From morningstar.ca – March 3, 2008
Last week's federal budget centrepiece was the Tax-Free Savings Account (TFSA), giving investors a new vehicle to save on taxes. As previously reported, the TFSA is scheduled to make its debut in 2009, allowing maximum contributions of up to $5,000 a year.
Although a TFSA is very different from an RRSP, each of these accounts holds an after-tax advantage in returns over a non-registered account. Everyone who is 18 years old and over will be able to contribute to a TFSA, and if you are eligible to make RRSP contributions it will generally be to your advantage to contribute to both.
That, of course, depends on having the money available. According to a national BMO Financial Group/Leger poll released on Feb. 27, more than half of Canadians are not making an RSP contribution this year.
Realistically, for a large number of Canadians who won't be able to contribute to both a TFSA and an RRSP, the question becomes: Which one of the two will leave me further ahead?
To illustrate the differences between the TFSA, RRSP and non-registered savings, the Finance Department created a table comparing the three according to one scenario. The example used a $1,000 one-time contribution, held for 20 years by an individual with a 40% marginal tax rate. The assumed return, implying a very conservatively managed portfolio, was a compound annual 5.5%.
The RRSP investor jumps out to an early lead, since there is a tax deduction that leaves this account with the full $1,000 to invest. The TFSA and non-registered accounts, by contrast, start out with only $600, since they must make their contributions with after-tax dollars.
Both the TFSA and the RRSP accounts enable income to accumulate tax free, while the holder of the non-registered account gets hit with income tax each year. The RRSP extends its lead, since it started out with a larger amount, while the TSFA ranks second and the non-registered account lags.
By the end of 20 years, the value of the net contribution plus investment income has reached $1,751 for the TFSA, $2,918 for the RRSP, and only $1,307 for the non-registered account. (The government's example for the non-registered account assumes a tax rate of 28% on investment income, based on portfolio returns that are assumed to be composed of 30% capital gains, 30% Canadian dividends and 40% interest.)
The great equalizer between the TSFA and the RRSP account occurs at the time of withdrawal. The value of the TSFA remains at $1,751, since no taxes are payable on withdrawal of either the original TFSA contribution or any capital gains, dividends or interest earned.
But the $2,918 RRSP is taxable at the highest marginal tax rate at the time of withdrawal, which works out to a tax hit of $1,167. This leaves the RRSP holder with after-tax proceeds of $1,751, thereby finishing in a dead heat with the TFSA holder. (The non-registered account finishes last with $1,307.)
The key variable is how the tax rate at the time of withdrawal compares to the tax rate at the time of the contribution. Here are the three scenarios, and how they may affect your choice of account:
• If the two rates are identical, as in the hypothetical example cited in this article, the TFSA and the RRSP are equally effective tax-savings alternatives.
• If the tax rate at the time of withdrawal is lower than at the time of contribution, the RRSP is the better choice.
• If the tax rate at the time of withdrawal is higher than at the time of contribution, the advantage goes to the TFSA.
In other personal-finance related developments in the budget, there were several changes affecting life-income funds (LIFs) and registered education savings plans (RESPs).
LIFs are locked-in pension accounts. They hold assets that are transferred from a registered pension plan to an individual who would prefer to manage his or her own account rather than remain in the pension plan. LIFs can be created, for instance, when individuals are laid off from an employer.
The budget provides much increased flexibility for LIF holders to gain access to their assets. Individuals who are 55 years or older, and with LIF holdings of up to $22,450, will be able to wind up their accounts and have the option of transferring the assets to an RRSP or a registered retirement income fund (RRIF).
Those 55 and older are also entitled to a one-time conversion of up to 50% of their LIF holdings into an RRSP or RRIF, with no maximum withdrawal limits.
In addition, all individuals facing financial hardship (such as low income, disabilities or medical costs), will be entitled to unlock up to $22,450 from their LIFs.
As for RESPs, the budget proposed changes in the time limits and age limits. The maximum number of contribution years will be increased to 31 years, up from 21 years. The lifetime contribution limit remains at $50,000.
The deadline for terminating an RESP will be extended to the year that includes the 35th anniversary of the plan, up from the current 25th anniversary. If the beneficiary qualifies for the disability tax credit, the deadline is extended to the 40th anniversary year, up from the 30th year.
In terms of age limits, no contributions can currently be made in family plans for beneficiaries who are 21 or older. The budget calls for raising this age threshold to 31 years old.
Monday, March 3, 2008
Do You Want Insurance With That?
