2023 Personal Year-End Tax Tips

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The end of 2023 is quickly approaching – which means it’s time to get your paperwork in order so you’re ready when it comes time to file your taxes!

In this article, we’ve covered five different major types of 2023 personal tax tips:

  • Investment Considerations

  • Individuals

  • Families

  • Retirees

  • Students

Investment Considerations

Tax-Free Savings Account (TFSA)-You can contribute up to a maximum of $6,500 for 2023. You can carry forward unused contribution room indefinitely. The maximum amount you’re allowed to make in TFSA contributions is $88,000 (including 2023) if you have been at least 18 years old and resident in Canada since 2009.

Registered Retirement Savings Plan (RRSP) – For the 2023 tax year, you have until February 29, 2024, to contribute to your Registered Retirement Savings Plan (RRSP) or a spousal RRSP. However, contributing earlier can benefit you more due to tax-deferred growth. Your deduction limit for 2023 is 18% of your 2022 income, up to $30,780, but this will reduce if you have pension adjustments. Don’t forget, any unused contribution room from previous years or pension adjustment reversals can increase your limit.

Also, you can deduct contributions on your 2023 income if they are made within the first 60 days of 2024. It’s possible to defer these deductions to a later year if that suits your financial strategy better. To optimize your RRSP, consider holding investments that have the potential for growth outside of your RRSP to take advantage of lower taxes on capital gains and dividends. Within your RRSP, keep investments that generate regular interest income. If you’re unsure about the best investment strategy for your RRSP, our team is ready to provide expert advice to help you maximize your retirement savings.

Do you expect to have any capital losses? If you have capital losses, sell securities with accrued losses before year end to offset capital gains realized in the current or previous three years. You must first deduct them against your capital gains in the current year. You can carry back any excess capital losses for up to three years or forward indefinitely. 

Interest Deductibility – If possible, repay the debt that has non-deductible interest before other debt (or debt that has interest qualifying for a non-refundable credit, i.e. interest on student loans). Borrow for investment or business purposes and use cash for personal purchases. You can still deduct interest on investment loans if you sell an investment at a loss and reinvest the proceeds from the sale in a new investment.

Tax Loss Selling- Tax-loss selling is when you sell investments that have lost value by the end of the year from accounts that are not tax-deferred. This helps to offset any profits you made from other investments. If your losses are greater than your profits, you can use these extra losses to reduce taxes on profits from the last three years or save them to lower taxes on future profits.

For your losses in 2023 (or the past three years) to count, you need to complete the sale by December 27, 2023. This is because it needs to be settled by the end of the year, and December 30th and 31st are on a weekend in 2023.

If you sell an investment at a loss and plan to buy it again soon, you should know about the “superficial loss” rule. This rule applies if you sell something for a loss and buy it back within 30 days before or after selling it. It also applies if someone close to you, like your spouse or partner, a company they or you control, or a trust where you or they are the main beneficiaries (like your RRSP or TFSA), buys it within 30 days and still has it after 30 days. If this happens, you can’t use that loss to reduce your taxes right away. Instead, the loss gets added to the cost of the investment you bought back. You’ll only get the tax benefit from this loss when you sell this investment later.

When it comes to transferring investments, you might think about moving one with a loss into your RRSP or TFSA to count the loss without really selling it. But the tax rules don’t allow this, and there are big penalties for swapping an investment from a regular account to a registered account like an RRSP or TFSA.

To avoid these issues, it’s better to sell the investment that’s lost value and, if you have room, put the money from the sale into your RRSP or TFSA. Then, if you want, your RRSP or TFSA can buy the investment again after waiting for 30 days since the initial sale. This way, you avoid the superficial loss rule.


Individuals

The following list may seem like a lot, but it’s unlikely every single tip will apply to you. It’s essential to make sure you aren’t paying taxes unnecessarily.

