The end of 2024 is quickly approaching – which means it’s time to get your paperwork in order so you’re ready when it comes time to file your taxes!
In this article, we’ve covered five different major types of 2024 personal tax tips:
Investment Considerations
Investment Portfolio Mix
Different investments are taxed differently, so reviewing your portfolio ensures optimal after-tax returns. With the recent increase to the capital gains tax rate on gains realized after June 24, 2024, it might make sense to focus on investments that yield eligible dividends instead of capital gains. Whether this works for you depends on your marginal tax rate and where you live, so take some time to evaluate your options.
Capital Gains Inclusion Rate
The 2024 federal budget introduced changes to the capital gains inclusion rate that could affect your tax planning. For individuals, the first $250,000 of annual capital gains remain taxed at the 50% inclusion rate. However, any gains exceeding this threshold are now taxed at 2/3 of the total. If this applies to you, consider strategies like tax-loss selling to offset realized gains.
Tax-Loss Selling
Selling investments in non-registered accounts with losses can offset capital gains elsewhere in your portfolio. Unused net capital losses can be carried back up to three years or forward indefinitely to offset gains in other years. To ensure the loss applies for 2024 (or the prior three years), the transaction must settle within 2024.
Be aware of the “superficial loss” rule: if you or an affiliated person repurchases the same investment within 30 days before or after the sale, the loss cannot be used to reduce taxes immediately. Instead, it’s added to the cost of the repurchased investment, and you’ll benefit from the loss when you sell it later.
Tax-Free Savings Account (TFSA)
You can contribute up to a maximum of $7,000 for 2024. You can carry forward unused contribution room indefinitely. The maximum amount you’re allowed to make in TFSA contributions is $95,000 (including 2024) if you have been at least 18 years old and resident in Canada since 2009.
Registered Retirement Savings Plan (RRSP)
For the 2024 tax year, you have until March 3, 2025, to contribute to your Registered Retirement Savings Plan (RRSP) or a spousal RRSP. However, contributing earlier can benefit you more due to tax-deferred growth. Your deduction limit for 2024 is 18% of your 2023 income, up to $31,560, but this will reduce if you have pension adjustments. Don’t forget, any unused contribution room from previous years or pension adjustment reversals can increase your limit.
Also, you can deduct contributions on your 2024 income if they are made within the first 60 days of 2025. It’s possible to defer these deductions to a later year if that suits your financial strategy better.
Interest Deductibility
If you can, focus on paying off debts with non-deductible interest first, like personal loans or those with non-refundable credits (e.g., student loans). Use borrowing for investment or business purposes and save your cash for personal expenses.
For Individuals
Income Timing
If your marginal personal tax rate is lower in 2025 than in 2024, defer the receipt of certain employment income; if your marginal personal tax rate is higher in 2025 than in 2024, accelerate.
First Home Savings Account (FHSA)
If you are a Canadian resident, age 18 or older and planning to become first-time homebuyers. Starting from April 1, 2023, this account serves as a valuable tool for saving towards the purchase of a qualifying first home.
The FHSA program comes with an annual contribution limit of $8,000, and a cumulative lifetime cap of $40,000, with the flexibility to carry forward up to $8,000 in unused contributions. Importantly, contributions made to the FHSA are tax-deductible, offering potential tax benefits. Additionally, the returns earned on your savings within this account are not subject to taxation, which can enhance the overall growth of your savings. Most notably, when you make qualifying withdrawals to buy your first home, these withdrawals are non-taxable.
Medical expenses
If you have eligible medical expenses that weren’t paid for by either a provincial or private plan, you can claim them on your tax return. You can even deduct premiums you pay for private coverage. Either spouse can claim qualified medical expenses for themselves and their dependent children in a 12-month period, but it’s generally better for the spouse with the lower income to do so.
Charitable Donations
Federal and provincial donation tax credits can significantly reduce your taxes, with the savings depending on your province. Larger donations receive higher federal credits, and you can pool receipts with your spouse or carry them forward for up to five years.
For 2024, changes to the Alternative Minimum Tax (AMT) limit the portion of the donation credit that can be applied for AMT purposes. Be sure to make your donations by December 31 to claim them for 2024.
Alternative Minimum Tax (AMT)
The Alternative Minimum Tax (AMT) ensures a minimum level of tax is paid by limiting certain deductions, exemptions, and credits. If your AMT calculation exceeds your regular tax, you’ll pay the difference as AMT for the year.
Revised for 2024, AMT changes include a higher tax rate, a larger exemption, and stricter limits on tax-reducing measures like capital gains, stock options, Canadian dividends, and non-refundable tax credits. These changes may increase your AMT if your taxable income exceeds $173,205.
For Families
Childcare Expenses
If you paid someone to take care of your child so you or your spouse could attend school or work, then you can deduct those expenses. A variety of childcare options qualify for this deduction, including boarding school, camp, daycare, and even paying a relative over 18 for babysitting. Be sure to get all your receipts and have the spouse with the lower net income claim the childcare expenses. In addition, some provinces offer additional childcare tax credits on top of the federal ones.
Caregiver
If you are a caregiver, claim the available federal and provincial/territorial tax credits.
Registered Education Savings Plan (RESP)
RESP can be a great way to save for a child’s future education. The Canadian Education Savings Grant (CESG) is only available on the first $2,500 of contributions you make each year per child (to a maximum of $500, with a lifetime maximum of $7,200.) If you have any unused CESG amounts for the current year, you can carry them forward. If the recipient of the RESP is now 16 or 17, they can only receive the CESG if a) at least $2,000 has already been contributed to the RESP and b) a minimum contribution of $100 was made to the RESP in any of the four previous years.
Registered Disability Savings Plan (RDSP)
If you have an RDSP open for yourself or an eligible family member, you may be able to get both the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB) paid into the RDSP. The CDSB is based on the beneficiary’s adjusted family net income and does not require any contributions to be made. The CDSG is based on both the beneficiary’s family net income and contribution amounts. In addition, up to 10 years of unused grants and bond entitlements can be carried forward.
For Retirees
Registered Retirement Income Fund (RRIF)
Turning 71 this year? If so, you are required to end your RRSP by December 31. You have several choices on what to do with your RRSP, including transferring your RRSP to a registered retirement income fund (RRIF), cashing out your RSSP, or purchasing an annuity. Talk to us about the tax implications of each of these choices.
Pension Income
Are you 65 or older and receiving pension income? If your pension income is eligible, you can deduct a federal tax credit equal to 15% on the first $2,000 of pension income received – plus any provincial tax credits. Don’t currently have any pension income? You may want to think about withdrawing $2,000 from an RRIF each year or using RRSP funds to purchase an annuity that pays at least $2,000 per year.
Canada Pension Plan (CPP)
If you’ve reached the age of 60, you may be considering applying for CPP. Keep in mind that if you do this, the monthly amount you’ll receive will be smaller. Also, you don’t have to have retired to be able to apply for CPP. Talk to us; we can help you figure out what makes the most sense.
