by Owen | May 22, 2023 | Government Programs, Income, Tax Planning
The Canada Child Benefit is one of the most generous government benefits in Canada and it just increased! Unlike many government benefits, the Canada Child Benefit is available to low, moderate, and also some high income families.
The amount you receive from the Canada Child Benefit (CCB) depends on a few factors, one is the taxable net income for the family (line 23600 on your tax return), another is the number of children in the family, and the final factor is the age of each child.
The Canada Child Benefit is an “income tested” government benefit. The higher your taxable net income is, the lower your Canada Child Benefit will be. For some high income families, at a certain level of income the Canada Child Benefit will be reduced to $0. Anyone with income above that income level will not receive any benefit. The tricky thing is that this income level is different depending on the number of children and their ages.
The Canada Child Benefit also changes every year. New benefits start in July and are based on prior years tax return (the first payment of the updated benefit is July 20th).
The Canada Child Benefit also increases with inflation. The new 2023 Canada Child Benefit has increased by 6.3% versus 2022.
So how much Canada Child Benefit can you expect in July? We’ve got a table below that shows the Canada Child Benefit based on family taxable net income (line 23600) in $10,000 increments, so you can figure out generally how much you can expect in July.
by Owen | Apr 24, 2023 | Behavioral Finance, Buying A Home, Financial Planning, Government Programs, Investment Planning, Retirement Planning, Tax Planning
The largest financial transaction you will ever make is selling your home in retirement. Selling your home in retirement comes with a number of important considerations.
In this blog post we’re going to touch on 9 important things to consider when selling your home in retirement.
Selling a home in retirement can be a core part of many retirement plans. A sale usually takes one of three forms…
– Sell and rent
– Sell and downsize
– Sell when entering long-term care
Often the plan is to hold the home throughout retirement, but it can still be used as a “fall back” asset if necessary. Even if there was never a plan to sell the home, it can still be used to help fund long-term care costs in late retirement.
Each situation above has its unique circumstances but, in all cases, there is a major transaction taking place. So, before you put up the ‘for sale’ sign in retirement there are a few important considerations to highlight.
by Owen | Apr 10, 2023 | Financial Goals, Financial Planning, Government Programs, Retirement Planning
Did you know that the Canada Pension Plan (CPP) is getting bigger? Every year since 2019 CPP has been expanding and it will continue to expand for the next 40+ years until 2065. By the end, CPP will be HUGE!
CPP is an important retirement benefit. The old “base” CPP aimed to replace 25% of pre-retirement employment income. The new “expanded” CPP will increase this amount to 33.33% and will cover a larger amount of pre-retirement of income. The result is that CPP will be over 50% larger in the future.
If we follow the rule of thumb* that suggests that we need 70% of pre-retirement income in retirement, then for the average Canadian the new expanded CPP could provide nearly half of retirement income in the future. When combined with OAS this means that over half of retirement income could be covered by CPP and OAS combined.
And if we consider that the maximum annual CPP payment could be over $7,000 per year higher in the future (and over $14,000 per year for a couple), that could mean the average Canadian needs to save hundreds of thousands less for retirement.
In this post we’ll look at the current maximum CPP payment, the maximum CPP contribution, the current contribution rate, and how these will change in the future as CPP expands. We’ll also look at how the current “base” CPP will grow by over 50% in the future…
by Owen | Apr 3, 2023 | Buying A Home, Down Payment, Financial Planning, Government Programs, Investment Planning, Retirement Planning, Tax Planning
There is a new tax advantaged account in Canada, the First Home Savings Account! Along with the TFSA and RRSP, the new First Home Savings Account (FHSA) is another great way to reach your financial goals in a very tax efficient way. The account provides a significant advantage to those planning to purchase their first home and creates a new option for parents who are thinking about helping their children with a future home purchase.
The new First Home Savings Account (FHSA) does add a little bit of complexity to an already complex landscape of tax planning options, however like the TFSA and RRSP, if used properly it can help accelerate progress towards financial goals like purchasing a home and planning for retirement.
When saving and investing for future goals you can now choose between TFSA, RRSP, and the new FHSA, and for families with small children, there is the RESP too.
The new First Home Savings Account is very new, so in this post we’re going to explore how this account works, the eligibility criteria, the contribution and withdrawal rules, some things to possibly watch out for, and some strategic options when using it within your financial plan.
by Owen | Mar 13, 2023 | Financial Goals, Financial Planning, Government Programs, Income, Investment Planning, Retirement Planning, Tax Planning
When we talk about retirement planning with our clients one topic that inevitably comes up is tax planning.
Income tax is often the single largest expense in retirement. Larger than travel, food, or medical expenses.
Income tax often comes up when we talk about retirement planning because many people are worried about paying too much tax in retirement and negatively impacting their retirement spending goals.
Many people do not realize that in retirement there are new tax credits that can help reduce income tax, sometimes to zero. It’s understandable that people aren’t aware of these tax credits because they’re mostly available to those over age 65, so they’re not necessarily on someone’s radar if they’re under age 65.
Paying less tax in retirement is nice, but what if you could pay NO TAX at all in retirement? With some pre-retirement planning that is easily possible.
There are three important tax credits that can help you earn over $25,000 per year as an individual, or over $50,000 per year as a couple, and pay zero tax in retirement.
In this blog post we’re going to look at three important tax credits in retirement, two of which, for most people, are only available after age 65. We’re also going to work backward to craft a retirement plan that provides $75,000 per year in spending with zero tax.
by Owen | Mar 6, 2023 | Financial Planning, Government Programs, Retirement Planning, Tax Planning
One of the amazing things about financial planning and retirement planning is how much the details matter. One detail in particular is very important and that is the province you live in.
It’s not even about the difference in cost of living, or the difference in average salary. Even with every factor being equal, just the difference in tax rates and provincial benefits are enough to impact your financial plan over time.
We’ve worked with clients who are nearly identical in every detail except for the province they live in. One client is very successful, while the other will run out of money in the future.