COVID-19 federal benefits – If you return any amounts you received from COVID-19 benefits before the year 2023, you have the option to deduct the amount you paid back from your income for the year when you originally received the benefit, rather than the year in which you repay it.

Income Timing – If your marginal personal tax rate is lower in 2024 than in 2023, defer the receipt of certain employment income; if your marginal personal tax rate is higher in 2024 than in 2023, accelerate.

Medical expenses – If you have eligible medical expenses that weren’t paid for by either a provincial or private plan, you can claim them on your tax return. You can even deduct premiums you pay for private coverage. Either spouse can claim qualified medical expenses for themselves and their dependent children in a 12-month period, but it’s generally better for the spouse with the lower income to do so.

Charitable donations – Tax credits for donations are two-tiered, with a more considerable credit available for donations over $200. You and your spouse can pool your donation receipts and carry donations forward donations for up to five years. If you donate items like stocks or mutual funds directly to a charity, you will be eligible for a tax receipt for the fair market value, and the capital gains tax does not apply.

Moving expenses – If you’ve moved to be closer to school or a place of work, you may be able to deduct moving expenses against eligible income. You must have moved a minimum of 40 km.

Alternative Minimum Tax (AMT)- The AMT framework is a taxation system that sets a minimum amount of tax for individuals who utilize specific tax deductions, exemptions, or credits to substantially reduce their tax liabilities to exceedingly low levels. With AMT, there’s a parallel tax calculation that doesn’t allow as many deductions, exemptions, or credits as the regular way of calculating taxes. If the tax amount computed under the AMT system exceeds the tax liability determined under the regular tax system, the surplus amount becomes payable as AMT for the year.

Recent government proposals have outlined forthcoming adjustments to the AMT system, set to take effect in 2024. These proposed modifications encompass elevating the AMT tax rate, enhancing the AMT exemption threshold, and expanding the AMT tax base by constraining specific exemptions, deductions, and credits that serve to reduce overall tax obligations. 

For individuals whose taxable income surpasses approximately $173,000, and who derive income subject to lower tax rates than standard income, or those who benefit from deductions or credits that mitigate their tax liabilities (such as capital gains, stock options, Canadian dividends, unused non-capital losses from preceding years, or non-refundable tax credits like the donation tax credit), it is anticipated that their AMT liabilities in 2024 may exceed those incurred in 2023.

To navigate these impending changes effectively and make financial decisions, it is advisable for individuals to seek counsel from a tax professional. 


Families

Childcare Expenses – If you paid someone to take care of your child so you or your spouse could attend school or work, then you can deduct those expenses. A variety of childcare options qualify for this deduction, including boarding school, camp, daycare, and even paying a relative over 18 for babysitting. Be sure to get all your receipts and have the spouse with the lower net income claim the childcare expenses. In addition, some provinces offer additional childcare tax credits on top of the federal ones.

Caregiver – If you are a caregiver, claim the available federal and provincial/territorial tax credits.

Children’s fitness, arts and wellness tax credits – If your child is enrolled in an eligible fitness or arts program, you may claim a provincial or territorial tax credit for fitness and arts programs.

Estate planning arrangements

  • Periodic Review: It is imperative to conduct an annual review of your estate planning arrangements to verify that they are in alignment with your objectives and compliant with current tax regulations.

  • Probate Fee Mitigation: Deliberate strategies should be explored to minimize probate fees. 

  • Will Examination: Regularly reviewing your will is crucial to ensure it remains valid and aligns with your evolving life and estate planning requirements.

Registered Education Savings Plan (RESP) – can be a great way to save for a child’s future education. The Canadian Education Savings Grant (CESG) is only available on the first $2,500 of contributions you make each year per child (to a maximum of $500, with a lifetime maximum of $7,200.) If you have any unused CESG amounts for the current year, you can carry them forward. If the recipient of the RESP is now 16 or 17, they can only receive the CESG if a) at least $2,000 has already been contributed to the RESP and b) a minimum contribution of $100 was made to the RESP in any of the four previous years.