Old Age Security (OAS)
If you’re 65 or older, enrolling in OAS is essential. If your income exceeds OAS thresholds, strategies like income splitting can help reduce clawbacks.
You can defer OAS for up to 60 months, increasing your monthly payment by 0.6% for each month deferred. Planning ensures you maximize your benefits and optimize your retirement income.
Estate planning arrangements
Regularly reviewing your estate plan is essential to ensure it aligns with your objectives and complies with current tax laws. An annual review allows you to adjust for life changes and legal updates, keeping your plan effective. Additionally, exploring strategies to minimize probate fees can preserve more of your estate for your beneficiaries. Regularly examining your will ensures it remains valid and reflects your current wishes.
For Students
Education, tuition, and textbook tax credits
If you’re attending post-secondary school, claim these credits where available.
Canada tuition credit
If you’re between 25 and 65 and enrolled in an eligible educational institution, you may be eligible for the Canada Training Credit, a refundable tax credit designed to help cover tuition and other fees associated with training. Additionally, you can claim tuition paid on your taxes, carry forward unused amounts to future years, or transfer unused tuition amounts to a spouse, parent, or grandparent.
Need some additional guidance? Reach out to us if you have any questions. We’re here to help.
How Tariffs Affect Your Wallet: A Canadian Perspective on the US–Canada Trade War
/in 2025, Blog, Government Budget, tax /by Maritime Private Wealth Solutions Inc.Explaining the US–Canada Trade War
What Is It All About?
The US–Canada trade war has far-reaching implications for every Canadian, affecting everything from the cost of groceries to the stability of our economy. The US–Canada trade war refers to the series of tariff impositions and trade barriers that the United States and Canada have used as negotiating tools in various disputes. Historically, while the two countries share one of the world’s largest trading relationships, disagreements have erupted over issues such as softwood lumber, dairy, steel, and aluminum [1, 2]. In recent developments, U.S. President Donald Trump ordered a 25% tariff on all Canadian goods—with a 10% tariff on energy—to go into effect on February 4, 2025 [3]. Effective February 3, 2025- this has now been delayed 30 days.
What’s the Timeline so far?
Pre-Announcement and Rumors: In the weeks leading up to February 4, President Trump had repeatedly threatened to impose steep tariffs on Canada, along with China and Mexico. Early reports even suggested that the tariffs might be postponed until March 1 [3].
Confirmation of Tariffs: Shortly after these speculations, the White House clarified that the tariffs were indeed set to take effect on February 4, leaving little room for negotiation or delay [3].
Immediate Economic Reactions: Once announced, the Canadian dollar (loonie) took a significant hit, dropping to approximately US$0.68 per Canadian dollar, signaling market concerns about the economic impact [3].
Canadian Retaliation: In response to the U.S. measures, Prime Minister Justin Trudeau declared that Canada would retaliate with a 25% tariff on American goods. This response includes immediate tariffs on $30 billion worth of U.S. products, with additional measures on another $125 billion scheduled to begin three weeks later to give Canadian companies time to adjust [4].
Enhanced Border Security and Tariff Pause Announcement: In a statement on February 3, 2025 shared via social media, Prime Minister Trudeau commented: “I just had a good call with President Trump. Canada is implementing our $1.3 billion border plan — reinforcing the border with new choppers, technology and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl. Nearly 10,000 frontline personnel are and will be working on protecting the border. In addition, Canada is making new commitments to appoint a Fentanyl Czar, we will list cartels as terrorists, ensure 24/7 eyes on the border, launch a Canada-U.S. Joint Strike Force to combat organized crime, fentanyl and money laundering. I have also signed a new intelligence directive on organized crime and fentanyl and we will be backing it with $200 million. Proposed tariffs will be paused for at least 30 days while we work together.”
This announcement not only outlines significant border security enhancements but also temporarily pauses the proposed tariffs, giving both nations time to coordinate their responses [4, 18].
How Tariffs come into play
Tariffs are essentially taxes imposed on imported goods. The current measures reflect a tit-for-tat strategy. The United States has imposed a 25% tariff on Canadian goods and an additional 10% on energy products [3]. In response, Canada announced it will counter with a 25% tariff on American goods [4]. These aggressive measures are meant to protect domestic industries and gain leverage in negotiations. However, they also create uncertainty for businesses, raise production costs, and ultimately result in higher prices for consumers [5].
The Broader Economic Picture
For individuals, the main takeaway is that these trade policies disrupt the balance of supply and demand. Tariffs can:
Increase Costs: Importers and manufacturers face higher costs that are passed on to consumers.
Shift Markets: Businesses may alter where and how they source materials, impacting product availability and quality.
Impact Jobs: Industries may slow down, affecting employment and wage growth.
Fuel Inflation: As production expenses rise, so do retail prices, adding inflationary pressure to the economy [6, 7].
How the Tariffs Affects Canada
Direct Economic Impacts
Tariffs affect key sectors of the Canadian economy in several ways. Recent news indicates that the Canadian dollar has taken an immediate hit, falling further to a level where one Canadian dollar is now worth approximately US$0.68 [3]. This depreciation means that imported goods will become even more expensive for Canadians. Specific sectors affected include:
Manufacturing and Exports: Higher prices make Canadian goods less competitive in the U.S. market.
Agriculture: Farmers risk losing market access if American tariffs restrict Canadian produce and meat.
Consumer Prices: Increased production costs are passed on to consumers, causing everyday items—from electronics and clothing to food—to become more expensive over time. This not only contributes to inflation but also erodes Canadians’ purchasing power [8, 9].
Additionally, industries such as automotive manufacturing may experience significant disruptions since vehicle parts frequently cross the border and could become uneconomical to ship.
Indirect Effects on Personal Finances
The ripple effects of the tariffs can significantly impact daily life:
Higher Living Costs: As companies face increased input costs from tariffs, consumers are likely to see a gradual increase in prices for everyday goods, further contributing to inflation.
Increased Cost of Goods: Basic commodities and consumer products may rise in price, reducing household purchasing power.
Investment Uncertainty: Market volatility is likely as investors react to the uncertain effects of the tariffs on corporate profits and economic growth.
Employment Concerns: Industries severely impacted by tariffs may delay hiring or reduce their workforce, leading to concerns over job security and income levels [10, 11].
Government and Business Responses
To mitigate these challenges, both the Canadian government and businesses are taking proactive steps:
Diversification: Shifting trade relations toward new markets to lessen dependence on the U.S.
Innovation: Investing in technology and automation to reduce reliance on imported goods.
Support for Local Industries: Prime Minister Justin Trudeau has urged Canadians to buy domestic products, and several provinces have taken non-tariff actions—such as pulling U.S. liquor from store shelves—to pressure U.S. consumers and prompt a tariff rollback [4, 12, 13].
The Case for Buying Canadian
Strengthening the Local Economy
Purchasing Canadian-made products supports local businesses and helps keep money circulating within the national economy. When you choose domestic goods, you contribute to:
Job Creation: Local companies are more likely to hire Canadians, which can help reduce unemployment and boost regional growth.