Recently, CBC’s Marketplace ran a story on the pitfalls of purchasing mortgage and creditor insurance and we thought this would be a perfect opportunity to highlight the benefits of arranging your own life and health insurance plans in order to protect yourself and your loved ones.
When you are approved for a mortgage, credit card or line of credit, your lender will offer to sell you insurance to pay off these debts in case of a death or disability. This offer may seem convenient, but you should be aware of many factors before saying ‘yes’ to these coverages.
Most of us will agree that it is important not to leave your loved ones with outstanding debts in the case of a premature death or disability, but mortgage or creditor insurance plans offered by the banks and lenders are not always the best option.
When you purchase mortgage insurance you are actually joining a group insurance policy owned by the lender. Though this may seem like the easiest way to get the coverage that you want, but there are many disadvantages.
With mortgage insurance, the lender is beneficiary on the plan there are no further provision to protect your family. There is very little flexibility with the coverage. Your lender will insure you only for the amount of your debts. You cannot alter, renew or convert the plan.
Should you happen to move to another lender in the future, or sometimes even renegotiate with your current lender, the policy is not transferable. This means you will have to reapply for the insurance coverage and pay premiums based on a higher age, or you may not qualify for coverage at all should your health change.
Also, since creditor insurance is provided through a group plan, you pay the same rate for the coverage as everybody else. You are not rewarded for looking after your health or with some plans, even being a non-smoker.
Another important fact is that your premiums and benefits are not guaranteed. Your lender can change or cancel the policy at any time. Also, your premiums remain the same while your benefit will be reduced as you pay-off your mortgage.
There have also been many documented cases where mortgage insurance claims have been denied due to non-discloser by the clients, even after years of paying premiums for coverage mortgage clients thought were in place the whole time.
With so many gaps in creditor insurance polices, most Canadians will want better guarantees and greater choice. It should also be noted that most lending officers and mortgage brokers don’t even hold an insurance license. Quite frankly it makes sense to speak with an insurance professional about mortgage insurance.
Financial advisors that hold an insurance license have a process in place to help you purchase the right amount and right type of insurance.
Their recommendations will put you in control of your insurance plan. You will own the policy, you can make changes to the plan when necessary, and your loved ones are the beneficiaries—not the bank. If circumstance change, the beneficiary can choose to use the money for other needs instead of paying the mortgage off automatically.
Term life insurance is more affordable and will meet most people’s needs. But you also have the option of choosing permanent insurance like whole life or universal life plans, as well as personal disability or critical illness insurance as well.
A personally plan will have important guarantees and cannot be canceled. If you decide to shop around for better mortgage rates, your insurance plan is portable and will stay in force even if your move to another lender. Also, the insurance benefit will not decrease like mortgage insurance.
You should be aware that when you arrange a mortgage, the lender may ask you to purchase insurance, but you have the right to shop for the plan that meets your needs.
So before you say ‘yes’ to creditor insurance talk with an insurance professional to find out how you can better insure your debts.
When you are approved for a mortgage, credit card or line of credit, your lender will offer to sell you insurance to pay off these debts in case of a death or disability. This offer may seem convenient, but you should be aware of many factors before saying ‘yes’ to these coverages.
Most of us will agree that it is important not to leave your loved ones with outstanding debts in the case of a premature death or disability, but mortgage or creditor insurance plans offered by the banks and lenders are not always the best option.
When you purchase mortgage insurance you are actually joining a group insurance policy owned by the lender. Though this may seem like the easiest way to get the coverage that you want, but there are many disadvantages.
With mortgage insurance, the lender is beneficiary on the plan there are no further provision to protect your family. There is very little flexibility with the coverage. Your lender will insure you only for the amount of your debts. You cannot alter, renew or convert the plan.
Should you happen to move to another lender in the future, or sometimes even renegotiate with your current lender, the policy is not transferable. This means you will have to reapply for the insurance coverage and pay premiums based on a higher age, or you may not qualify for coverage at all should your health change.
Also, since creditor insurance is provided through a group plan, you pay the same rate for the coverage as everybody else. You are not rewarded for looking after your health or with some plans, even being a non-smoker.
Another important fact is that your premiums and benefits are not guaranteed. Your lender can change or cancel the policy at any time. Also, your premiums remain the same while your benefit will be reduced as you pay-off your mortgage.
There have also been many documented cases where mortgage insurance claims have been denied due to non-discloser by the clients, even after years of paying premiums for coverage mortgage clients thought were in place the whole time.