Registered Disability Savings Plan (RDSP) – If you have an RDSP open for yourself or an eligible family member, you may be able to get both the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB) paid into the RDSP. The CDSB is based on the beneficiary’s adjusted family net income and does not require any contributions to be made. The CDSG is based on both the beneficiary’s family net income and contribution amounts. In addition, up to 10 years of unused grants and bond entitlements can be carried forward.

First Home Savings Account (FHSA) – If you are a Canadian resident, age 18 or older and planning to become first-time homebuyers. Starting from April 1, 2023, this account serves as a valuable tool for saving towards the purchase of a qualifying first home. 

The FHSA program comes with an annual contribution limit of $8,000, and a cumulative lifetime cap of $40,000, with the flexibility to carry forward up to $8,000 in unused contributions. Importantly, contributions made to the FHSA are tax-deductible, offering potential tax benefits. Additionally, the returns earned on your savings within this account are not subject to taxation, which can enhance the overall growth of your savings. Most notably, when you make qualifying withdrawals to buy your first home, these withdrawals are non-taxable.

Retirees

Registered Retirement Income Fund (RRIF) – Turning 71 this year? If so, you are required to end your RRSP by December 31. You have several choices on what to do with your RRSP, including transferring your RRSP to a registered retirement income fund (RRIF), cashing out your RSSP, or purchasing an annuity. Talk to us about the tax implications of each of these choices. 

Pension Income- Are you 65 or older and receiving pension income? If your pension income is eligible, you can deduct a federal tax credit equal to 15% on the first $2,000 of pension income received – plus any provincial tax credits. Don’t currently have any pension income? You may want to think about withdrawing $2,000 from an RRIF each year or using RRSP funds to purchase an annuity that pays at least $2,000 per year.

Canada Pension Plan (CPP) – If you’ve reached the age of 60, you may be considering applying for CPP. Keep in mind that if you do this, the monthly amount you’ll receive will be smaller. Also, you don’t have to have retired to be able to apply for CPP. Talk to us; we can help you figure out what makes the most sense.

Old Age Security – For individuals aged 65 or older, securing enrollment in Old Age Security (OAS) benefits is essential. It’s important to note that retroactive OAS payments are limited to a maximum of 11 months plus the month in which you apply for your OAS benefits. Moreover, if you encounter OAS clawback challenges due to exceeding income thresholds, there are strategic measures you can take including income splitting or reduction. 

If eligible, you can opt to defer the initiation of your OAS benefits for up to 60 months after turning 65. This choice results in a permanent increase of 0.6% in your monthly OAS payment for each month of deferral.

These financial strategies, when combined with timely enrollment in OAS benefits, can help you navigate OAS-related matters effectively, ensuring you receive the maximum benefits available to you while optimizing your retirement income.

Estate planning arrangements – Review your estate plan annually to ensure that it reflects the current tax rules. Consider strategies for minimizing probate fees. If you’re over 64 and living in a high probate province, consider setting up an inter vivos trust as part of your estate plan.


Students

Education, tuition, and textbook tax credits – If you’re attending post-secondary school, claim these credits where available.

Canada tuition credit – If you’re between 25 to 65 and enrolled in an eligible educational institution, you can claim a federal tax credit of $250 per year, $5,000 maximum lifetime tax credit. You can claim tuition paid on your taxes, carry the amount forward, or transfer an unused tuition amount to a spouse, parent, or grandparent.

Need some additional guidance?

Reach out to us if you have any questions. We’re here to help.

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Understanding Target Loss Ratio and Your Group Benefits Plan

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Group benefits can be intricate both in their establishment and administration. There are numerous details and considerations to be aware of when purchasing a group benefits plan, one of which is the target loss ratio (TLR).

Key Questions Addressed:

  • What is a target loss ratio?