Economic Stability: A strong local economy can shield consumers from international market fluctuations and inflation, offering a more predictable environment for personal finances.
Innovation and Quality: Canadian firms reinvest in research and development to remain competitive, so buying Canadian helps promote ongoing innovation and quality improvements [14, 15].
Practical Tips for Buying Canadian
Read Labels: Look for products that clearly state they are made in Canada; local certifications and branding help you identify them.
Support Local Retailers: Shop at local stores and markets whenever possible, as these businesses are more directly affected by trade disruptions and inflation.
Be an Informed Consumer: Stay updated on the sectors most affected by tariffs and inflation so you can adjust your purchasing decisions and budget accordingly [16].
Balancing Your Budget
Managing your personal finances becomes even more crucial when prices rise:
Budget Adjustments: Expect imported goods to become more expensive due to tariffs and inflation, so plan your monthly budget with a buffer for these increased costs.
Diversify Spending: Strike a balance between purchasing domestic and international products, taking availability and price into account.
Monitor Economic Trends: Keep an eye on economic news, particularly regarding inflation and price changes, to make informed decisions about savings, investments, and major purchases [17].
Final Thoughts
The US–Canada trade war, marked by a complex mix of tariffs, countermeasures, and inflationary pressures, is poised to affect personal finances significantly. As production costs rise due to these measures, companies often pass increased expenses on to consumers, driving up prices and adding to inflation. Recent events—including the dramatic fall of the loonie and swift retaliatory actions by Canada—underscore the real impact of these trade disputes. Despite the challenges posed by the trade war, Canadians have shown remarkable resilience. By supporting local businesses and making informed financial decisions, we can navigate these uncertain times and emerge stronger.
Disclaimer: This article is for informational purposes only and should not be considered personalized financial advice. Always consult a professional advisor for guidance tailored to your individual circumstances.
Works Cited
Government of Canada. Trade and Investment. Retrieved from https://www.international.gc.ca/trade-commerce/index.aspx?lang=eng
USTR. United States Trade Representative. Retrieved from https://ustr.gov/
CNN. “Trump Tariffs on Canada.” CNN, 1 Feb. 2025, https://www.cnn.com/2025/02/01/economy/trump-tariffs-mexico-canada-china-increased-costs/index.html
Reuters. “Canada’s Trudeau Announces Counter-Tariffs.” Reuters, 2 Feb. 2025, https://www.reuters.com/world/americas/canadas-trudeau-announces-counter-tariffs-2025-02-02/
Investopedia. “Tariff.” Retrieved from https://www.investopedia.com/terms/t/tariff.asp
BBC. “What Are Tariffs?” Retrieved from https://www.bbc.com/news/business-23939589
Investopedia. “Inflation.” Retrieved from https://www.investopedia.com/terms/i/inflation.asp
Conference Board of Canada. Retrieved from https://www.conferenceboard.ca/
Statistics Canada. Retrieved from https://www.statcan.gc.ca/
Bank of Canada. Economic Research. Retrieved from https://www.bankofcanada.ca/research/
CBC. Business News. Retrieved from https://www.cbc.ca/news/business
Innovation, Science and Economic Development Canada. Retrieved from https://www.ic.gc.ca/eic/site/icgc.nsf/eng/home
Business News Network. Retrieved from https://www.bnnbloomberg.ca/
Canadian Chamber of Commerce. Retrieved from https://chamber.ca/
Retail Council of Canada. Retrieved from https://www.retailcouncil.org/
Canadian Consumer Handbook. Retrieved from https://www.canada.ca/en/competition-consumer.html
Financial Consumer Agency of Canada. Retrieved from 18https://www.canada.ca/en/financial-consumer-agency.html
X, 2025. Retrieved from https://x.com/JustinTrudeau/status/1886529228193022429
TFSA vs RRSP 2025
/in Blog, Investment, rrsp, Tax Free Savings Account /by Maritime Private Wealth Solutions Inc.When looking to save money in a tax-efficient manner, Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSP) can offer significant tax benefits. To assist you in understanding the distinctions, we will compare the following:
The differences in deposits between TFSAs and RRSPs
The differences in withdrawals between TFSAs and RRSPs
TFSA versus RRSP – Difference in deposits
When comparing deposit differences between TFSAs and RRSPs, there are several key considerations:
The amount of contribution room available
The ability to carry forward unused contributions
The tax deductibility of contributions
The tax treatment of growth in the account
How much contribution room do I have?
If you have never contributed to a TFSA since 2009, you can contribute up to $102,000 today. This table outlines the contribution amount you are allowed each year since TFSAs were created, including this year:
Regarding RRSPs, the limit for tax deductions is 18% of your pre-tax earned income from the previous year, with a maximum limit of $32,490. To illustrate, if your pre-tax income in 2024 was $60,000, your deduction limit for 2024 would be $10,800 (18% x $60,000). If your pre-tax income was $200,000, the maximum limit of $32,490 would apply.
How much contribution room can I carry forward?
Suppose you opt not to contribute to your TFSA each year or do not contribute the maximum amount. In that case, you can carry forward your unused contribution room indefinitely, provided you are a Canadian resident, over 18 years of age, and have a valid social insurance number. If you make a withdrawal, the amount withdrawn will be added to your annual contribution room for the next calendar year.
In contrast, for an RRSP, you can carry forward your unused contribution room until age 71. Once you reach 71, you are required to convert your RRSP into an RRIF. Withdrawals from an RRSP do not create additional contribution room.
The tax deductibility of contributions
Your TFSA contributions are not tax-deductible and are made with after-tax dollars.
Your RRSP contributions are tax-deductible and made with pre-tax dollars.
Tax Treatment of Growth
It is essential to contribute to both RRSP and TFSA because of the different tax treatment of the growth within them.
A TFSA is ideal for short-term goals, such as saving for a down payment on a house or a vacation, as its growth is entirely tax-free. When withdrawing from your TFSA, you will not have to pay any income tax on the amount withdrawn. On the other hand, the growth within an RRSP is tax-deferred. This means you will not pay taxes on your RRSP gains until age 71, at which point you convert the RRSP into an RRIF and start withdrawing money.
RRSPs are more suitable for long-term goals such as retirement because, in retirement, you will have a lower income and be in a lower tax bracket, resulting in less tax on your RRIF income.
TFSA versus RRSP – Differences in withdrawals
There are several areas to focus on when comparing differences in withdrawal:
Conversion Requirements
Tax Treatment
Government Benefits
Contribution Room
Conversion Requirements
For a TFSA, there are never any conversion requirements as there is no maximum age for a TFSA.
For an RRSP, you must convert it to a Registered Retirement Income Fund (RRIF) if you turn 71 by December 31st, 2025.
Tax Treatment of Withdrawals
One of the most attractive things about a TFSA is that all your withdrawals are tax-free! Therefore, they are recommended for short-term goals; you don’t have to worry about taxes when you take money out to pay for a house or a dream vacation.
