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IMF Predicts Slowing Growth for Canada: What Can You Do About It?

The IMF predicts that if Canada and the U.S. fail to reach agreement on NAFTA, Canada’s competitiveness could take a serious hit, resulting in a drop of 0.4 percentage points or more in GDP. Donald Trump’s tweets about Justin Trudeau could further dampen the outlook. But, astute financial advisors can help clients meet their goals in these difficult times by staying on course.

According to CBC, the IMF lists the recent tense trade negotiations and the threat of major correction in the housing market as “significant risks.” Predicting that Canadian economic growth will slow in the near term from 3 percent last year to 2.1 percent in 2018, with another drop to 2 percent in 2019. The news gets worse the longer the forecast period, with potential growth limited to as little as 1.75 percent in the medium term due to “sluggish labour productivity growth and population aging.” Other factors playing into this overall picture are U.S. tax cuts and stronger government spending, as well as other policy changes in the U.S. under the Trump administration.

There are domestic challenges to our competitiveness as well.  As reported in last week’s Knowledge Bureau Report, the Bank of Canada is expected to raise its benchmark interest rate in July, which will put pressure on anyone carrying personal or household debt.  It could also increase the risk of a major correction in the housing market. There have already been significant slowdowns in the once-hot markets of the Greater Toronto Area (GTA) and in Metro Vancouver.  In the GTA, May home sales were down over 22 percent from last year. Metro Vancouver faced a decline of more than 35 percent in the same period.

These are serious challenges to Canada’s competitiveness on the global stage. They signal the need for a review of financial plans by advisors here at home, especially for their nervous clients. Reviewing debt management opportunities and sticking to investment plans, with a good measure of tax efficiency is the key to weathering the storm clouds gathering.

Now more than ever, it’s essential for advisors and clients to keep on top of economic change and to develop strategies to shore up your clients’ wealth. Knee-jerk reactions could secure unwanted tax liabilities or lock in irreversible losses, and strategies must address this economic uncertainty and potential decline of family wealth.

Additional educational resources:

  1. Join Knowledge Bureau in November for this year’s Distinguished Advisor Conference where Dr. Jack Mintz will address Canada’s declining competitiveness. Learn more about this can’t miss speaker session here.
  2. Knowledge Bureau’s Debt and Cash Flow Management course will show you how you can help your clients avoid the erosion of their wealth that comes with debt.
  3. Or, go one step further and learn strategies for building sustainable wealth for your clients with our Elements of Real Wealth Management course, the first step in working towards your Real Wealth Manager Enroll in any of our courses today to save on tuition before the June 15 registration deadline.



Interest and Inflation Rate Hikes Ahead? Time to Manage Real Wealth

After holding interest rates at 1.25 percent since January, the Bank of Canada appears ready for raise the rate in its next announcement, July 11, when many economists expect it to increase to 1.5 percent. This small jump could affect millions of Canadians and is an opportunity for advisors and clients to lean in and plan for change.

Interest rates are one tool at the bank’s disposal to keep inflation in check, around the 2 percent mark. Due to steady growth in the Canadian economy in recent months, plus increases in gasoline prices, inflation is at or above this targeted level.

According to a May 30 Globe and Mail article, “The odds of a July rate hike is now just shy of 80 percent, up from slightly more than 50 percent on Tuesday, according to Bloomberg’s interest rate probability tracker.”

The article goes on to speculate on the nuances of language in the central bank’s May 30 announcement as an indicator of what is to come in the next announcement, but what does all this talk of a probable interest rate hike mean for Canadians? And how can you help your clients manage in the face of rising interest rates?

  1. Your clients will need your help not only to save and plan for home ownership, but also to develop broader strategies for building wealth. An article in the May 30 KBR pointed to real estate ownership as one of the three big secrets to wealth accumulation and financial success. But rising interest rates will mean that home ownership will get tougher for Canadians to achieve, especially with new mortgage stress test rules in effect that require home owners to be able to afford a rate that is the greater of the Bank of Canada’s benchmark mortgage rate (currently 5.34 percent), or the rate negotiated by the buyer with their lender, plus two percent.
  2. Your clients will need your good counsel on debt management strategies to shore up their chances of financial success. In addition to mortgages, any form of debt will become more costly to service. Anyone carrying debt such as student loans, lines of credit, credit card debt and more will be stretched even further than they currently are.
  3. Real Wealth Management requires a solid look at the effect of taxes, inflation and fees on accumulation, growth, preservation and transition of family wealth. This framework will help you have better discussions about lifecycle changes in the context of emerging economic cycles.