  • How does my TLR influence my premiums upon policy renewal?

  • What steps should I take if I have concerns regarding my TLR?

Understanding Target Loss Ratio (TLR):
Here are the primary aspects you should understand about the target loss ratio (TLR):

  • It represents the expected profit point of your employee benefit plan’s comprehensive health and dental benefits.

  • TLR is the maximum dollar amount of claims paid by the insurance company, expressed as a percentage of your premium. For instance, if an insurance company pays $40 in claims for every $80 collected in premiums, the loss ratio stands at 50%.

  • The TLR is primarily determined by two factors: the number of members participating in the employee benefit plan and the annual premium paid.

  • The loss ratios can vary based on the type of insurance. For instance, the loss ratio for property insurance is typically lower than that for health insurance.

Does my TLR Affect My Premiums Upon Renewal?
Generally, your TLR won’t have a significant influence on your premiums when renewing. However, a notable increase or decrease in the number of staff members participating in your group benefits plan might cause some impact.

Other factors influencing your renewal premiums include:

  • A substantial amount of health and dental claims made.

  • Changes in the general demographics of your employees, such as aging.

  • An increase in the cost of services covered by your group benefits plan.

  • General inflation.

Addressing Concerns About TLR:
As someone overseeing a group benefits plan, your objective is to ensure optimal value for your premium expenditure.

If you’ve been collaborating with the same insurance provider for an extended period, it’s beneficial to explore other available options. Comparing offerings can help ascertain if the rate and TLR you’re being offered align with current market standards.

It’s essential to consider how varying TLRs might influence the long-term viability of your group benefits plan. If you’re keen on gaining deeper insights, consider reaching out to industry experts or consultants for guidance.

Investing as a Business Owner 2023

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Investing as a Business Owner

Many business owners have built up earnings in their corporation and are looking for tax efficient ways to pull the earnings out to achieve their personal and business financial goals such as:

  • building and protecting your savings

  • providing for loved ones

  • planning for retirement

Factors to consider when investing as a corporation:

What’s the purpose of the investment? First, think about what you’ll be doing with your savings. This will help dictate what savings vehicle is best suited for your situation. Then consider the following factors:

Taxes: As a small business owner, you have access to the small business tax rate which is typically lower than your personal tax rate. (See table below.) Also, as of January 1, 2019, the Federal Budget decreased the small business limit for corporations with a set threshold of income generated from passive investments.

Taxes on investment growth: Depending on what you invest in, you will want to review this as different asset types are taxed at different rates.

Timing: You can control the timing of the payout which means you could potentially defer paying out the money until you need it and determine if you’d like to pay it out as salary or dividend.

Creditor Protection: Sometimes, investments held inside a corporation can be vulnerable to creditors, therefore you may want to consider using a holding company or trust or pay out money to yourself personally. This can be complex and requires professional advice.

Capital Gains Exemption: If your investment grows too large, it may endanger your qualification for the lifetime capital gains exemption that’s available when shares of a qualified small business corporation are sold or transferred.

For business owners, before investing personally or corporately, it’s certainly worth talking to us to ensure that it suits your individual circumstances. 

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First Home Savings Account (FHSA): What You Need to Know

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The First Home Savings Account (FHSA) is a savings plan designed for first-time home buyers in Canada, which allows them to save up to $40,000 tax-free. Contributions to an FHSA are tax-deductible, similar to Registered Retirement Savings Plans (RRSP). Additionally, income and gains earned inside the account and withdrawals are tax-free, like a Tax-Free Savings Account (TFSA).

In this article and accompanying infographic, we will provide you with the necessary information you need to know about FHSA, including eligibility requirements, contributions and deductions, income and gains, qualifying investments, withdrawals, and transfers.