With an RRSP, if you make a withdrawal, it will be taxed as income except in two cases:
The Home Buyers Plan lets you withdraw up to $60,000 tax-free, but you must pay it back within fifteen years.
The Lifelong Learning Plan lets you withdraw up to $20,000 ($10,000 maximum per year) tax-free, but you must pay it back within ten years.
How will my government benefits be impacted?
If you are withdrawing from your TFSA or RRSP, it’s essential to know how that will affect any benefits you receive from the government.
Since TFSA withdrawals are not considered taxable income, they will not impact your eligibility for income-tested government benefits.
RRSP withdrawals are considered taxable income and can affect the following:
Income-tested tax credits such as Canada Child Tax Benefit, the Working Income Tax Benefit, the Goods and Services Tax Credit, and the Age Credit.
Government benefits including Old Age Security, Guaranteed Income Supplement and Employment Insurance.
How will a withdrawal impact my contribution room?
If you withdraw from your TFSA, the amount you withdrew will be added on top of your annual contribution room for the following calendar year. If you withdraw from your RRSP, you do not open any additional contribution room.
The Takeaway
RRSPs and TFSAs can both be great savings vehicles. However, there are significant differences between them which can affect your finances. If you need help navigating these differences, please do not hesitate to contact us. We’re here to help.
2025 Financial Calendar
/in Blog, Family, Financial Planning, personal finances, rrsp, tax, Tax Free Savings Account /by Maritime Private Wealth Solutions Inc.Welcome to our 2025 financial calendar! This calendar is designed to help you keep track of important financial dates and deadlines, such as tax filing and government benefit distribution. You can bookmark this page for easy reference or add these dates to your personal calendar to ensure you don’t miss any important financial obligations.
If you need help with your taxes, tax packages will be available starting February 2024. Don’t wait until the last minute to get started on your tax return – make an appointment with your accountant to ensure you’re ready to go when tax season arrives.
Important 2024 Dates to Know
On January 1, 2025, the contribution room for your Tax-Free Savings Account (TFSA) opens again. For those that are eligible, the contribution rooms for your Registered Retirement Savings Plan (RRSP), First Home Savings Account (FHSA), Registered Education Savings Plan (RESP), and Registered Disability Savings Plan (RDSP) will also be available.
For your Registered Retirement Savings Plan contributions to be eligible for the 2024 income tax year, you must make them by March 3, 2025.
GST/HST credit payments will be issued on:
January 3
April 4
July 4
October 3
Canada Child Benefit payments will be issued on the following dates:
January 20
February 20
March 20
April 17
May 20
June 20
July 18
August 20
September 19
October 20
November 20
December 12
The government will issue Canada Pension Plan and Old Age Security payments on the following dates:
January 29
February 26
March 27
April 28
May 28
June 26
July 29
August 27
September 25
October 29
November 26
December 22
The Bank of Canada will make interest rate announcements on:
January 29
March 12
April 16
June 4
July 30
September 17
October 29
December 10
April 30, 2025, is the last day to file your personal income taxes, and tax payments are due by this date. This is also the filing deadline for final returns if death occurred between January 1 and October 31, 2024.
May 1 to June 30, 2025, would be the filing deadline for final tax returns if death occurred between November 1 and December 31, 2024. The due date for the final return is six months after the date of death.
The tax deadline for all self-employment returns is June 16, 2025. Payments are due April 30, 2025.
The final Tax-Free Savings Account, First Home Savings Account, Registered Education Savings Plan and Registered Disability Savings Plan contributions deadline is December 31, 2025.
December 31, 2025 is also the deadline for 2025 charitable contributions.
December 31, 2025 is also the deadline for individuals who turned 71 in 2025 to finish contributing to their RRSPs and convert them into RRIFs.
Please reach out if you have any questions.
Sources:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/life-events/doing-taxes-someone-died/prepare-returns/filing-deadlines.html
https://www.canada.ca/en/revenue-agency/services/child-family-benefits/benefit-payment-dates.html
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/important-dates-rrsp-rrif-rdsp.html
https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2024/planning-file-your-tax-return-on-paper-here-what-you-need-know.html
https://www.bankofcanada.ca/2024/08/bank-canada-publishes-2025-schedule-policy-interest-rate-announcements-other-major-publications/
https://www.canada.ca/content/dam/cra-arc/camp-promo/smll-bsnss-wk-e.pdf
2024 Year-End Tax Tips and Strategies for Business Owners
/in 2024, Blog, business owners, Financial Planning, tax /by Maritime Private Wealth Solutions Inc.As a business owner, managing your finances well can make a big difference for your business’s future. Whether it’s choosing how to compensate yourself or making the most of opportunities like the small business deduction and lifetime capital gains exemption, thoughtful planning can help you save on taxes. This guide offers practical tips to help you make informed decisions.
Salary and RRSP Contributions
Taking a salary from your corporation can help reduce the company’s taxable income while creating RRSP contribution room for you. In 2024, a salary of up to $180,500 allows you to maximize your RRSP contribution room for 2025, which is $32,490.
Dividends
Dividends offer another way to take income from your business. They’re paid from the corporation’s after-tax income, but thanks to the dividend tax credit, they’re often taxed at a lower rate than salary.
Compensating Family Members
If family members are involved in your business, paying them can be a practical and tax-efficient option:
Salaries to Family Members: Paying a fair salary to family members who work for your business not only compensates them but also gives them access to RRSP contributions and CPP. You must be able to prove the family members have provided services in line with the amount of compensation you give them.
Dividends to Family Members: If family members are shareholders, dividends can provide them with tax-efficient income. The tax-free amount varies by province or territory, so it’s worth checking the rules where you live.
Income Splitting: Distributing income among family members can help reduce overall taxes. However, be mindful of the Tax on Split Income (TOSI) rules to avoid penalties. A tax professional can guide you through this process.
Deferring Income
If you don’t need the full amount for personal use, leaving surplus funds in the corporation could be a smart move. This keeps the money invested within the business, benefiting from lower corporate tax rates. Over time, this approach may allow the funds to generate more income compared to personal investing, depending on your goals and investment strategy. However, be mindful of passive investment income limits, as exceeding $50,000 in passive income could reduce or eliminate your corporation’s access to the small business deduction. Monitoring this threshold is essential to maintaining the tax advantages available to your business.
Compensation
It’s always a good idea to review how you handle compensation beyond base salary.
Consider these options:
Shareholder Loans: Borrow funds from your corporation with deductible interest but ensure repayment to avoid personal tax.
Profit-Sharing Plans: These can be a tax-efficient alternative to bonuses for distributing profits.
Stock Options: Only the employee or employer—not both—can claim a deduction when options are cashed out.
Retirement Plans: Explore setting up a Retirement Compensation Arrangement (RCA) to save for retirement tax-efficiently.
Passive Investments
Canadian-controlled private corporations (CCPCs) benefit from a reduced corporate tax rate on the first $500,000 of active business income, thanks to the small business deduction (SBD). The SBD can lower the tax rate by 12% to 21%, depending on your province or territory.