Rising interest rates have a very real impact on your clients’ ability to be financially successful. Make appointments now to discuss debt loads, and forward-thinking investment strategies.  Stay tuned to KBR to stay informed and prepare for this developing trend.

Additional educational resources: You can prepare your clients for impending interest rate hikes with the debt management strategies you’ll learn in Knowledge Bureau’s Debt and Cash Flow Management course. And the Real Wealth Manager designation will give you all the tools you need to help them plan for and afford the home of their dreams—a cornerstone in a broader, more holistic approach to building wealth.



Canada’s Tax Freedom Day: Implications to Wealth Management

Every year there is a milestone date when Canadians can shift their focus from paying taxes due to using their income to secure their financial future. Several countries track “Tax Freedom Day” annually, and Canada’s is coming up in June. It falls weeks behind other countries, which can have negative repercussions to wealth management and retirement planning.

In 2017, Canada’s Tax Freedom Day was June 9, one day later than 2016’s June 8. Compared to the U.S. date of April 19 and Australia’s April 13, it turns out we work almost two months longer to pay taxes, and that’s not likely to change anytime soon.

According to the Tax Foundation, a Washington, D.C.-based think tank that tracks Tax Freedom Day down south, Americans will pay $3.4 trillion in federal taxes and $1.8 trillion in state and local taxes, for a total bill of $5.2 trillion, or 30 percent of the nation’s income in 2018. But the American Tax Freedom Day has come three days earlier  than past years thanks to recent tax reforms.

Meanwhile, back home in Canada, the Fraser Institute, which publishes Canada’s Tax Freedom Day, has estimated that all households will pay over $2,000 more in taxes each year going forward, starting in 2019. It found, “. . .when looking at all 2.988 million families with children in Canada (excluding those in Quebec), 2.756 million, or 92.2 percent, will pay higher taxes—$2,218 more, on average, each year. Indeed, once the increase in CPP pay¬roll taxes is fully implemented, nearly all Canadian families—regardless of where they stand in the income distribution—will pay higher taxes.”

The federal government appears to concur. Its largest revenue line item is personal taxes, but due to a labor force slowdown that will result with large numbers of boomers retiring over the next decade, it will be difficult to maintain the current tax base.

The Finance Department has noted in a long-term forecast, issued on December 22, 2017, that “no single initiative can guarantee sustainable growth in our prosperity. . .(but) in particular, improving the economic participation of groups traditionally under-represented in the labour market, including women, Indigenous peoples, older workers, newcomers and persons with disabilities, is key to Canada’s long-term fiscal and economic performance.”

We’ll soon know what Tax Freedom Day looks like for 2018; but with a declining population and all levels of government carrying increasing debt into a significant demographic reduction, Tax Freedom Day could be pushed out further into the summer as time goes by.

Sadly, for many Canadian households that means less money available for retirement savings. For these reasons it is important to find ways to invest sooner, rather than later. With an eagle-eye to tax efficiency, money can be freed up for saving and investing, and investment performance can also be propelled forward. Be sure to see a qualified Real Wealth Manager for help in developing and securing a well-rounded family wealth management plan.

Additional educational resources:

Canadians looking to expand their financial literacy and make tax-efficient decisions at all life stages should pick up a copy of Essential Tax Facts, by Evelyn Jacks.

Evelyn Jacks is President of Knowledge Bureau, Canada’s leading national financial education institute and author of a new book in 2018: Essential Tax Facts – How to Make the Right Tax Moves and Be Audit-Proof, Too.  Follow her on twitter @evelynjacks


Staying Prosperous: Market Performance Outstrips Government Transfers

Significant gains in transfer payments combined with good market income growth translated into an increase in median income for Canadian households, to $57,000 in the period 2000 to 2016. There is a message in the numbers for pre-retirees, and in particular women: be proactive about tax-efficient investing now or risk poverty in retirement.

According to Statistics Canada’s Canadian Income Survey 2016, an increase of 8.7 percent in income from market sources—which includes employment, investment and retirement income—added more to retirement income than government transfers did. While Canadians are lucky to live in a country with many generous social safety nets, particularly the Canada Child Benefit, it’s critical to prioritize retirement planning early if you want to manage risk and at least beat inflation and taxes in your future.