Eligibility Requirements

To be able to open an FHSA, you need to meet all the following eligibility requirements:

  1. Residency: You must be an individual who is a resident of Canada.

  2. Age: You must be at least 18 and not reach 72 in the current year.

  3. First-time Home Buyer: You must be a first-time home buyer, which means that neither you nor your spouse had owned a qualifying home that was your principal residence at any point during the calendar year or the preceding four calendar years before the account was opened.

Contributions and Deductions

There are limits to the amount you can contribute to your FHSA.

  • The annual contribution limit is $8,000.

  • The lifetime contribution limit is $40,000.

If you do not contribute the full amount each year, the contribution room carries forward to the following year. However, carry-forward amounts only start accumulating after you open an FHSA for the first time, and they do not automatically begin when you turn 18.

Any excess contributions are subject to a penalty of 1% per month.

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Tax Deductions

By claiming contributions made to FHSA accounts as a deduction against all taxable income sources, the amount of taxable income for the year can be reduced, resulting in a decrease in the amount of taxes payable.

Suppose you choose not to claim the FHSA deduction in the year. In that case, you can carry forward the unused contribution amounts indefinitely and claim them as a deduction later, like RRSP deductions.

Qualifying Investments

Qualifying investments for an FHSA are like those allowed in RRSPs and TFSAs, including mutual funds, segregated funds, ETFs, stocks, bonds, and GICs.

Incomes and Gains

The income and capital gains earned in an FHSA are not included in your annual income for tax purposes and therefore are not deductible. This means that the investment can continue to grow and compound within the FHSA tax-free like a TFSA.

Qualifying Withdrawals

Withdrawals from an FHSA are subject to specific rules and conditions. Qualifying withdrawals made to purchase a home are tax-free but must meet specific criteria:

  • The person making the withdrawal must be a first-time home buyer and a Canadian resident.

  • They must also intend to use the property as their primary residence within one year of purchasing or building it.

  • The home being purchased must be in Canada, and a written agreement to buy or build the home must be in place before October 1st of the year following the withdrawal.

It is not possible to restore FHSA contribution limits by making withdrawals or transfers.

Transfers

Unused funds in an FHSA account following a qualifying withdrawal can be transferred tax-free to an RRSP or Registered Retirement Income Fund (RRIF) until the end of the following year from the year of the first withdrawal. Transfers do not affect the available RRSP contribution room, but the transferred funds will be taxable when withdrawn from the account.

It’s important to remember that there are limitations on how long you can keep your FHSA account. You must close your FHSA after you’ve held it for 15 years or by the end of the year in which you turn 71, whichever comes first.

If you’re considering opening an FHSA or saving for a home, we can help; contact us.

Do you have enough for retirement?

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Many of us dream of the day that we can retire and have the time to ourselves that we have dreamed of for so many years. But, to have a genuinely contented and relaxing retirement, you need to ensure that you have the means to afford it. So, now’s the best time to consider the three critical stages of retirement planning.

Accumulation

This is the stage you save for your retirement – essentially, the majority of your working life. So, naturally, if you start saving for your retirement early, you will have the ability to save a larger pension for the future, though this is not always achievable for young people or those on a low income.

Pre-retirement

At this point, you are making the final plans for your retirement. Although you are potentially making less money at this late stage of your career, it’s still a necessary time to continue saving and making sure that your investments are fit for purpose.

Retirement

Once you are no longer working, your retirement income will usually come from three key sources:

  • Government benefits: Canada Pension Plan or Old Age Security

  • Employer pension or retirement plan

  • Personal savings: Registered Retirement Savings Plan, Tax-Free Savings Account, Non-Registered Savings

Your concern will be to ensure that your money lasts the length of your lifetime.

Drawing up a retirement plan

A retirement plan is a crucial process to undertake during your working life, as it will help you outline and achieve your financial goals for the future. However, making such a plan doesn’t have to be daunting – here are our key steps to success:

  • Work out how much income you’ll need in your retirement. This is a key starting point to ensure that you save enough to meet this need.