With so many gaps in creditor insurance polices, most Canadians will want better guarantees and greater choice. It should also be noted that most lending officers and mortgage brokers don’t even hold an insurance license. Quite frankly it makes sense to speak with an insurance professional about mortgage insurance.
Financial advisors that hold an insurance license have a process in place to help you purchase the right amount and right type of insurance.
Their recommendations will put you in control of your insurance plan. You will own the policy, you can make changes to the plan when necessary, and your loved ones are the beneficiaries—not the bank. If circumstance change, the beneficiary can choose to use the money for other needs instead of paying the mortgage off automatically.
Term life insurance is more affordable and will meet most people’s needs. But you also have the option of choosing permanent insurance like whole life or universal life plans, as well as personal disability or critical illness insurance as well.
A personally plan will have important guarantees and cannot be canceled. If you decide to shop around for better mortgage rates, your insurance plan is portable and will stay in force even if your move to another lender. Also, the insurance benefit will not decrease like mortgage insurance.
You should be aware that when you arrange a mortgage, the lender may ask you to purchase insurance, but you have the right to shop for the plan that meets your needs.
So before you say ‘yes’ to creditor insurance talk with an insurance professional to find out how you can better insure your debts.
Wednesday, February 13, 2008
Why An RRSP? – Deadline is Feb 29th!
A REGISTERED RETIREMENT SAVINGS PLAN (RRSP) PROVIDES ONE OF THE FEW ways in which Canadians can shelter their income from taxes. Still, the vast majority of Canadians don’t take full advantage of their RRSP eligibility. According to Statistics Canada, less than one in five Canadians contributed to an RRSP in 2002. And the amount they contributed represented only about nine per cent of the total room available.
We often hear people say that “I don’t like RRSP’s” or that they are “not good to invest in.” But when you look at the big picture, the math is clear, for most Canadians, there is no better place to save for your retirement. Where else can a person earning $60,000 a year, paying income taxes at a rate of 40 per cent, put away $10,000 and get a $4,000 gift in return?
Not only do you get an immediate deduction from your annual tax bill,
but your investment within an RRSP grows tax deferred. And when you reach the age of 71 and have to convert your plan to another tax-deferred investment vehicle such as a registered retirement income fund (RRIF), only the money you withdraw is subject to income tax. The rest remains within the tax-free environment until you need it. The key is pay less in taxes during retirement than you were paying while you were working.
The federal government introduced RRSP’s in Canada in 1957 to encourage Canadians to save for retirement. Before RRSP’s, only individuals who belonged to employer-sponsored registered pension plans could deduct pension contributions from their taxable income. Several legislative changes have occurred over the decades that have encouraged larger RRSP contributions. Today, annual RRSP room is a calculation of 18% of your earned income minus a “pension adjustment” up to a maximum of $19,000 as of this year (it will be $20,000 next year). If that is not used up it is carried forward and added to next year’s room. A section on your Notice of Assessment you receive back from the government when you submit your income tax will outline what RRSP contribution room you currently have.
In today’s modern work environment, many people do not have the option to join in a company pension plan. As companies cut back on their pension plans, people have fewer opportunities to help them save for retirement. It’s crucial that people put something away to supplement their income in their retirement years. RRSPs are an excellent option to save for retirement.
Another misconception that we often see is the client who is looking to “buy an RRSP?” It’s important to understand that RRSPs are not something you can actually buy or invest in, but rather a name or title given to any type of investments such as a GIC’s, mutual funds, stocks or bonds, that is held within the plan. You can hold the exact same investments ‘outside’ your RRSP in a non-registered plan, but you will not get tax deduction or tax deferred growth. Think of an RRSP as a tax-saving box that you put your investment into. In a future article, we will touch on the different tax consequences of money held ‘outside’ your RRSPs.
For now however, if you have an RRSP, you have until February 29 to “top it up” to save on your 2007 tax return. But if you don’t have one, make it your month to start! Don’t be afraid to look for professional advice on what investments you should hold inside your RRSP….this decision will have the biggest impact on your retirement savings.
For most people easiest way to contribute to your RRSP is by arranging for automatic monthly withdrawals throughout the year rather than investing a single lump sum. Paying your self first is an old principle but very practical and easy to do, and has many benefits along the way. Some day you will want to retire, plan for it.