Here are the numbers: median income after tax for all families was $57,000 in Canada in 2016. But that was also the year that top marginal tax rates increased significantly for some. Broken down in profile groups, you’ll see some critical trends:

PROFILE After Tax-Income in 2016
Couples with kids $94,500
Couples no kids $76,400
Unattached with kids $44,600
Unattached no kids $30,400
Seniors, highest earner is over 65 $57,800
Seniors, unattached $26,100

Noteworthy: we now know that unattached senior (often women) are the poorest of Canadians. These numbers don’t measure assets held, however, only income. That means there is an important opportunity for tax and financial advisors to work harder with families, and in particular with younger women, to set up sound financial plans to avoid poverty in retirement.

The first and most powerful step in doing so is with TFSA planning, which begins when a Canadian resident turns 18. A TFSA deposit of $5,500 a year for 40 years between the ages of 25 and 65, for example, will provide a very significant retirement nest egg. At an average rate of return of 5 percent, it can generate capital totalling $697,619. Parents and grandparents can help: there are no income splitting or attribution rules to be concerned about with this investment.

Assuming an average retirement of 20 years from age 65 to 85, a tax-free annual income of $34,880 is created, just from the TFSA investment in the example above. Add to this taxable public pensions like the universal Old Age Security (OAS) and the contributory Canada Pension Plan (both employer and employee must make contributions), employer-sponsored savings plans and the RRSP (Registered Retirement Savings Plan)—all can help significantly increase those median income numbers for seniors in the future.

However, the financial terms above, and the optimal order of investing (which comes first?) are a mystery to many Canadians. For professionals in financial services, there is much good work to do with clients to educate them and position them for financial success, both in retirement and before. It can be truly rewarding, but it’s important to get started now before taxes, inflation or interest rates rise to contribute to the significant changes Canadians face in the economy moving forward.

Next Time: Maximizing the Canada Child Benefit

Additional educational resources: Brush up on your skills to better help your clients prepare for retirement. Become a Master Financial Advisor by taking Knowledge Bureau’s comprehensive Retirement and Estate Services Specialist designation. Register before the June 15 session deadline for tuition savings. A free trial is available for Tax-Efficient Retirement Income Planning, a certificate course that earns you credits for the full designation. Completion of a free trial also gives you 2 CE/CPD credits! Also pick up your copy of Essential Tax Facts, by Evelyn Jacks, for tips on tax-efficient wealth management during all life stages. It’s written in easy-to-understand language and is perfect for sharing with your clients.

Evelyn Jacks is President of Knowledge Bureau, Canada’s leading national financial education institute and author of a new book in 2018: Essential Tax Facts – How to Make the Right Tax Moves and Be Audit-Proof, Too. Follow her on twitter @evelynjacks


Canadian Debt Solutions Demanded: Personal Debt Hits $2 Trillion

Canadian personal debt levels are now at such an alarming level, that most Canadians can’t even comprehend the size of the rising figure: $2 Trillion, as of last week. As part of their best interest duties to clients, financial advisors need to broach this uncomfortable subject, as things could get worse, soon.

According to the Bank of Canada, increasing interest rates, anticipated in the second half of 2018, could impact the financial security of many Canadians. On May 1, Bank of Canada Governor Steven Poloz shed light on why a cautious approach has been taken with interest rate hikes in recent months – and the $2 Trillion personal debt owed by Canadian taxpayers is among the primary concerns.

It’s not a new issue, as it continues a trend that has been witnessed over the past three decades. Canadian debt levels just keep rising due to low interest rates designed to stimulate the economy, and a hot housing market, according to Poloz. The numbers support this, as $1.5 Trillion of the current debt can be accounted for in mortgages.

After a lengthy period of maintaining lower interest rates, the central bank’s concern is that Canadians will become increasingly unable to meet their financial obligations or pay down their debt when interest rates do start to climb. As the Bank of Canada notes, there is potential for detrimental effects on the economy.

It is an issue of particular concern for those who have access to lots of credit; and, contrary to perception, that’s often higher net worth individuals. This is where the “Know Your Client” process is of utmost value; in fact, financial advisors must be sure to explore the entire financial environment and this includes the amount of debt being carried by the investor.

A professional strategy and process is therefore required. Knowledge Bureau’s Debt and Cash Flow Management course can assist advisors in developing knowledge and key skills in this field and provide credentials after a rigorous process of true-to-life practical applications that can enable more confident discussions, too. This course will help you lead your clients through a discovery and empowerment process to maintain a healthy balance sheet and use debt more responsibly and deliberately to build family wealth.