  • Start early. If you can, invest any spare money into your retirement fund and keep going. Small amounts grow over time and can help you create a savings fund to meet your needs in retirement.

  • Diversify as much as you can. The best way to reduce your risk and exposure to poor market performance is to spread your investments. We can help you create a strategy that focuses on your attitude to risk.

  • Contributing to a TFSA or RRSP is a great place to start. Contribute the maximum amounts you can, and don’t forget to contribute on a consistent basis.

Talk to us today about your retirement goals.

Understanding Tax-Free Savings Accounts (TFSAs)

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A Tax-Free Savings Account (TFSA) is an investment vehicle available to Canadian residents. It offers numerous benefits, including tax-free growth of your investments and tax-free withdrawals. Before you decide to open a TFSA, it’s essential to understand the eligibility requirements, contribution limits, eligible investments, and withdrawal rules. 


Eligibility Requirements

To open a TFSA, you must be a resident of Canada with a valid Social Insurance Number (SIN) and be at least 18 years old. However, in some provinces and territories, the legal age to enter a contract (which includes opening a TFSA) is 19. The TFSA contribution room for the year an individual turns 18 is carried over to the following year if the individual resides in a jurisdiction where the legal age is 19.


Benefits

One of the primary benefits of a TFSA is that it allows your investments to grow tax-free. Any income you earn from your investments within the TFSA is not taxed, even upon withdrawal. This includes interest, dividends, and capital gains. 

Additionally, you can withdraw any amount from your TFSA at any time, and the withdrawals are tax-free. It’s important to note that withdrawing funds from your TFSA does not reduce the total amount of contributions you have made for the year. The amount withdrawn in a year will be added back to your TFSA contribution room at the beginning of the following year.


Contribution Limit

The annual TFSA dollar limit has varied over the years. From 2009 to 2012, it was $5,000; in 2013 and 2014, it was $5,500; in 2015, it increased to $10,000; from 2016 to 2018, it was $5,500; from 2019 to 2022, it was $6,000, and in 2023, it is $6,500. This annual limit will be indexed to inflation and rounded to the nearest $500. 

The maximum amount you can contribute to a TFSA is determined by your TFSA contribution room. This room is the sum of the TFSA dollar limit of the current year, any unused TFSA contribution room from previous years, and any withdrawals made from the TFSA in the previous year. 

Let’s look at two examples to better understand this:

Example #1: Carry Forward Unused Room to Your Current Contribution

In 2020, the annual TFSA contribution limit is $6,000. If you only contribute $5,000, you would have $1,000 of unused room. This unused room gets carried over to the next year. So, in 2021, the annual contribution room is $6,000, but because of the unused room from 2020, you actually have a total contribution room of $7,000 ($6,000 for 2021 + $1,000 carried over from 2020).

Example #2: Reclaim Your Contribution Room in the Following Year When You Make a Withdrawal

In 2021, you have $7,000 in contribution room and decide to contribute the full amount. However, you also decide to make a withdrawal of $1,000 in 2021. In 2022, the annual contribution limit is $6,000, but because of the withdrawal made in 2021, you actually have a total contribution room of $7,000 ($6,000 for 2022 + $1,000 withdrawn in 2021).

Please note that if you exceed your available TFSA contribution room at any time in the year, you will have to pay a tax equal to 1% of the highest excess TFSA amount in the month, for each month that the excess amount stays in your account.


Eligible Investments

The types of investments that are permitted in a TFSA are generally the same as those allowed in a Registered Retirement Savings Plan (RRSP). These include cash, segregated funds, mutual funds, securities listed on a designated stock exchange, guaranteed investment certificates, and bonds.


Withdrawals

As mentioned earlier, you can generally withdraw any amount from the TFSA at any time, depending on the type of investment held in your TFSA. However, if you decide to replace or re-contribute all or a part of your withdrawals into your TFSA in the same year, you can only do so if you have available TFSA contribution room. 