However, passive investment income over $50,000 in the previous year reduces the SBD by $5 for every additional dollar, potentially eliminating it altogether. To maintain access to the SBD, it’s important to keep passive investment income below this threshold.
Here are some strategies to help preserve your SBD:
Defer Portfolio Sales: Delay selling investments that generate capital gains if possible.
Optimize Your Investment Mix: Focus on tax-efficient investments like equities over fixed income.
Exempt Life Insurance Policies: Income earned within these policies isn’t included in your passive investment total.
Individual Pension Plan (IPP): This defined benefit plan is exempt from passive income rules and offers tax-advantaged retirement savings.
Consider Corporate Class Mutual Funds: These funds offer tax-efficient growth by deferring taxable distributions. While recent tax changes have limited their benefits, they remain a viable option for minimizing taxable passive income.
Carefully managing passive investments can help your business maintain access to the SBD and maximize its tax advantages for continued growth.
Capital Gains Inclusion Rate Increase
With recent changes to the capital gains inclusion rate, business owners personally holding investments with unrealized gains may want to consider realizing up to $250,000 in capital gains in 2024. This approach allows you to benefit from the lower tax rate on gains within this threshold, provided it aligns with your overall financial strategy.
Tax-Free Dividends
If your corporation has investments with losses that haven’t been sold yet, it’s a good idea to check the balance of its Capital Dividend Account (CDA) before selling. The CDA keeps track of the non-taxable portion of capital gains and some other amounts. You can pay tax-free dividends to shareholders using this account if you don’t go over the balance. However, if you sell investments at a loss, the CDA balance will go down, which might reduce or even remove your ability to pay these tax-free dividends. To avoid this, think about paying out any available tax-free dividends before selling investments at a loss.
Business Transition
If you’re planning to transition your business and believe its value has decreased, now might be a good time to explore options like an estate freeze or refreeze as part of your strategy.
Lifetime Capital Gains Exemption (LCGE)
The 2024 Federal Budget increased the LCGE from $1,016,836 to $1.25 million as of June 25, 2024. This allows you to benefit from tax savings on up to $1.25 million in capital gains over your lifetime when selling qualifying small business shares, farm properties, or fishing properties. Ensuring your corporate shares qualify for this exemption can help reduce the tax burden when selling or transferring your business.
Canadian Entrepreneurs’ Incentive (CEI)
The 2024 Federal Budget also introduced the Canadian Entrepreneurs’ Incentive (CEI) to lower taxes on selling qualifying shares. Starting June 25, 2024, the CEI reduces the taxable portion of capital gains to one-third for gains over $250,000 on qualifying sales.
In 2025, the CEI will go even further, lowering the taxable portion of capital gains to half the usual amount for up to $2 million in lifetime gains. This $2 million limit will start at $400,000 in 2025 and increase by $400,000 each year until it reaches $2 million in 2029.
To use the CEI, the shares must meet certain rules. However, it does not apply to shares of professional corporations or businesses focused on financial services, insurance, real estate, food and accommodation, arts, recreation, entertainment, consulting, or personal care services.
Together, the LCGE and CEI offer tax savings for business owners when selling or passing on their businesses.
Employee Ownership Trusts (EOT)
An EOT is a way for employees to own a business. A trust holds shares of the business on behalf of the employees, so they don’t have to pay directly to buy shares themselves.
Starting in 2024, EOTs are allowed in Canada. If a business is sold to an EOT in 2024, 2025, or 2026, the first $10 million in capital gains from the sale is tax-free, if certain conditions are met. This $10 million limit applies to the entire business, not to each individual shareholder. If multiple people sell shares to an EOT as part of the sale, they can each claim part of the exemption, but the total claimed by everyone combined can’t be more than $10 million. All sellers must agree on how to split the exemption.
Depreciable Assets
Purchasing depreciable assets can be a smart tax planning move, as they allow you to claim Capital Cost Allowance (CCA) to reduce taxable income.
To maximize the benefits:
Take advantage of the Accelerated Investment Incentive, which offers an enhanced first-year CCA for eligible assets.
Postpone selling depreciable assets if it could trigger recaptured depreciation in your 2024 tax year.
Timing your asset purchases and sales can help optimize your tax savings.
Donations
Making donations, whether charitable or political, can provide valuable tax benefits. To maximize these advantages, consider options like:
Donating securities
Giving a direct cash gift to a registered charity
Using a donor-advised fund for ongoing charitable contributions
Setting up a private foundation
Donating a life insurance policy by naming a charity as the beneficiary or transferring ownership.
Each option offers unique tax advantages depending on your situation.
Final Corporate Tax Balances
Pay your corporate taxes within two months of year-end (or three months for some CCPCs) to avoid interest charges that can’t be deducted.
Contact Us
For guidance on implementing these strategies, connect with your trusted tax professional. If you’d like to discuss how these tips align with your overall plan, let’s schedule a meeting.
Sources:
CPA Canada, “2024 Federal Budget Highlights,” https://www.cpacanada.ca/-/media/site/operational/sc-strategic-communications/docs/02085-sc_2024-federal-budget-highlights_en_final.pdf?rev=6d565a6a66ef4e20b1e01dc784464c93, 2024.
Government of Canada, “Capital Gains Inclusion Rate,” https://www.canada.ca/en/department-finance/news/2024/06/capital-gains-inclusion-rate.html, 2024.
Advisor.ca, “Lifetime Capital Gains Exemption to Top $1M in 2024,” https://www.advisor.ca/tax/tax-news/lifetime-capital-gains-exemption-to-top-1m-in-2024/, 2024.
PwC Canada, “Year-End Tax Planner,” https://www.pwc.com/ca/en/services/tax/publications/guides-and-books/year-end-tax-planner.html, 2024.
CIBC, “2024 Year-End Tax Tips,” https://www.cibc.com/content/dam/personal_banking/advice_centre/tax-savings/year-end-tax-tips-en.pdf, 2024.
Government of Canada, “Federal Budget 2024,” https://budget.canada.ca/2024/report-rapport/tm-mf-en.html, 2024.
2024 Personal Year End Tax Tips
/in 2024, Blog, Financial Planning, individuals, tax /by Maritime Private Wealth Solutions Inc.The end of 2024 is quickly approaching – which means it’s time to get your paperwork in order so you’re ready when it comes time to file your taxes!
In this article, we’ve covered five different major types of 2024 personal tax tips:
Investment Considerations
Individuals
Families
Retirees
Students
Investment Considerations
Investment Portfolio Mix
Different investments are taxed differently, so reviewing your portfolio ensures optimal after-tax returns. With the recent increase to the capital gains tax rate on gains realized after June 24, 2024, it might make sense to focus on investments that yield eligible dividends instead of capital gains. Whether this works for you depends on your marginal tax rate and where you live, so take some time to evaluate your options.
Capital Gains Inclusion Rate
The 2024 federal budget introduced changes to the capital gains inclusion rate that could affect your tax planning. For individuals, the first $250,000 of annual capital gains remain taxed at the 50% inclusion rate. However, any gains exceeding this threshold are now taxed at 2/3 of the total. If this applies to you, consider strategies like tax-loss selling to offset realized gains.