Tax efficiency in managing debt is explained as well. This certificate course will help you help your clients plan to pay down debt, maintain ideal debt-to-income ratios and make smart debt consolidation choices. It includes access to EverGreen Explanatory Notes and the following calculators to help you work out scenarios and what-if examples:

  •  Take Home Pay Calculator
  • Financial Assessment Calculator
  • Cash Flow Calculator
  • Income Tax Estimator
  • Debt Reductions Solution Calculator

Take advantage of our spring early-bird deadline by June 15 and save on tuition fees. A free trial of this course is available, and once you’ve brushed up on your debt management skills, credits from this course can be applied towards a Designation – either DFA – Bookkeeeping Services Specialist, or MFA – Retirement and Estate Services Specialist.

 Additional educational resources:

  1. Pick up a copy of Essential Tax Facts, by Evelyn Jacks. Written in easy-to-understand language, it’s great for sharing with your clients so they, too, can learn more about tax-efficient income planning.
  2. Sign up for our free trials, which offer a preview of EverGreen Explanatory Notes and important tax calculators, as well as a glimpse at course content, including Debt and Cash Flow Management.
  3. Earn CE credits efficiently while you enhance your education by attending a live event with Knowledge Bureau. Spring CE Summits are quickly approaching, and this fall the Distinguished Advisor Conference heads to Quebec City!

Guaranteed Basic Income in Canada: Taxpayers Beware

A nationwide initiative that would provide Canadians with a base guaranteed income is under consideration. It’s a move with polarizing opinions, with many citing an increased burden upon taxpayers to fund the program.

With a pilot project already underway in Ontario, the Parliamentary Budget Officer (PBO) released a report outlining the financial impact of introducing a nationwide program. The program proposes Canadians are never forced to live on an income that isn’t sustainable, regardless of their employment status. The estimated cost to taxpayers is $43 Billion per year. However, the program itself would come at a cost of $76 to $79.5 Billion, as it would replace other support programs already offered to some low-income Canadians that are already accounted for in the budget.

The PBO estimates that the Guaranteed Basic Income program would benefit 7.5 million low-income Canadians and would model Ontario’s pilot program. Currently, the maximum amount for participants in Ontario has been set at $16,989 for singles and $24,027 for couples. Disabled Canadians receive an additional $500 in support. The amount received is reduced when income is acquired from other sources, like employment. These numbers were established taking low-income tax credits and benefits into consideration

Ontario’s Basic Income program requires that participants be between the ages of 18 and 64. Seniors are not eligible due to the availability of other income supplement and benefit programs. Employment Insurance and income from CPP can still be collected, but reduce the guaranteed basic income dollar-for-dollar. The test group of eligible Ontarians is being monitored to determine if a universal income supplement improves quality of life, food security, and improved physical and mental health.

It’s a controversial consideration, particularly in light of the fact that Finland just pulled the plug on their universal income experiment. With fewer strings attached than in Ontario’s model, the nation provided 560 Euros to 2,000 unemployed individuals for more than a year. Since revealing that their experiment would end in 2018, they’ve put legislation in place to revoke other benefits and income supplementation from unemployed individuals who are unable to prove that they’re actively seeking job opportunities.

Additional educational resources:

Looking to gain further understanding about tax provisions outlined in the 2018 federal budget? The Spring CE Summits are focused on post-budget action strategies for tax and financial advisors. Evelyn Jacks will be joined by cross-order tax expert Dean Smith and several regional business leaders in the tax and financial services in a peer-to-peer educational experience in these comprehensive workshops. The early registration deadline is May 15; for the best rates, reserve your seat today!


Childcare Trends: Statistics Influencing Universal Funding Proposals

The federal government has pledged to put $7 Billion in funding into childcare support, and some provinces intend to add more. Do you think this is a good idea? Statistics Canada released data in October 2014 focusing on who uses childcare in Canada, which may impact your opinion. Weigh in and share your thoughts before this month’s poll closes.

