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Cash Flow Issues

What is an effective way to eliminate my personal debt?
Concentrating on paying down your most costly debt first can save a significant amount of money over the long term. However, determining which loan is costing you the most isn't necessarily as simple as looking at the interest rate. Other factors such as tax deductibility, fixed vs. variable rates, and loan terms must also be taken into account. In addition, sometimes it is more effective to invest rather than put additional money against your debt. After a brief fact-finding session we would be able to help you assess and prioritize your loans.

How can I minimize the amount of tax that I pay?
There are numerous ways you can reduce the amount of tax you pay. Developing a tax-efficient investment portfolio may lower the tax you pay on the growth by as much as 50 percent. Purchasing tax-advantaged vehicles may produce an immediate ax saving. Carrying forward some of your RRSP contributions to help ensure they are deducted at the highest possible rate may save as much as 20 percent. Maximizing your charitable and medical expense credits will make at least a 15 percent difference. A review of your financial situation and recent returns can determine whether or not there is anything you should be doing differently.

What is the Home Buyer's Plan?
It is a government-sponsored program that allows first time home buyers (or those who haven't owned a house for at least 5 years) to withdraw money from their RRSP tax-free. This can make it possible for you to come up with a down payment even if most of your savings are tied up in your RRSP. It is then treated as a loan that must be paid back into your RRSP over no more than 15 years. For more information please visit

Education Funding

What is the Lifelong Learning Plan?
It is a government program similar to the Home Buyer's Plan that allows you to withdraw funds from your RRSP tax-deferred to finance you or your spouse's education. If you are enrolled full-time at a qualifying institution you can withdraw up to $10,000 annually to a maximum of $20,000. It then has to be paid back over no more than 10 years.

What are the benefits of a Registered Education Savings Plan?
The Canada Education Savings Grant is a 20 percent bonus that is paid into the plan by the government in addition to your contribution. Therefore, if you contribute the maximum $2,000 per year per child they will receive $400 automatically. Another advantage is that all the growth in the account is tax-free until withdrawn. RESPs are one of the fastest way to accumulate funds for your children's education.

How much money will I need to pay for my children's education?
University costs are one of the fastest growing expenses facing Canadians today. They will vary depending on the school and whether or not your children live at home during school, however the average cost of a four year program beginning in 2020 will be approximatly $102,675*. Starting early is essential if you hope to sufficiently cover these costs years in the future.

* Cost is based upon Human Resources and Skills Development Canada (HRDC) estimates (2007)

Termination of Employment

Can I transfer my severance to an RRSP?
Yes, so long as you have RRSP contribution room available. Your limit can be found on your perious years' Notice of Assessment. Unless you have been maximizing your contributions every year you should have some room. The contribution can be made into either your RRSP or a Spousal RRSP.

You are also entitled to an additional $2,000 transfer per year of service prior to 1996. If you have been with the company since 1995 or earlier you will be able to take advantage of this contribution room in addition to your normal amount. You may also be entitled to an additional $1,500 per year of service before 1990, assuming you were not a member of a company pension plan at that time.

Can I access the money in my Deferred Profit Sharing Plan?
Yes, but it is taxable in the same way as RRSP withdrawals. You can transfer your DPSP into an RRSP with no tax consequences. However, if you choose to take the money out there will be tax withheld and any future growth will be fully taxable as well.

You may be eligible for non-taxable withdrawals from your RRSP through the Home Buyer's Plan or Lifelong Learning Plan. These programs are explained in more detail later on.

Is it better to put money into my RRSP or pay down my mortgage?
That depends on a number of factors that will vary in each situation. In order to determine the most beneficial approach we need to perform calculations based on your age, mortgage balance, mortgage interest rate, expected rate of return and marginal tax rate, among others. Please contact us if you would like us to help you determine the choice that best suits your particular situation.

What types of investments are appropriate for my situation?
We offer a wide range of mutual funds that provide all different levels of risk and return. Using your age, net worth, family situation, investment knowledge and various other factors we can determine the optimum risk tolerance for your portfolio.

Estate Planning

Why do I need to have a will?
A will is the only way to control how your estate is divided after you pass away. Without one, government legislation will decide who receives what, all your assets will be subject to probate taxes and many income tax incentives will be unavailable. A will is an extremely important estate planning tool, and one that is surprisingly inexpensive.