Tax-Loss Selling
Selling investments in non-registered accounts with losses can offset capital gains elsewhere in your portfolio. Unused net capital losses can be carried back up to three years or forward indefinitely to offset gains in other years. To ensure the loss applies for 2024 (or the prior three years), the transaction must settle within 2024.
Be aware of the “superficial loss” rule: if you or an affiliated person repurchases the same investment within 30 days before or after the sale, the loss cannot be used to reduce taxes immediately. Instead, it’s added to the cost of the repurchased investment, and you’ll benefit from the loss when you sell it later.
Tax-Free Savings Account (TFSA)
You can contribute up to a maximum of $7,000 for 2024. You can carry forward unused contribution room indefinitely. The maximum amount you’re allowed to make in TFSA contributions is $95,000 (including 2024) if you have been at least 18 years old and resident in Canada since 2009.
Registered Retirement Savings Plan (RRSP)
For the 2024 tax year, you have until March 3, 2025, to contribute to your Registered Retirement Savings Plan (RRSP) or a spousal RRSP. However, contributing earlier can benefit you more due to tax-deferred growth. Your deduction limit for 2024 is 18% of your 2023 income, up to $31,560, but this will reduce if you have pension adjustments. Don’t forget, any unused contribution room from previous years or pension adjustment reversals can increase your limit.
Also, you can deduct contributions on your 2024 income if they are made within the first 60 days of 2025. It’s possible to defer these deductions to a later year if that suits your financial strategy better.
Interest Deductibility
If you can, focus on paying off debts with non-deductible interest first, like personal loans or those with non-refundable credits (e.g., student loans). Use borrowing for investment or business purposes and save your cash for personal expenses.
For Individuals
Income Timing
If your marginal personal tax rate is lower in 2025 than in 2024, defer the receipt of certain employment income; if your marginal personal tax rate is higher in 2025 than in 2024, accelerate.
First Home Savings Account (FHSA)
If you are a Canadian resident, age 18 or older and planning to become first-time homebuyers. Starting from April 1, 2023, this account serves as a valuable tool for saving towards the purchase of a qualifying first home.
The FHSA program comes with an annual contribution limit of $8,000, and a cumulative lifetime cap of $40,000, with the flexibility to carry forward up to $8,000 in unused contributions. Importantly, contributions made to the FHSA are tax-deductible, offering potential tax benefits. Additionally, the returns earned on your savings within this account are not subject to taxation, which can enhance the overall growth of your savings. Most notably, when you make qualifying withdrawals to buy your first home, these withdrawals are non-taxable.
Medical expenses
If you have eligible medical expenses that weren’t paid for by either a provincial or private plan, you can claim them on your tax return. You can even deduct premiums you pay for private coverage. Either spouse can claim qualified medical expenses for themselves and their dependent children in a 12-month period, but it’s generally better for the spouse with the lower income to do so.
Charitable Donations
Federal and provincial donation tax credits can significantly reduce your taxes, with the savings depending on your province. Larger donations receive higher federal credits, and you can pool receipts with your spouse or carry them forward for up to five years.
For 2024, changes to the Alternative Minimum Tax (AMT) limit the portion of the donation credit that can be applied for AMT purposes. Be sure to make your donations by December 31 to claim them for 2024.
Alternative Minimum Tax (AMT)
The Alternative Minimum Tax (AMT) ensures a minimum level of tax is paid by limiting certain deductions, exemptions, and credits. If your AMT calculation exceeds your regular tax, you’ll pay the difference as AMT for the year.
Revised for 2024, AMT changes include a higher tax rate, a larger exemption, and stricter limits on tax-reducing measures like capital gains, stock options, Canadian dividends, and non-refundable tax credits. These changes may increase your AMT if your taxable income exceeds $173,205.
For Families
Childcare Expenses
If you paid someone to take care of your child so you or your spouse could attend school or work, then you can deduct those expenses. A variety of childcare options qualify for this deduction, including boarding school, camp, daycare, and even paying a relative over 18 for babysitting. Be sure to get all your receipts and have the spouse with the lower net income claim the childcare expenses. In addition, some provinces offer additional childcare tax credits on top of the federal ones.
Caregiver
If you are a caregiver, claim the available federal and provincial/territorial tax credits.
Registered Education Savings Plan (RESP)
RESP can be a great way to save for a child’s future education. The Canadian Education Savings Grant (CESG) is only available on the first $2,500 of contributions you make each year per child (to a maximum of $500, with a lifetime maximum of $7,200.) If you have any unused CESG amounts for the current year, you can carry them forward. If the recipient of the RESP is now 16 or 17, they can only receive the CESG if a) at least $2,000 has already been contributed to the RESP and b) a minimum contribution of $100 was made to the RESP in any of the four previous years.
Registered Disability Savings Plan (RDSP)
If you have an RDSP open for yourself or an eligible family member, you may be able to get both the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB) paid into the RDSP. The CDSB is based on the beneficiary’s adjusted family net income and does not require any contributions to be made. The CDSG is based on both the beneficiary’s family net income and contribution amounts. In addition, up to 10 years of unused grants and bond entitlements can be carried forward.
For Retirees
Registered Retirement Income Fund (RRIF)
Turning 71 this year? If so, you are required to end your RRSP by December 31. You have several choices on what to do with your RRSP, including transferring your RRSP to a registered retirement income fund (RRIF), cashing out your RSSP, or purchasing an annuity. Talk to us about the tax implications of each of these choices.
Pension Income
Are you 65 or older and receiving pension income? If your pension income is eligible, you can deduct a federal tax credit equal to 15% on the first $2,000 of pension income received – plus any provincial tax credits. Don’t currently have any pension income? You may want to think about withdrawing $2,000 from an RRIF each year or using RRSP funds to purchase an annuity that pays at least $2,000 per year.
Canada Pension Plan (CPP)
If you’ve reached the age of 60, you may be considering applying for CPP. Keep in mind that if you do this, the monthly amount you’ll receive will be smaller. Also, you don’t have to have retired to be able to apply for CPP. Talk to us; we can help you figure out what makes the most sense.
Old Age Security (OAS)
If you’re 65 or older, enrolling in OAS is essential. If your income exceeds OAS thresholds, strategies like income splitting can help reduce clawbacks.
You can defer OAS for up to 60 months, increasing your monthly payment by 0.6% for each month deferred. Planning ensures you maximize your benefits and optimize your retirement income.
Estate planning arrangements
Regularly reviewing your estate plan is essential to ensure it aligns with your objectives and complies with current tax laws. An annual review allows you to adjust for life changes and legal updates, keeping your plan effective. Additionally, exploring strategies to minimize probate fees can preserve more of your estate for your beneficiaries. Regularly examining your will ensures it remains valid and reflects your current wishes.
For Students
Education, tuition, and textbook tax credits
If you’re attending post-secondary school, claim these credits where available.