The General Social Survey reported the following statistics for 2011:

  • Almost half of parents (46 percent) used childcare of some variety for children under the age of 14. Fifty-four percent of these children were age 4 and under.
  • The majority of parents who used childcare did so regularly.
  • There were three primary types of childcare arrangements used for children 4 and under, and the arrangements varied by province:
    • 33 percent used daycare centres
    • 31 percent used home daycare
    • 28 percent used private arrangements

The top choice for parents from the Prairie provinces was private childcare. Before and after school programs were the most common type of childcare arrangement for school-aged children in Quebec, Ontario and Eastern Canada.

Outside of the province of Quebec, very young children were usually placed in the care of relatives, nannies and other private arrangements. In Quebec, however, home daycares and daycare centres were used almost exclusively. In fact, parents from Quebec reported the highest rates of childcare use—a result of the fact that it is the only province that has a universal child daycare program.

What did parents consider when weighing their childcare options? Location was the most important influencer for 33 percent, with trust in the care provided coming in second at 18 percent.

Sixty-nine percent of parents reported that they were very satisfied with the quality of their childcare arrangements, while 29 percent claimed to be satisfied.

Do the trends pertaining to childcare use in Canada influence how you feel about the new funding proposals? Should governments spend more on universal childcare? Cast your vote and share your thoughts in our April poll!

Additional educational resources:

For more information on the provisions of the 2018 federal budget, check out our Budget Report. Also attend the Spring CE Summits in one of four Canadian cities, focusing on post-budget action strategies.


Retirement Planning: Four Tax-Efficient Income Options

Have you explored all of the tax-efficient income options available to generate consistent income that will provide for your retirement needs and wants? If you’re a Boomer challenged to find tax-efficient options, discuss these four alternative sources with your tax advisor today.

Many tax advisors will have these resources available in their retirement toolkit, in addition to the government benefits and private savings options that are more commonly used by Canadian investors. Taking advantage of these alternatives is especially important if you’re self-employed.

Pooled Retirement Pension Plans (PRPP).This new type of pension plan was passed into law by the federal government in 2012 and provincial legislation has since followed for most provinces. The plan provides a voluntary and affordable alternative for small businesses to offer an employer-sponsored pension plan at work, with contribution levels that will mirror those available under the Registered Pension Plan (RPP) defined contribution or money purchase rules. Pre-retirees should discuss the opportunity to initiate such a plan for their smaller business enterprise.

Individual Pension Plans (IPP). Individual Pension Plans are established for an owner-manager who is an employee of his or her own corporation. Annual minimum amounts are required to be withdrawn from the IPP once the plan member is 72, similar to the rules under the Registered Retirement Income Fund (RRIF). Also, contributions related to past years of employment must come from RRSP or RPP assets or by reducing RRSP contribution room, before deductible contributions to an IPP can be made.

Registered Disability Savings Plan (RDSP) Rule Changes. First established in 2008, the RDSP is used to accumulate private pension funds for the benefit of a disabled person. RDSPs function in a similar fashion to RESPs, in that contributions are not tax deductible, earnings accumulate on a tax-deferred basis and the government contributes grants and bonds to enhance savings. Any person eligible to claim the Disability Amount can be the beneficiary of an RDSP and the plan can be established by them or by an authorized representative. Until the end of 2023, a family member may be the plan holder for the beneficiary if the beneficiary’s capacity to enter into a contract is diminished.

German and other Foreign Pensions. If you receive German social security pension, it’s reportable in Canada, but you will qualify to claim a partial exempt portion; the exemption depends on when you started receiving the pension benefits. Ex-pats who receive any German pension benefits will also have filing obligations in Germany. Taxpayers may claim foreign tax credits on any income that is taxed both in Canada and Germany. To determine the proper credit, you’ll have to file returns in both countries rather than relying on taxes withheld at source which may be fully or partially refunded by filing a tax return. For other taxpayers with offshore pension income sources, don’t forget to report world income in Canadian funds; claiming a foreign tax credit if there are any foreign tax withholdings. Offshore assets require the filing of Form T1135 Foreign Income Verification Statement if the cost of assets exceeds $100,000 Canadian. This form must be filed by April 30.

Additional educational resources:

For further information and specialized training in retirement income planning, become a designate in Knowledge Bureau’s Master Financial Advisor – Retirement and Estate Services Specialist program, or the Tax Efficient Retirement Income Planning course. As a taxpayer, looking for an advisor with these credentials and consulting Evelyn Jacks’ latest book – Essential Tax Facts – can help you focus on tax-efficiency for every stage of life.