We often hear people say that “I don’t like RRSP’s” or that they are “not good to invest in.” But when you look at the big picture, the math is clear, for most Canadians, there is no better place to save for your retirement. Where else can a person earning $60,000 a year, paying income taxes at a rate of 40 per cent, put away $10,000 and get a $4,000 gift in return?
Not only do you get an immediate deduction from your annual tax bill,
but your investment within an RRSP grows tax deferred. And when you reach the age of 71 and have to convert your plan to another tax-deferred investment vehicle such as a registered retirement income fund (RRIF), only the money you withdraw is subject to income tax. The rest remains within the tax-free environment until you need it. The key is pay less in taxes during retirement than you were paying while you were working.
The federal government introduced RRSP’s in Canada in 1957 to encourage Canadians to save for retirement. Before RRSP’s, only individuals who belonged to employer-sponsored registered pension plans could deduct pension contributions from their taxable income. Several legislative changes have occurred over the decades that have encouraged larger RRSP contributions. Today, annual RRSP room is a calculation of 18% of your earned income minus a “pension adjustment” up to a maximum of $19,000 as of this year (it will be $20,000 next year). If that is not used up it is carried forward and added to next year’s room. A section on your Notice of Assessment you receive back from the government when you submit your income tax will outline what RRSP contribution room you currently have.
In today’s modern work environment, many people do not have the option to join in a company pension plan. As companies cut back on their pension plans, people have fewer opportunities to help them save for retirement. It’s crucial that people put something away to supplement their income in their retirement years. RRSPs are an excellent option to save for retirement.
Another misconception that we often see is the client who is looking to “buy an RRSP?” It’s important to understand that RRSPs are not something you can actually buy or invest in, but rather a name or title given to any type of investments such as a GIC’s, mutual funds, stocks or bonds, that is held within the plan. You can hold the exact same investments ‘outside’ your RRSP in a non-registered plan, but you will not get tax deduction or tax deferred growth. Think of an RRSP as a tax-saving box that you put your investment into. In a future article, we will touch on the different tax consequences of money held ‘outside’ your RRSPs.
For now however, if you have an RRSP, you have until February 29 to “top it up” to save on your 2007 tax return. But if you don’t have one, make it your month to start! Don’t be afraid to look for professional advice on what investments you should hold inside your RRSP….this decision will have the biggest impact on your retirement savings.
For most people easiest way to contribute to your RRSP is by arranging for automatic monthly withdrawals throughout the year rather than investing a single lump sum. Paying your self first is an old principle but very practical and easy to do, and has many benefits along the way. Some day you will want to retire, plan for it.
Wednesday, January 23, 2008
Our commentary now covered in Soonews.ca
You can now find our continuing commentary on financial planning in Soonews.ca under the blog section. Visit www.soonews.ca for more info.
Our content to Soonews.ca will compliment the articles that we post here. We are very excited for this new avenue to bring timely financial advice to Saultites and would like to thank Karen Johns, Craig Huckerby and all of the hard working staff at Soonews.ca for the opportunity.
Our content to Soonews.ca will compliment the articles that we post here. We are very excited for this new avenue to bring timely financial advice to Saultites and would like to thank Karen Johns, Craig Huckerby and all of the hard working staff at Soonews.ca for the opportunity.
Monday, January 21, 2008
Don't Sell Quality - Article from The Globe and Mail
No doubt you are aware of the recent stock market declines. We came across a great article today in the Globe and Mail that we would like to share with you. It sums up nicely our position on long term investing through a 'Bear Market'.
The most important aspect of any investment plan is to ensure that your investment choices meet your time horizon and risk tolerance. If you would like a review of your current investment portfolio, please don't hesitate to call and make an appointment.
This is no time to sell quality
Rob Carrick
Monday, January 21, 2008
Beware the one-two punch of plunging stock markets.
Not only do they decimate your portfolio, but they also lure you into making bad investing decisions that help ease your short-term anxiety but then hurt you in the long term. That's how it is that investors sell perfectly good stocks and mutual funds, buy principal-protected investments and make other mistakes with lasting repercussions.
Selling quality right now is probably the worst error you can get fooled into making by a plunging stock market. The rationale here of protecting your money against further losses makes sense, especially because it's hard to imagine there aren't more bad days ahead for the market.
But what comes after that? If you sell today you'll have your money languishing in money market funds, where returns are on the decline because of falling interest rates. You'll eventually get an itch to find something with a higher return and, quite likely, you'll end up in the stock market again. By then, stocks will have jumped from their lows and you'll be buying at elevated prices.
