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DOLLARS & SENSE

An Annual Checklist to ensure your Long Term Goals are Met

Financial Planning is important for everyone and it has been stated that April
women tend to be better managers of finance as they tend to budget more,
take on less risk, have a longer term outlook and they collaborate much more Tax time
to find out information. Along with sending information to your accountant, be sure they know
who your financial advisor is so that they can communicate directly with
Women often face various gender specific financial challenges, such as one another and ensure you are reporting all income from all sources.
gender pay gap, longer life expectancy, and career breaks due to caregiving May
responsibilities for parents and children. Life is full of transition such as
marriage, divorce, looking after elderly parents or becoming a parent. Create a tax-efficient retirement income stream
Financial planning equips us with the necessary tools and knowledge to For those drawing an income from their investment portfolios, there are
navigate these transitions successfully, minimizing stress and uncertainty. several strategies to create a more tax-efficient income stream, without
By addressing different issues at different times throughout the year , your necessarily taking on more risk. One strategy is to draw on your various
planning becomes manageable, and you can ensure you are implementing the income sources in a certain order, starting with less tax-advantaged sources
smartest strategies to achieve the Long Term Goals for you and your family. such as GIC income in a taxable account. This gives tax-advantaged
sources such as your RRIF more time to grow on a tax-deferred basis.
January/ February Another strategy is to split your income with your spouse so that you have
Maximizing your RRSP means more than just maximizing your RRSP similar incomes and thus similar tax rates. Because of Canada’s marginal
contributions tax rates, a couple with two similar tax rates generally pays less combined
Your Registered Retirement Savings Plan (RRSP) offers two well-known tax than a couple with two different tax rates.
tax advantages: RRSP contributions are tax-deductible and grow free of June, July, August
annual taxes. There are several ways to make the most of these
advantages, beyond simply maximizing your contributions every Consider the big picture
year. For example, if your annual income fluctuates, consider Summer months can be a good time to reflect while sitting
making your RRSP contribution as usual in a lower-income year, on the deck or the deck and discuss your financial goals with
but wait until a higher-income year to claim it for a potentially family. This is a great time to review your financial plan with
greater tax deduction. your Advisor, just to ensure no changes have occurred and you
are track with your family goals. A financial plan is an excellent
If you do not yet own a home consider the new in 2023, First way to be sure you are maximizing all available tax strategies,
Time Home Buyers Account: and to be sure your family is well taken care of in the event
Similar to an RRSP your contributions are tax deductible –, there that you are unable to do so in the future. A plan can also cover
is a maximum contribution amount of $8000 per year and a max cottage or business succession planning, intergenerational
contribution of $40,000 lifetime. This is beneficial as the entire wealth transfer, and a number of other topics.
amount can be withdrawn and applied to purchase your first September, October
home- or if you have not owned a home in over two years you
may also qualify. These funds are not required to be paid back Erica Tennenbaum, CFP, FCSI RESPs
unlike the first time Homebuyers account. Check with your Senior Portfolio Manager & RESPs can be a great way to help save for your children’s
financial institution for more information or email us to receive Wealth Advisor or grandchildren’s education. The maximum contribution
a summary of this new program. needed to achieve the 20% ($500) annual grant is $2500 per
Don’t settle for just tax-deferred growth when you can get tax-free child or grandchild. It is cumulative, and a maximum annual deposit of
growth too $5,000 per child can be made in any one year.
With an RRSP, your investment earnings grow on tax-deferred basis – November, December
meaning you don’t pay tax until you actually start making withdrawals.
With the Tax-Free Savings Account (TFSA) your investment earnings grow Focusing on your after-tax returns can – literally – pay dividends
on a tax-free basis – meaning you never pay tax, even when you make Capital gains are taxable in the year they are earned. However, capital
withdrawals. losses can be carried forward indefinitely and can be applied to future
capital gains. Although it seems counter-intuitive to realize a loss, doing so
This has some people wondering whether they should still contribute to their may work to your advantage in years to come. It is always a good strategy
RRSP – or just go with a TFSA. However, in most cases, it makes sense to to make lemonade out of lemons. November and December is a perfect
contribute to both. Your RRSP is designed for a specific purpose – saving for time to review your portfolio and crystallize some of those losses. In doing
your retirement. It also offers the ability to make much larger contributions so, keep in mind that interest income (e.g. from GICs or bonds) is fully
– and they also are tax-deductible. Your TFSA, meanwhile, is more flexible, taxable at your marginal tax rate. However, only one half of any capital
allowing tax-free withdrawals at any time for any reason – and the amount gain (e.g. from selling a stock that has increased in value) is taxable at
withdrawn is added back to your available contribution room the following your marginal rate. And eligible Canadian-source dividends are generally
year. 2024 contribution has been moved up to $7000. taxed even less, depending on your province. In fact, you can earn between
March $20,000 – $50,000 in tax-free dividends if you have no other income (varies
by province).
Enhance retirement income with special tax-advantaged plans for
business owners Please keep in mind that this is simply a guide to some of the important financial
An Individual Pension Plan (IPP) allows business owners and incorporated considerations for your family over a typical year. It is best to work alongside your
professionals like dentists and vets to make larger tax-deductible contributions professional advisors to ensure you are considering the best strategies for you and
compared to an RRSP. your family. If you have any questions or would like more information please send us
an email at; erica.tennenbaum@rbc.com or give us a call at 519-621-6297

This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor. This will ensure that your own circumstances have been considered properly and that action is taken on the latest
available information. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness.
This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information
suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate
entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ® / TM Trademark(s) of Royal Bank of Canada. Used under licence.
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