Found Money: How Filing an Accurate T1 Pays Off

For many Canadians filing a tax return is the most important financial transaction of the year. Getting the best tax refund is important: not only will it put more or the money you previously earned back in your own pocket, your refund can make at least some of your cash flow and retirement worries go away. Here’s how:

The average tax refund last year was $1,735 or about $145 a month. If that money was going into an RRSP, over a 40-year period at an average return of 5 percent, that tax refund would grow to $220,067. That’s a solid nest egg!

The tax return is also your avenue to refundable tax credits – tax free money – which include the following:

The GST/HST Credit of $284 per adult and $149 per child, offered by government to offset the cost of paying tax at the till.

  1. The Canada Child Benefit of up to $6,496 per child under six (that’s $541.33 per month) and $5,481 for each child between six and seven (that’s $456.75 per month).
  2. The Working Income Tax Benefit of up to $1,028 for those who have a minimum earned income of $3,000 (full-time students who don’t have an eligible dependant are amongst those who don’t qualify).
  3. The Eligible Educator School Supply Tax Credit of up to $1,000 in qualifying expenses – 15 percent is then refundable.
  4. Various Provincial refundable tax credits

The money moral: filing a timely, accurate T1 is about how much of your hard-earned dollars you get to keep – for now and for peace of mind in your financial future.

Additional educational resources: Interested in learning more about how to help others prepare accurate T1 and get a jump on retirement planning? Try Knowledge Bureau’s Distinguished Financial Advisor – Tax Services Specialist or Master Financial Advisor – Retirement and Estate Service Specialist designations. Register before June 15 to save on tuition for the summer session. Courses are available online 24/7 with continuous intake, so you can start anytime!

Evelyn Jacks is President of Knowledge Bureau, Canada’s leading educator in the tax and financial services, and author of 53 books on family tax preparation and planning.



Tax Tip: Three Tax Secrets for RRSP Investors

March 1, 2018 is an important date for savvy taxpayers: don’t miss topping up your RRSP contribution by this deadline. It’s a great investment for your retirement, of course, but it’s so much more powerful: there are, in fact, three additional tax secrets most people don’t know about that can help you improve your finances.

First, your RRSP accumulations will provide valuable options for lifelong learning and for homebuyers, too, as you can withdraw funds for those purposes on a tax free basis, as long as you pay the money back into the RRSP annually, according to CRA’s schedule.  Check out the Lifelong Learning Plan and the Home Buyers Plan for details.

The third secret is all about your net income (line 236 of the T1 return).  Because your RRSP deduction will reduce your net income, you will increase your cash flow—all year long from refundable tax credits and social benefits you may qualify for. Here’s what you need to know.

Net income, Line 236 on your tax return, is the income-testing level used to determine the size of some of the non-refundable tax credits a taxpayer is entitled to. The RRSP will reduce that number so you get more.  Your non-refundable tax credits can be found on Schedule 1 of the T1 return. Check out the entire list of them by printing this form from CRA’s website.

In real dollars, non-refundable tax credits are worth 15 percent of their value as an offset to the federal taxes payable. Their value is higher than that, though, depending on where you live, as they offset provincial taxes, too. Provinces have discretion on what tax credits they offer their residents, so check out what non-refundable tax credits your province allows as the list may be different from the federal schedule.  So to benefit, you must have taxable income.

Not so with refundable tax credits, like the Canada Child Benefit or the GST/HST Credit.  Even people with no income should file for them.  But if you have net income, the RRSP can help to reduce it so that you get more of these lucrative credits.  Often these credits are simply calculated automatically by the government and sent directly to you—no additional math for you to do. But that’s tricky for some people – you don’t actually see reference to the credits or their calculations on the return; although your tax software will usually provide those references for you.

Net income is also the figure used to determine any clawback of Old Age Security or Employment Insurance Benefits. You want to keep as much of those benefits as possible; so if your income is above the thresholds the Finance Department sets out for benefit eligibility,  the RRSP can reduce income levels to your advantage.

That’s why the RRSP can be your financial hero: it reduces your net income so you get more tax benefits at tax time and all year long.  Remember, the higher your income, the more valuable the deduction of your RRSP contributions will be. The RRSP is a very effective tool in reducing taxable income—so do contribute before midnight March 1!

Check it out with your tax services specialist, or see for yourself by using Knowledge Bureau’s Income Tax Estimator.

Evelyn Jacks is President of Knowledge Bureau, Canada’s leading educator in the tax and financial services, and author of 53 books on family tax preparation and planning.

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