Should you take extra RRIF withdrawals to increase your estate? + MORE Nov 26th

The federal government’s “meaty” move to pause federal sales tax on a long list of items and send cheques to millions of Canadians this spring could factor into an improving outlook for growth in 2025, economists say. The plan, which will cost about $6.3 billion, could put some upward pressure on inflation, Bank of Montreal chief economist Doug Porter said in an interview Thursday.

“It’s important to point out just how meaty this is. It’s quite a substantial move and it’s important to note that the much bigger impact here will not be on the high-profile GST holiday. It’s much more on the (rebate cheques),” he said.

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Ontario rebates + GST holiday: tax savings or inflation booster?

When combined with provincial government rebates promised in Ontario, Porter said the money is likely to offer a significant boost to incomes and consumer spending at the start of the new year…

This year you want to make holiday gifts extra special. Why not? You worked hard for the money and you want your family to enjoy it—heck, you want to enjoy it. These “big gifts” might be a family trip, a down payment on a house or even renos.

In addition, three of the year’s busiest shopping days are coming up: Black Friday, Cyber Monday and Boxing Day. In the meantime, whether you’re holding out for the lowest prices on big-ticket items or preparing to give a sizable monetary holiday gift, putting your cash in a high-interest savings account (HISA) can help those funds grow until you’re ready to use them.

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Simplii’s HISA has no transaction fees or monthly fees, and no required minimum balance.

Welcome offer: Earn 6.00% interest on eligible deposits for five months. (Limits apply. Offer ends Jan. 31, 2025.)Interest rate: 0.35% to 3.75% (depending on your balance)
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Where to hold cash intended for gifts this holiday season

Using a HISA is an easy way to grow your cash savings…

Ask MoneySense
I have a RRIF that is worth approximately $250,000 at the moment. My two children are the beneficiaries. Obviously, I am hoping to somehow reduce any tax on this RRIF income when I die. Is my taking more out of the RRIF and paying the tax each year the best way to do this? Do you have other suggestions?

—Anne

Most tax-efficient way to withdraw from a RIFF

When you convert your registered retirement savings plan (RRSP) into a registered retirement income fund (RRIF), there are minimum annual withdrawals that you must take each year thereafter. This conversion needs to happen no later than the end of the year that you turn 71.

Your minimum withdrawal is a percentage of the account value as of the end of the previous year, and it rises annually. While RRIFs have minimum withdrawals, there are generally no maximums, unless your account is a locked-in one that came from a pension plan.

A locked-in RRSP, arising from a pension plan, must be converted to a life income fund (LIF) or similar locked-in account depending on the federal or provincial jurisdiction of the pension from which the account arose…