Canada tuition credit
If you’re between 25 and 65 and enrolled in an eligible educational institution, you may be eligible for the Canada Training Credit, a refundable tax credit designed to help cover tuition and other fees associated with training. Additionally, you can claim tuition paid on your taxes, carry forward unused amounts to future years, or transfer unused tuition amounts to a spouse, parent, or grandparent.
Need some additional guidance? Reach out to us if you have any questions. We’re here to help.
Understanding Taxes Payable at Death in Canada
/in Blog, Estate Planning, financial advice, tax /by Maritime Private Wealth Solutions Inc.A common belief among Canadians is that they will be taxed on money they inherit. However, Canada does not impose an inheritance tax. Instead, after someone passes away, their final tax return must be filed, covering the income they earned up to the date of death. Any taxes owed are paid from the estate’s assets before the remaining funds are distributed to the beneficiaries.
While there isn’t an inheritance tax in Canada, other costs are associated with settling an estate. It’s important to understand these costs and how the process works.
Is There an Estate Tax in Canada?
Canada doesn’t have a traditional estate tax, but there are taxes and fees that apply after death. The Canada Revenue Agency (CRA) ensures that taxes are paid on any income earned up to the date of death. If there is a tax balance owing, the executor of the estate must file a final tax return and settle any outstanding taxes.
Earned Income
When you pass away, any earned income up to the date of death is included in your final tax return. This includes salary, wages, and other forms of income earned before death.
Deemed Disposition
Deemed disposition occurs when all your assets are treated as if they were sold at their current market value upon death. This means the difference between the original purchase price and the market value at the time of death is considered a capital gain.
Capital Gains:
If your assets have increased in value, the difference (capital gain) is taxable. Effective June 25, 2024, 50% of this gain is included in your income unless the total gain exceeds $250,000, in which case any amount above the first $250,000 the inclusion rate increases to two thirds.
What Property Does Deemed Disposition Apply To:
Deemed Withdrawal
Deemed withdrawal applies to registered accounts such as RRSPs and RRIFs. The total value of these accounts is added to your income for the year of death, potentially leading to a significant tax liability.
Example: Earned Income, Deemed Disposition, and Deemed Withdrawal (Effective June 25, 2024)
Let’s consider an example to illustrate how earned income, deemed disposition, and deemed withdrawal work together, including how much of the estate is kept after taxes and how much is paid in taxes:
Scenario:
Earned Income:
Deemed Disposition:
1. Income Property:
2. Stock Portfolio:
Deemed Withdrawal:
Total Taxable Income Calculation:
Tax Liability:
Estate’s Remaining Value:
So, after paying $120,500 in taxes, John’s estate would keep $629,500 to be distributed to the beneficiaries.
Strategies to Address Estate Taxes
To manage the tax burden on your estate, several strategies can be considered:
Implementing these strategies effectively requires careful planning and consideration of your unique circumstances. Professional guidance can help tailor these strategies to your needs.
Understanding these rules helps in planning your estate effectively. For more personalized advice, feel free to contact us.
Estate Planning for Blended Families
/in Blog, Family, financial advice, Financial Planning, Insurance, Investment /by Maritime Private Wealth Solutions Inc.Blended families – where two people get married but have children from previous relationships – are becoming more common. It can be challenging enough to take care of the everyday logistics; from where to live to making sure everyone gets along. So trying to make sure you properly take of estate planning often doesn’t get taken care of.
In most families – blended or not – spouses leave everything to each other. Then, when the surviving spouse dies, the remainder is divided amongst all of the children. The problem with this setup is that there is no guarantee that the surviving spouse will not remarry and inadvertently disinherit the deceased’s children.
To make sure that everyone is treated fairly, it’s essential to consider how to handle each of the following estate planning issues for blended families:
It’s essential to have a full discussion with your spouse and children to avoid misunderstandings and reduce uncertainty. But you don’t have to do it alone! We can provide you with tailored solutions to ensure your wishes are carried out.
Sharing The Family Home
This can be challenging, depending on whether the blended family moves into a new home or into a house one spouse already owns. An option to consider is that the spouse who is moving into the home already owned by the other spouse can then purchase an interest in the family home. If this occurs, each spouse can own the home as tenants-in-common, enabling them to manage their interest in the house separately.
When it comes time for each spouse to draw up a will, provisions can be made for the surviving spouse to remain in the home until the time of their choosing (or death) before passing on the interest to their respective children.
Make the Most of a Registered Retirement Savings Plans
The best way to take advantage of the tax-free rollover from an RRSP is for each spouse to name each other the beneficiary. While it may be tempting to leave your RRSP to your estate or one or more of your children, this can have ramifications. If you leave it to your estate, it will have to go through probate and also be taxed. If you leave it an adult child, the RRSP won’t have to go through probate, but the entire RRSP will be considered taxable to the deceased in the year of death.
How to Share Non-Registered Investments and Other Assets
You can set up your estate planning so that your spouse can benefit from income-producing assets during their lifetime, without necessarily impacting the capital in those assets. Your children can then benefit from them after your spouse dies.
Each spouse can set up a spousal testamentary trust to contain their income-producing investments and assets. The surviving spouse will then receive all the income from the trust and the option to access the capital for specific needs (if specified in the trust). After the surviving spouse dies, the assets will pass to whoever was identified as the trust’s inheritors. You can make the inheritors your children. This ensures that both your spouse and your children are taken care of.
Why It’s Important to Select a Good Trustee
Trusts are a vital part of effective estate planning for blended families. This means that it’s critical to pick the right trustee – as they will control and manage the assets of the deceased’s estate as outlined in the deceased’s will. You may even want to consider multiple trustees or the services of a trust company. A strong but neutral trustee will help ensure that your wishes are followed without causing fighting amongst family members.
Advantages of Life Insurance for Blended Family Estate Planning
There are several advantages to using life insurance policies as part of your estate planning for blended families:
The Takeaway
No matter what choices you make about estate planning for your blended family, you must communicate openly and honestly with everyone in the family. This will help ensure that everyone is aware of the state of affairs and reduces misunderstandings and uncertainty about what the future may hold for everyone in the family.
Using professional advice while you are estate planning for blended families can help you create a solution that satisfies both spouses and their respective children’s objectives. Reach out to me if you have any questions or concerns about your estate planning – I’m here to help!
How to Choose and Customize a Group Benefits Plan for Small Businesses
/in Blog, business owners, corporate, critical illness insurance, dental benefits, disability, disability insurance, financial advice, Financial Planning, Group Benefits, health benefits, incorporated professionals, Insurance, life insurance /by Maritime Private Wealth Solutions Inc.Building a Bright and Sustainable Future Together
As a small business owner, you recognize the significance of looking after your team and fostering a nurturing work environment. One method to demonstrate this is by providing a robust group benefits plan. This not only reflects your dedication to your team’s well-being but also is instrumental in drawing and retaining the best talent. Dive into the realm of group benefits and discover how to select and tailor the ideal plan for your small enterprise.