Some people, amateur and professional, get lucky timing their moves in and out of the market. The masses get it wrong and thus end up in a cycle of selling low and buying high that robs of them of returns and extracts unnecessary fees and commissions.
Another mistake is to give up on the risks of the stock market and instead buy guaranteed investments like principal-protected notes or segregated funds. The appeal of these investments is obvious – you get exposure to stocks with no risk of losing money in down markets like we're seeing today. The problem is with the cost of the guarantee – it cuts into returns so deeply that it's simply not a good value.
Buying guaranteed investments at times like now make less sense than usual because the stock markets have already lost a lot of ground. They may fall further, but savvy investors know that the current decline is setting up the next move up for the markets. Sellers of guaranteed products will make out like bandits when stocks rebound. Investors, not so much.
With registered retirement savings plan season just about here, gun-shy investors are poised to make yet another mistake, which is failing to make an RRSP contribution. If a plunging stock market is freaking you out, invest your RRSP money in a high-interest savings account until the dust settles and then move into a long-term investment when you can.
The best move would be to take your RRSP money and put it into the highest quality, most beaten down stocks or funds you can find. But one step at a time.
© The Globe and Mail
The most important aspect of any investment plan is to ensure that your investment choices meet your time horizon and risk tolerance. If you would like a review of your current investment portfolio, please don't hesitate to call and make an appointment.
This is no time to sell quality
Rob Carrick
Monday, January 21, 2008
Beware the one-two punch of plunging stock markets.
Not only do they decimate your portfolio, but they also lure you into making bad investing decisions that help ease your short-term anxiety but then hurt you in the long term. That's how it is that investors sell perfectly good stocks and mutual funds, buy principal-protected investments and make other mistakes with lasting repercussions.
Selling quality right now is probably the worst error you can get fooled into making by a plunging stock market. The rationale here of protecting your money against further losses makes sense, especially because it's hard to imagine there aren't more bad days ahead for the market.
But what comes after that? If you sell today you'll have your money languishing in money market funds, where returns are on the decline because of falling interest rates. You'll eventually get an itch to find something with a higher return and, quite likely, you'll end up in the stock market again. By then, stocks will have jumped from their lows and you'll be buying at elevated prices.
Some people, amateur and professional, get lucky timing their moves in and out of the market. The masses get it wrong and thus end up in a cycle of selling low and buying high that robs of them of returns and extracts unnecessary fees and commissions.
Another mistake is to give up on the risks of the stock market and instead buy guaranteed investments like principal-protected notes or segregated funds. The appeal of these investments is obvious – you get exposure to stocks with no risk of losing money in down markets like we're seeing today. The problem is with the cost of the guarantee – it cuts into returns so deeply that it's simply not a good value.
Buying guaranteed investments at times like now make less sense than usual because the stock markets have already lost a lot of ground. They may fall further, but savvy investors know that the current decline is setting up the next move up for the markets. Sellers of guaranteed products will make out like bandits when stocks rebound. Investors, not so much.
With registered retirement savings plan season just about here, gun-shy investors are poised to make yet another mistake, which is failing to make an RRSP contribution. If a plunging stock market is freaking you out, invest your RRSP money in a high-interest savings account until the dust settles and then move into a long-term investment when you can.
The best move would be to take your RRSP money and put it into the highest quality, most beaten down stocks or funds you can find. But one step at a time.
© The Globe and Mail
Wednesday, January 16, 2008
Staying Focused
With the recent volatility in the markets, it can be easy to lose sight of your long-term financial goals. That's why we encourage all of our clients to meet with us on a regular basis to review the financial plans we have made together. Goals and needs can change quickly and it is important that your plan remains focused and adaptable.
It's important to also understand what's happening in the markets and how these changes can affect your plan Our most important goal when working with together is to make sure your time-horizon (the amount of time your investments can stay invested before your need to make withdraws),your risk-tolerance and portfolio diversification strategies are kept up to date.
While we take the time this time of year to contemplate our future financial goals (like your RRSP contribution for this year for example), we would like to leave you with a short presentation on investing through the natural cycles of the financial markets and how to separate our emotions from guiding us toward the wrong investment decisions.
We look forward to meeting with each of you in the near future to ensure that your financial plans stay on track. Please don't hesitate to call and book a meeting.
Kevin Lamour & Ellen MacDougall
It's important to also understand what's happening in the markets and how these changes can affect your plan Our most important goal when working with together is to make sure your time-horizon (the amount of time your investments can stay invested before your need to make withdraws),your risk-tolerance and portfolio diversification strategies are kept up to date.
