

Employee Stock Options

The introduction of a $200,000 annual cap on employee stock option grants (based on Fair market value) that may receive preferential tax treatment for employees of “large, long-established, mature firms.” More details will be released before this summer.

Retirement and Retirees

Additional types of Annuities under Registered Plans

For certain registered plans, two new types of annuities will be introduced to address longevity risk and providing flexibility: Advanced Life Deferred Annuity and Variable Payment Life Annuity.

This will allow retirees to keep more savings tax-free until later in retirement.

Advanced Life Deferred Annuity (ALDA): An annuity whose commencement can be deferred until age 85. It limits the amount that would be subject to the RRIF minimum, and it also pushes off the time period to just short of age 85.

Variable Payment Life Annuity (VPLA): Permit Pooled Retirement Pension Plans (PRPP) and defined contribution Registered Retirement Plans (RPP) to provide a VPLA to members directly from the plan. A VPLA will provide payments that vary based on the investment performance of the underlying annuities fund and on the mortality experience of VPLA annuitants.

Farmers and Fishers

Small Business Deduction

Farming/Fishing will be entitled to claim a small business deduction on income from sales to any arm’s length purchaser. Producers will be able to market their grain and livestock to the purchaser that makes the most business sense without worrying about potential income tax issues. This measure will apply retroactive to any taxation years that began after March 21, 2016.

To learn how the budget affects you, please don’t hesitate to contact us.

RRSP Tax Savings deadline – March 1, 2019

February 22, 2019/in Blog, Family, Individuals, Investment, Retirees, RRSP /by Charter Wealth

RRSP Deadline: March 1, 2019

This is the deadline for contributing to your Registered Retirement Savings Plan (RRSP) for the 2018 tax filing year. You generally have 60 days within the new calendar year to make RRSP contributions that can be applied to lowering your taxes for the previous year.

If you want to see how much tax you can save, enter your details below!

Comparing TFSAs and RRSPs – 2019

February 1, 2019/in Blog, Family, Individuals, Investment, Retirees, RRSP, Tax, Tax Free Savings Account /by Charter Wealth

If you are seeking ways to save in the most tax-efficient manner available, TFSAs and RRSPs can both be effective options for you to achieve your savings goals more quickly. However, each plan does have distinct differences and advantages / disadvantages. Let’s take a look at their key features:

While a TFSA can be used for any type of savings, an RRSP is used exclusively for retirement savings.
You can enjoy tax free withdrawals from your TFSA due to the fact that you make your contributions after you have paid tax, whereas the opposite is true for withdrawals from your RRSP (except in the case of lifelong learning plan and home buyers’ plan)
TFSA contributions aren’t tax deductible whereas RRSP contributions are i.e. with an RRSP, you can deduct the contributions that you make from your income when you file your tax return.
It is required that you use earned income to contribute towards your RRSP but this is not the case for your TFSA.
You can continue to contribute towards your TFSA for as long as you like, whereas you must close your RRSP and stop contributing towards it when you turn 71 and purchase an annuity or convert it to a RRIF with the savings that you have made within the plan.
You are able to specify your spouse as your beneficiary with both your TFSA and your RRSP, however there is a key difference with how your savings are treated upon your spouse’s death. With an RRSP, there will be taxes payable upon the monies left in the plan by your children who inherit it, whereas with a TFSA, tax is only paid on the increase in the value of the plan since the date of death in the year that it is inherited by your children. What’s more, no tax is payable if the value that they receive is less than the value of the TFSA at the time of death.

In summary, your individual circumstances will dictate which plan is the most appropriate for you, depending on your tax position and withdrawal intentions. The primary difference between both plans is the timing of the taxes payable i.e. if you want to defer the payment of your taxes, particularly if your marginal tax rate will be lower in retirement, an RRSP may be more beneficial for you. Alternatively, if your marginal tax rate will be higher when you plan to make withdrawals, a TFSA may suit you better.

CERB Extended | Business Owners who did not qualify previously – expanded CEBA starts June 19th

CERB Extended 2 more months

More small businesses can apply for CEBA $40,000 no-interest loans

Guide to Covid-19: Government Relief Programs in Canada

Comparing TFSAs and RRSPs – 2020

2020 Financial Calendar

2020 Financial Calendar

2019 Tax Tips for Employees

Tax Deadlines for 2019 Savings

December 31, 2019:

January 30, 2020:

February 29, 2020:

Family Tax Issues

Managing Your Investments

Retirement Planning

Financial Advice

Why work with a Financial Advisor?

What can a Financial Advisor help you with?

How do you start?

Next steps…

Critical Illness

2019 Federal Budget

2019 Federal Budget

Individuals & Families

Business Owners and Executives

Retirement and Retirees

Farmers and Fishers

RRSP Tax Savings deadline – March 1, 2019

Comparing TFSAs and RRSPs – 2019

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