Understanding the Basics of Group Benefits
Group benefits plans are crafted to offer a variety of health, financial, and wellness advantages to your team members. These packages can encompass health and dental insurance, life and disability insurance, retirement savings alternatives, and more. The main benefit of a group benefits plan is its ability to distribute the risk among your team, making coverage more cost-effective and reachable for all.
Step 1: Assess Your Business Needs
Before diving into a group benefits plan, it’s vital to evaluate the requirements of your business and your team. Ponder over these questions:
Step 2: Collaborate with a Benefits Specialist
Teaming up with a benefits specialist is akin to having a navigator on your quest to devise the perfect plan. They will assist you in traversing the intricate landscape of insurance choices, rules, and compliance mandates. They’ll engage closely with you to grasp the distinct needs of your business and craft a plan that matches your budget and principles.
Step 3: Customize Your Plan
Adaptability is paramount when shaping a benefits plan that appeals to your team. Here are some avenues for personalization:
Step 4: Educate Your Employees
The efficacy of a group benefits plan hinges on transparent communication and enlightenment. Ensure your team comprehends the worth of the benefits provided and the methods to utilize them optimally. Arrange seminars, online sessions, or informational meetups to aid them in making knowledgeable choices about their coverage.
Step 5: Regularly Review and Adjust
The dynamics of your business and the needs of your team will transform over time. Hence, it’s crucial to revisit your group benefits plan annually and make requisite modifications. This guarantees that your plan stays in sync with your objectives and consistently delivers value to your team.
Building a Sustainable Future Together
As you embark on the path of picking and personalizing a group benefits plan for your small enterprise, bear in mind that your collaboration with your team is central to the process. By placing their welfare at the forefront and presenting a comprehensive benefits package, you’re not merely paving a brighter path for your team but also cultivating a sustainable work setting that promotes allegiance, efficiency, and expansion.
What is disability insurance?
/in Blog, business owners, disability, disability insurance, Family, farmers, financial advice, health benefits, incorporated professionals, individuals, Insurance, Professionals /by Maritime Private Wealth Solutions Inc.If you cannot work because you are seriously injured or ill, disability insurance will provide you with a monthly, tax-free income to help replace your lost wages. An injury does not have to be as blatant as a broken leg or arm – suffering from chronic pain or dealing with mental health issues can also qualify you for a disability insurance payout.
Why do I need disability insurance?
Unfortunately, people become disabled – whether temporarily or permanently – quite often. In 2017, over 20 percent of Canadians had one or more disabilities.
If you’re disabled, you may lose one of your most valuable assets – your ability to work and bring in a paycheck. Disability insurance can help replace that paycheck for as long as you need it to. Being able to rely on a disability insurance payout means you won’t have to dip into your savings if anything happens to you.
Disability insurance is especially important if you are self-employed, particularly if you are the family’s sole income earner.
What if I already have disability insurance through work?
If you have disability insurance through work, that’s great – but it may not replace 100 percent of your paycheck, especially if you’re off work for a long time. If you purchase private disability insurance, you can:
Having private disability insurance will give you peace of mind that you either have additional coverage if you are employed and at least some disability coverage if you lose your job.
How does disability insurance work?
We’d be happy to answer any questions you have about disability insurance. There are five main steps to disability insurance:
We’re Here To Help
If you’d like to know more about disability insurance – from how much it would cost you to what you can file a claim for – we’re here to help! Give us a call today.
Getting Ready for Money Emergencies
/in Blog, Debt, Family, financial advice, Financial Planning, incorporated professionals, individuals, Investment, personal finances, Professionals /by Maritime Private Wealth Solutions Inc.Life can throw unexpected events your way that can hit you in the wallet. Whether it’s falling ill, getting laid off, or facing hefty repair bills for your car or home, these situations can strain your finances. To stay ahead and avoid falling into debt, it’s a good idea to have an emergency fund. This is cash you set aside specifically to handle unforeseen expenses, so you’re not left scrambling for money when the unexpected happens.
Why Emergency Funds Matter
An emergency fund is like an insurance policy for unexpected expenses that everyone can benefit from. It’s a stash of money specifically saved to cover daily living costs during emergencies that catch you off guard, such as:
Sudden car repairs
Vet visits
Losing your job
Sudden home repairs
Medical emergencies
Creating an emergency fund helps you to:
Deal with surprise costs without going into debt
Stay away from expensive loans like payday loans or credit card cash advances
Keep control of your finances
Feel less worried about unexpected expenses.
An emergency fund offers peace of mind during life’s surprises, preventing debt by covering costs without needing to use up savings or retirement funds, which could result in extra fees.
How much do you need?
The amount you should save depends on your financial situation, like how much you earn, what you spend each month, and if you have any dependents. A good rule is to have enough money to cover three to six months of necessary expenses, like rent, groceries, bills, and childcare.
How to Build Your Emergency Fund
Building an emergency fund to cover three to six months of essential living expenses might feel overwhelming, but the key is to start saving gradually. Even putting away a small amount regularly can add up significantly over time.
Here are some ways to build up your emergency fund:
Automate your savings: Pick how much money you want to save, when you want to save it, and how often. Then, arrange for the money to be automatically moved from your regular account to your savings account. You can set up this automatic transfer to happen on your payday. That means the money you’ve chosen to save will be moved as soon as your paycheque is put into your account.
Take advantage of opportunities to boost your emergency fund whenever you can. This might happen when you get extra money, like a tax refund, a pay raise at work, or when you sell things such as a car. Even receiving money as a gift or getting a bonus from your job can help. Additionally, when you finish paying off a loan, consider putting the money you used for payments into your emergency fund instead. Since you’re already used to budgeting for those payments, it’s an easy way to increase your savings without much extra effort.
Make it a habit: Make saving a regular part of your routine by incorporating it into your daily habits. Here are some simple tips to help you get started: drop any loose change into a container whenever you come home, set up a savings, mark your saving dates in advance on your calendar, and use sticky notes on your fridge to remind yourself to save regularly. These small actions can make a big difference in building your savings over time.
Where to keep your emergency fund?
Given that emergencies can occur unexpectedly, having quick access to your funds is important. Although a regular chequing account may offer immediate access to your money, it’s best to keep your emergency fund separate from your regular account. This prevents accidental spending on non-emergencies. Look for an account that:
Is distinct from your regular spending account
Has minimal or no transaction fees
Permits penalty-free withdrawals
Earns interest on your savings
Consider exploring “cash equivalents” as an option to invest your money. They’re a bit like cash but can also help your money grow with interest. They’re safe and easy to get your money from. But before you decide, make sure you understand how and when you can take your money out and if there are any extra fees or charges. Examples of cash equivalents include:
Savings accounts
Chequing accounts
High-interest rate savings accounts (HISA)
Guaranteed Investment Certificates (GIC)
Money market funds
Having an emergency fund can be a lifeline during tough financial times, preventing you from falling into debt. While there’s no fixed amount you should stash away, assessing your financial situation can guide you in determining your ideal emergency fund size. If you need assistance in planning your emergency fund, don’t hesitate to reach out to us for personalized guidance and support.