The First Home Savings Account Has Arrived
Canadians have gotten a boost to save for buying a home. The new registered plan, the First Home Savings Account (FHSA), became available on April 1, 2023, and was included in the last budget from the governing Liberals.
Investment Income and Income Tax
Investments can deliver a major source of income and tax implications for individuals. Each major type of investment income is subject to different tax treatment.
Understanding how your investments are taxed is an important consideration for investment planning since after-tax yield is more important than gross returns. The most common types of income most investors will receive are interest, dividends, and capital gains.
What We Know About the Tax-Free First Home Savings Account (FHSA)
Canadians will soon get a boost when it comes to saving for their first home. Starting in April of 2023, the Tax-Free First Home Savings Account (FHSA) will be available to those who have dreams of owning a home. This account is part of a campaign promise by the Liberals in the last election. Here is what we know so far.
6 Recession Tips.. it is never too late to plan
Depending on who you ask and the definition they use, a recession has occurred or is about to occur. The traditional definition is two consecutive quarters of economic decline measured in Gross Domestic Product. A more complex definition is a slowing of economic activity and an increasing unemployment rate.
Financial and lifestyle preparations for a recession should be undertaken now to lessen the effects should it occur. And if it does not, then you will be even better prepared for any economic shock that could unexpectedly occur.
5 Ways to Avoid Capital Gains Tax
Capital Gains tax occurs when you sell capital property for more than you paid for it. In Canada, you are only taxed on 50% of your capital gain. For example, if you bought an investment for $25,000 and sold it for $75,000 you would have a capital gain of $50,000. You would then be taxed on 50% of the gain. In this instance, you would pay tax on $25,000. In Canada, there are some legitimate ways to avoid paying this tax: Tax shelters, Lifetime Capital Gains Exemption, Capital Losses, Deferring, and Charitable Giving.
Converting an RRSP to a RRIF 2021
If you are nearing retirement, you may be starting to think about creating retirement income for yourself from your RRSPs. Registered Retirement Savings Plans (RRSPs) are considered accumulation vehicles. This means they are used to save for your retirement in a tax efficient way. When the time comes to start using your hard-earned savings to fund your retirement, you may want to consider moving them to a payout vehicle called a Registered Retirement Income Fund (RRIF).
What Happens If You Overcontribute to Your TFSA?
The amount deposited into a Tax Free Savings Account (TFSA) is subject to a yearly contribution limit. For 2020, and again in 2021, the annual limit has been set at $6,000. As of 2021 the lifetime maximum contribution has grown to $75,500.
If an over-contribution is made Canada Revenue Agency will levy penalties.
What Is Your Financial Independence Number?
Every investor wants to know the answer to the question, “How much money will I need to retire?” Many factors contribute to this determination and it is unique for everyone. For example, someone who earns $70,000 per year will likely be able to live comfortably on $60,000 per year in retirement, but another person who makes $200,000 each year will likely not find that income level realistic. There is a simple way to discover the amount of retirement income you and your family will require, and it is called the Financial Independence Number.
What to Consider When Drawing Down Your RRSP
If you have been a good saver and contributed religiously to your RRSP, you should be rewarded with a sizeable six or seven figure RRSP that would make your retirement that much more enjoyable. The only issue now is – how do you get the money out of the RRSP without paying more tax than you should? Typically, it is advised that investors leave their RRSPs alone for as long as possible to take advantage of the tax-free growth. While this can be true for many people, it is important to crunch the numbers before you retire to make sure this makes the most sense for your unique retirement situation. Many retirees, especially those with a high net worth, may find there could be a more efficient way to withdraw retirement income.
TFSA or RRSP? Take your pick 2021 Update
Whether you should invest in a Tax Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP) is a question that affects almost every investor. For most, the answer is “a bit of both.”
If you have a looming short or medium-term need (under five years), the untaxed TFSA withdrawals are likely the right choice. For longer term retirement needs, you’ll want to invest in an RRSP.