For example, if in 2023 you withdraw $1,000 from your TFSA and later in the same year decide to re-contribute that amount, you can only do so if your contribution room for 2023 allows for it. If it doesn’t and you re-contribute the $1,000 anyway, you will be considered to have over-contributed to your TFSA in that year. This will result in a tax equal to 1% of the highest excess TFSA amount in the month, for each month that the excess amount stays in your account


Beneficiary

When establishing a Tax-Free Savings Account (TFSA), you are given the choice to designate a beneficiary. This person will be the recipient of the investments within your TFSA in the event of your death. The assets inherited by the beneficiary are not considered income, and as such, are received tax-free. It’s important to note, though, that while the inherited amount is tax-free, the beneficiary will be responsible for any tax on earnings that the TFSA generates after the original account holder’s death. 


Start Planning for Your Future Today!

The Six Steps to Financial Planning

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The Six Steps to Financial Planning

Many people put off planning for their financial future because they’re overwhelmed with all the decisions they have to make. The good news is that there’s help at hand – in the form of a certified financial planner. A certified financial planner is trained to focus on all aspects of your finances – everything from your taxes to retirement savings.

A certified financial planner will develop a plan that works for you both today and in the future.

Meeting your financial planner

When you first meet with your financial planner, they will tell you about their obligations and responsibilities. They should:

  • Give you a general overview of the financial planning process

  • Tell you what services they provide and how they are compensated for them

  • Let you know what they will expect from you as a client

You should let your financial planner know how involved you want to be in creating and executing your financial plan. You should also ask any questions about the process or how compensation works.

Determining your goals and expectations

Now you’re ready to make your plan. But first, you and your financial planner should discuss your personal and financial goals and your current and future needs and priorities.

Your financial planner will make sure they have all the details they need. They may ask you to fill in questionnaires or provide documentation on your current financial state.

Reviewing your current financial state

Before your financial planner can get started on your financial plan, they need to know about your current situation – including cash flow, net worth and any taxes you may owe in the future.

To customize your financial plan, so it works for you, your financial planner must know about anything that could impact it – for example, a dependent adult child.

Developing the financial plan

Once they have all the information they need, your financial planner will create a customized plan that aligns with your goals, objectives, and risk tolerance. They will also provide you with information on projected returns and recommended actions.

Implementing the plan

Once you approve it, your financial planner should implement your plan. They should also help you contact other professionals they’ve recommended to assist with your financial plan – such as a lawyer or an insurance agent.

Monitoring the plan

Your certified financial planner should periodically contact you to adjust your financial plan. In addition, a life change – such as the birth of a child or retirement – may require adjustments to your financial plan.

It can be hard to plan for the future – but you don’t have to do it alone. Contact a certified financial planner or us today!

Tax Tips You Need To Know Before Filing Your 2022 Taxes

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Tax Tips You Need To Know Before Filing Your 2022 Taxes

This year’s tax deadline is May 1, 2023, as April 30 falls on a Sunday this year. It’s important to make sure you’re claiming all the credits and deductions you’re eligible for. In this article, we’ll provide you with tips to help you maximize your tax refund and ensure you’re taking advantage of all the available tax benefits.

Canada Workers Benefit

The Canada Workers Benefit (CWB) is a refundable tax credit designed to help low-income working families and individuals. The credit is made up of two parts:

  • The basic amount

  • A disability supplement (if you qualify).

To determine whether you qualify for the tax credit, you’ll need to consider your net income and where you live. The CRA website provides full details about the net income qualification amounts.

The maximum amounts you can qualify for are as follows:

  • The maximum basic amount is $1,428 for single individuals and $2,461 for families.

  • The maximum amount for the disability supplement is $737 for single individuals and $737 for families.