While we take the time this time of year to contemplate our future financial goals (like your RRSP contribution for this year for example), we would like to leave you with a short presentation on investing through the natural cycles of the financial markets and how to separate our emotions from guiding us toward the wrong investment decisions.
We look forward to meeting with each of you in the near future to ensure that your financial plans stay on track. Please don't hesitate to call and book a meeting.
Kevin Lamour & Ellen MacDougall
2007 in Review
As we begin a New Year, we would like to thank you for choosing us as your financial planning firm. We appreciate your trust and the business that comes with it. This time of year is a good opportunity to look back and put things into context. Here's a quick review of the more important financial events that occurred in 2007:
The Markets
At the beginning of 2007, the S&P/TSX Composite Index was sitting at around 12,923 points. For the first seven months of the year, the index was, for the most part, climbing and even broke the 14,000 barrier for the first time on Friday, May 11.
The strong performance was halted at the end of July, when the credit crisis first began to make itself known. Soon America's sub-prime woes, coupled with asset-backed commercial paper problems, sent markets around the world into turmoil. By August 8, just two weeks after the TSX dropped below 14,000 for the first time in weeks, it had lost nearly 600 points.
Since then, the index has been extremely volatile, dropping below 13,000 in mid-August, climbing back up to almost 14,600 at the end of October and landing at 13,467 on November 23. How the index — and world markets for that matter — will fare in the next month and through next year is anyone's guess, but investors can expect a bumpy ride to say the least.
Budget 2007
In March, the Conservative government presented its 2007 budget. For the most part, Finance Minister Jim Flaherty introduced a number of tax savings for families, including removing the Registered Education Savings Plan's annual contribution limit and introducing a new Registered Disability Savings Plan.
The government also implemented a child tax credit of $2,000 per child under 18, and the spousal penalty was phased out.
While there were a number of other tax savings in March, the government revealed even more tax relief in an October mini-budget, including a further 1% GST cut to come into effect January 1, 2008. As well, the government upped the basic personal amount to $9,600, effective January 1, and the lowest personal income tax rate was reduced from 15.5% to 15%.
Should you have any questions about how these or other recent events might affect you, I'd be happy to schedule a time to either speak with you on the telephone or sit down with you in person. If you have friends or colleagues who you think might benefit from my advice, I would also be pleased to meet with them. A referral is a wonderful present, and I'd like to thank everyone who gave me one over the past twelve months.
Best wishes for health, happiness and continued financial success in the New Year!
Kevin Lamour & Ellen MacDougall
The Markets
At the beginning of 2007, the S&P/TSX Composite Index was sitting at around 12,923 points. For the first seven months of the year, the index was, for the most part, climbing and even broke the 14,000 barrier for the first time on Friday, May 11.
The strong performance was halted at the end of July, when the credit crisis first began to make itself known. Soon America's sub-prime woes, coupled with asset-backed commercial paper problems, sent markets around the world into turmoil. By August 8, just two weeks after the TSX dropped below 14,000 for the first time in weeks, it had lost nearly 600 points.
Since then, the index has been extremely volatile, dropping below 13,000 in mid-August, climbing back up to almost 14,600 at the end of October and landing at 13,467 on November 23. How the index — and world markets for that matter — will fare in the next month and through next year is anyone's guess, but investors can expect a bumpy ride to say the least.
Budget 2007
In March, the Conservative government presented its 2007 budget. For the most part, Finance Minister Jim Flaherty introduced a number of tax savings for families, including removing the Registered Education Savings Plan's annual contribution limit and introducing a new Registered Disability Savings Plan.
The government also implemented a child tax credit of $2,000 per child under 18, and the spousal penalty was phased out.
While there were a number of other tax savings in March, the government revealed even more tax relief in an October mini-budget, including a further 1% GST cut to come into effect January 1, 2008. As well, the government upped the basic personal amount to $9,600, effective January 1, and the lowest personal income tax rate was reduced from 15.5% to 15%.
Should you have any questions about how these or other recent events might affect you, I'd be happy to schedule a time to either speak with you on the telephone or sit down with you in person. If you have friends or colleagues who you think might benefit from my advice, I would also be pleased to meet with them. A referral is a wonderful present, and I'd like to thank everyone who gave me one over the past twelve months.
Best wishes for health, happiness and continued financial success in the New Year!
Kevin Lamour & Ellen MacDougall
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