What is a Power of Attorney and is it important that I have one?
A durable Power of Attorney passes control of your affairs to a chosen representative in the event that something happens to you. The Power of Attorney is usually given to a spouse, or possibly a close friend or relative. Without one, someone in your family will have to prove their suitability in court during what will already be a very difficult time.

How can I minimize the amount of tax my estate will have to pay?
There are a number of methods available to help you pass your assets on as efficiently as possible. Testamentary trusts, inter vivos trusts, insured inheritance strategies and joint assets could all be used to reduce the income tax your estate will pay.

Probate tax can often be a drain on your estate. Some of the methods that can be used to avoid probate include named beneficiary designated RRSPs, insurance policies and segregated funds, along with joint assets.

What are some tax-efficient ways to leave money to a charity?
Depending on your particular situation there can be several tax-efficient ways to donate money through life insurance. By purchasing a policy naming the charity as the beneficiary you receive a tax credit each year for the premiums while the charity receives the death benefit when you pass away. Alternately, you can name your estate as the beneficiary and then donate the cash through your will. This gives your estate a very large tax credit but has the downside of exposing the death benefit to probate tax.

Another tax-efficient option is to donate investments instead of selling them first and donating the cash. When you donate investments you pay tax on only 25 percent of the capital gain as opposed to the 50 percent you would normally pay.

Family Protection

Can I convert my group plan to an individual plan?
Yes, except for your disability insurance. We can arrange to have your medical and dental benefits converted to personal coverage quickly and efficiently. Converting your life insurance, however, is quite expensive and unlikely to be cost-effective.

Why would I need private insurance when I have a group plan at work?
Many group plans do not provide sufficient coverage to entirely replace your current income. Some run out after a certain period of time. The key is that each one is different and it is important to have the plan, along with any other coverage that you may have, reviewed by a professional to help ensure that you are adequately covered.

Do Employment Insurance and the Canada Pension Plan provide disability coverage?
Yes, but both are limited as far as who qualifies and how much you will receive. Employment Insurance pays a maximum of $413 per week for just 15 weeks, and then only if you have worked enough to qualify.

Only an extremely serious injury or illness will allow you to qualify for Canada Pension Plan Disability benefits and they don't even take effect for 4 months.

If I have health problems in the future will I still be able to purchase insurance? Possibly, though if the illness is serious you may become completely uninsurable. Either way, the cost will still be far greater than if you purchased it while you were still healthy.

The costs of insurance also increase significantly as you get older. Guaranteed renewable life and disability insurance policies can lock you in at a premium rate based on your current age and health. If you are young and in good health the cost can be surprisingly low, and then you don't have to worry about being uninsurable due to health problems in the future.

How do I know if I have enough insurance to protect my family?
The only way to know for sure is to have an in-depth analysis done that takes into account your age, cost of living, current coverage, as well as the age and number of your dependants. It is often surprising how large a shortfall can occur when a family loses one of its incomes.

Retirement Planning

When will I be able to afford to retire?
That depends on your income, assets, and spending requirements as well as many other issues. We can produce a range of projections for you that will illustrate different levels of saving, rates of return, spending levels, retirement ages and severance decisions.

How will my lifestyle change in retirement?
This is an issue that is all too often overlooked during retirement planning. Knowing what you want to do in retirement is just as important as whether or not you will be able to afford it. In fact, it is very difficult to project how much money you will need to retire until you know how you want to spend your time. We can provide a comprehensive Lifestyle Planner that will help you work through these decisions.

When can I start to collect Canada Pension Plan and Old Age Security benefits?
Early Canada Pension Plan benefits can begin at age 60 if you have stopped working (or earn below a certain amount). In this case, your benefits will be a maximum of 30 percent lower than your regular benefits which you can begin receiving at age 65 whether you have retired or not. Old Age Security begins at age 65 without regard for your employment situation

What is income splitting and how will it affect my retirement?
In general, you can minimize the tax you pay by being in the same tax bracket as your spouse. One of the best ways to accomplish this is for the higher income spouse to contribute to a Spousal RRSP. That allows you to get the tax deduction at a higher rate while having the retirement income taxed in the lower income spouse's hands. Other methods involve shifting non-registered investments, splitting your government benefits and manipulating your RRIF withdrawals.

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