How will a pension buyback impact your income tax return? + MORE Apr 7th

There are plenty of retirement plan options in Canada! Stay on top of the best plans right here.
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Ten proven ways to pay less tax this year Mar 2nd

How to use tax shelters and structure your retirement portfolio to reduce your annual payment to the CRA..... More »

This 30-year-old freelancer makes $125,000 a year and pays modest rent living with his parents. Should he invest in retirement or buy a home? + MORE Feb 3rd

Jeremy says his main goal is to save for retirement, but after looking at condos online, he’s trying to decide if that will be a worthy investment..... More »

Should Kathy take monthly payments or the commuted value of her pension? + MORE Jun 15th

Q. I am torn about making a key financial decision in my life. First, a little about myself. I worked for about seven years (actually, six years and 360 days) as a teacher in the Arctic. I resigned this year and have returned to the “south.” Now, I have about a year to decide whether I cash out .... More »

What types of Tax-Free Savings Accounts (TFSAs) exist? + MORE Feb 10th

A Tax-Free Savings Account (TFSA) is a fantastic way to earn money on your savings, without having to pay tax on those earnings. Registered by the federal government, TFSAs are available to Canadians aged 18 and older. Unlike a Registered Retirement Savings Plan (RRSP), you cannot deduct contributio.... More »

An easy guide to income splitting for seniors Apr 14th

Q. My husband and I are both retired. He still has income from his business, and I have cashed in all of my RRSPs but one. My question is: Can Hubby cash one of his RRSPs (and pay taxes, of course), but then turn around and buy a spousal RRSP for me? Would that be worth doing? Then I could cash this.... More »
Q: I’m 81, single, female, with around $265,000 in a RRIF (invested in two different financial institutions, both mutual funds).  My withdrawal is about $12,000 a year.
How can I minimize tax payable (by my beneficiaries) at death?
— Lydia
A: The tax savings and deferral from contributing to a Registered Retirement Savings Plan (RRSP) can be a good thing. But in retirement, and on death, the tax payable on withdrawals from a registered account is an important tax and estate consideration.
As you may know, Lydia, a Registered Retirement Income Fund (RRIF) can be left on your death to a surviving spouse or common-law partner on a tax-deferred basis. In certain instances, a RRIF can also be left to a financially dependent child or grandchild. They must live with you, be dependent upon you, and have an income below the basic personal exemption in the year of your death. If these conditions apply, some or all of the value of your RRIF can be taxed on their tax return instead of having all of it taxed on your tax return…

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Q. I plan to do a pension buyback for my service with the Government of Canada. Can I deduct the lump sum payment from my total income if I fully pay the amount at once? And will the total income reported on my T4 be reduced if I choose to deduct a certain amount from each pay stub? Looking forward to your reply. Thank you.
— Alice
A. You’re asking about how your pension buyback will impact your yearly income tax return. Great questions!
First, some background: As a participant in the federal government’s defined-benefit pension plan, public sector employees accumulate years of “pensionable service,” which build credits toward an eventual retirement pension.
Then, at retirement, your total pensionable service is used to calculate your pension benefits. This total can include current service (all of the full and partial years you’ve worked while enrolled in the pension plan you’re retiring from), service that you’ve transferred from one plan to another (if you switched jobs and were able to take your pension with you to your new job), and service you have “bought back” to cover a period when you were not contributing to the pension (such as during maternity or parental leave, for example)…

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Why you might want to avoid using your RRSP to buy a homeThe Liberals have raised the amount you can borrow from your RRSP to buy a home, but there are costs, writes Gordon Pape.

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