Claiming Home Office Expenses Due To COVID-19

You can still claim home office expenses if you’re not self-employed but worked from home due to the pandemic. You can:

  • Claim the temporary flat amount if you worked more than 50% of the time from home for at least four consecutive weeks in 2022. You can claim $2 for each day worked from home, up to a maximum of $500. No paperwork or forms are required!

  • Use the detailed method and claim the actual amounts. In this case, you’ll need supporting documentation, plus a completed and signed T2200S form from your employer. You can claim various applicable expenses, including home Internet access fees.

The Tax Deduction for Zero-Emissions Vehicles

A capital cost allowance (CCA) is a tax deduction that helps cover the cost of an asset’s depreciation over time. The CRA created two new capital cost allowances, which apply to zero-emission vehicles bought after March 18, 2019.

They are as follows:

  • Class 54. This class is for motor and passenger vehicles, excluding taxis or vehicles used for lease or rent. It has a CCA rate of 30%. For 2022, capital costs will be deductible up to $55,000, plus sales tax. This amount will be reassessed every year.

  • Class 55 is for leased and rented vehicles or taxis. The CCA rate is 40%.

Return Of Fuel Charge Proceeds To Farmers Tax Credit

You may be eligible for this tax credit if you are either self-employed or part of a farming partnership in Alberta, Manitoba, Ontario and Saskatchewan.

This tax credit aims to help farmers offset the high cost of the carbon tax.

Eligible Educator School Supply Tax Credit

You can claim up to $1,000 of eligible supplies and expenses if you qualify for the educator school supply tax credit.

The tax credit rate for the 2022 tax year is 25%, with a maximum credit of $250.

Need help?

Do you qualify for a credit or deduction? Call us – we’re here to save you money on your taxes!

How To Use Insurance To Provide Your Family With Financial Protection

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How To Use Insurance To Provide Your Family With Financial Protection

The best way to provide your family with financial protection is with solid insurance planning. These three types of insurance will ensure your family has the financial resources they need if you die, are injured, or become ill:

  • Life insurance.
  • Critical illness insurance.
  • Disability insurance.

Life Insurance

Life insurance is an inexpensive way to ensure your family will have access to a tax-free lump sum payment after your death. Whether you want to give your grandchildren a helping hand getting started in life or provide financial resources for a stay-at-home parent, life insurance can be a great way to do it!

You have two main options when it comes to life insurance – term insurance and permanent life insurance.

With term insurance, you’ve got life insurance coverage for a set period (for example, five years). Premiums for term insurance are lower than for permanent life insurance, but they will rise as you age or your health changes.

With permanent life insurance, you’ve got lifetime coverage. You’ll pay more in premiums at first, but the cost will be less overall than if you buy term insurance for your entire life. Some permanent life insurance policies also allow you to contribute money beyond your premiums, where it can grow tax-free.

Not sure which type is best for you? We can help you figure this out!

Critical Illness Insurance

With critical illness insurance, you will be eligible for a tax-free lump sum of money if you’re diagnosed with a significant illness such as cancer or a stroke. While anyone can benefit from this insurance, it’s essential for self-employed people who don’t have employee benefits to help tide them over while recovering or receiving treatment.

You can spend the lump sum any way you want, including paying off your mortgage, paying for treatment not covered by provincial health care, or putting aside money for your children’s future.

Depending on the type of critical illness policy you select, you may be able to get a “return of premium” option, which means your premiums will be returned to you if you never make a claim. We can explain how to option works and what coverage we think is best for you.

Disability Insurance

Most people assume that they’ll never become disabled. But the stark reality is that 1 in 5 Canadians are considered to be living with a disability. If you couldn’t work anymore because you became disabled, this could have a disastrous impact on your family’s financial stability – especially if you’re self-employed.

With disability insurance, you’ve got financial protection to ensure you can pay your bills and maintain your family’s standard of living. We can explain how to minimize the cost of your premiums while still getting the coverage you need.

Protect Your Family

Book a meeting with us today to get started with insurance planning.