RRSP to RRIF Conversion

Think of a Registered Retirement Income Fund (RRIF) as an extension of your Registered Retirement Savings Plan (RRSP). By the end of the year in which you turn 71, you must convert your RRSP into a RRIF.  Starting in the year you turn 72, you will have to withdraw at least the annual minimum amount based on a government-prescribed formula, although you’re free to withdraw more if you wish. 

If you remember when you put money into RRIF the government refunded the taxes you would have paid at your higher working tax rate. Now, when you are taking it out of your RRIF, the government wants you to pay taxes (usually at a lower rate) on the amount taken out of your RRIF.  Care should be taken with your advisor to plan RRIF income to suit you specific retirement income needs while minimizing tax consequences.

When converting from an RRSP to a RRIF, you may continue holding some or all of the same investments. Not only is this convenient, it also allows you to participate in the markets at a risk level that’s suitable for you. Sometimes these investments are adjusted slightly to accommodate the regular income you will now start getting from your new RRIF.

Your annual minimum payment is based on when the RRIF was established, your or your spouse’s age, and the amount held within the RRIF on January 1st each year. Keep in mind that RRIF payments can be flexibly changed, both the amount to withdraw as well as the scheduling of payments.

You can convert your RRSP to a RRIF prior to turning 71 if you want, or need the income.  The calculation for your minimum payment prior to 71 is as follows:

After the year in which you turn 71, your minimum payment is determined by a percentage of the market value of your RRIF. This percentage has been established by the Canadian government and can be referenced here:

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/completing-slips-summaries/t4rsp-t4rif-information-returns/payments/chart-prescribed-factors.html

A RRIF is just one way to create an income stream in retirement. We can help you develop a personalized plan that supports your retirement lifestyle and generates income in a tax-efficient manner.

“Wealth, like a tree, grows from a seed. The sooner you plant that seed the sooner shall the tree grow.”

-        George S. Clason

Congratulations to our winners of this years’ 9th annual Helping Hands Scholarship!!

Karina Rizzo won first place with her essay entry.  She is attending Western University for Medical Sciences.  This year, we asked our entrants to tell us about their life goals, to expand on themselves and their community involvement.

Below is an excerpt from Karina’s essay:

“The pandemic also had a significant impact on my outlook of life and allowed me to grow as a person.  In February of 2020 when the first lockdown commenced, I broke my ankle playing hockey and required surgery. This process allowed me to grow as an individual and taught me how to stay positive despite my circumstances. It tested my drive and work ethic because I had to go through the rehabilitation process with the absence of a physiotherapist. Therefore, I had to keep myself accountable. Due to my inability to walk, I could not exercise and was concerned that I would fall into an unhealthy spiral. I was able to eat healthy and do moderate exercises to remain mentally and physically fit. The process of rehabilitation during the pandemic taught me the power of consistency and discipline, two traits that I must exemplify to reach my aspired career.”

Carissa Dedes was our second-place winner this year.  She is attending Simon Fraser University for Kinesiology.

An excerpt from Carissa’s essay follows:

“Through volunteering in the Special Olympics, a slow pitch tournament for adults with disabilities, I discovered my sense of fulfillment when helping others. During my time volunteering at the Special Olympics, I helped to line the fields, score keep games, and give out food and beverages to the players. Through these simple acts of kindness by assisting people in need I realized that helping others is what I wanted to dedicate my career to. Volunteering showed me the joy of making someone else’s life that much simpler or less stressful. I believe I can achieve this gratification in my studies in health and fitness by pursuing a career such as a physiotherapist or a naturopath.”

All the best to both Karina and Carissa – we look forward to following you as you become successful in your chosen fields!!

Congratulations!

Deb, Kelly, Gary, James & Fiona

Benefits of setting up a Registered Education Savings Plan (RESP) early

As summer draws to a close and the kids are back in school, we’d like to encourage and inspire you to start early with planning for your child or grandchild’s post-secondary education.  It might seem crazy to start saving for College, University or an Apprenticeship program while the little ones have not even started elementary school; however, let us tell you it is never too early to start.  Education costs for kids attending school (tuition, housing & supplies) are typically between $20,000 and $25,000 per year in 2022.  At this time of year as we process RESP withdrawals for our clients, we are always amazed at how much you can accumulate in a RESP over the years by contributing enough to receive the maximum FREE matching amount from the government.

Starting in the year that your child or grandchild is born, you can contribute up to $2500 per year and receive a 20% matching grant from the Canadian federal government called the Canada Education Savings Grant (CESG).  Depending upon your family’s income level, there is another grant and bond that you may be eligible for.  Each child could receive up to $7200 of free CESG, plus any additional grants and bonds.  You are able to play catch up each year for one year (you can contribute $5000 in any one year that you have room to catch up).  Keep in mind the deadline is December for the annual contributions.

You can choose to open an individual RESP per child, or a family RESP where the money can be shared amongst all of the children.  Contributions into a RESP account are not tax deductible; however, they do grow tax free until the time of withdrawal. 

Flash forward to age 17 when the now young adult is ready to head off post-secondary school.  With proof of enrolment, the beneficiary of the RESP can withdraw funds for schooling costs as needed.  The contributions into the RESP come back out tax free.  The growth and grant portion are taxable in the hands of the beneficiary/student at their tax rate (typically lower than the parent or grandparent’s tax rate).

The above is just an overview of RESPs, and how beneficial they are in helping to cover today’s expensive cost of education.  As with any government subsidized program, there are a number of rules and restrictions to be aware of, but they are quite manageable.  Additionally, there are a couple of estate planning tips to be followed when RESPs are created.  RESPs are quite easy to set up and all that is needed is a Social Insurance Number for your child or grandchild.

If you are interested in taking advantage of the 20% matching government grant to help save for your child’s or grandchild’s education, please reach out to us to discuss RESPs in more detail.

Tax savings for Summer 2022 travel in Ontario

With our ‘vacation’ season upon us, we thought we would remind you of the Ontario government’s incentive to travel and stay within Ontario this year.  Explore our beautiful province AND receive an Ontario Staycation Tax Credit for 2022 when you file your income tax.  As we all know the hospitality and tourism industries have been hit hard during the Covid pandemic.  As these industries are slowly recovering, the provincial government is encouraging residents to go out and enjoy our beautiful province and you will be given a tax credit for doing so.

When you file your income tax you will be able to claim up to $1,000 for an individual and $2,000 for a couple – actually reducing your income tax payable by $200 and $400 respectively.

Obviously, there are rules that need to be followed in order to be eligible to receive this credit.  Essentially you must be an Ontario resident as of December 31st of 2022 to qualify.  To claim your Ontario Staycation Tax Credit, you must be staying for leisure not business purposes in a hotel, motel, resort, campground, cottage, B&B for a stay of less than a month. 

Keep in mind, you must keep detailed receipts to prove your eligibility at tax time.  This would include having the following information available: date, location, amount and who paid for the ‘staycation’.

In addition, some cities tourism boards are offering additional free nights or discounts to boost the travel and tourism industry.  Take advantage of this if you can.  Check out Ottawa Tourism for example as they are offering to pay for a third night stay (if you are staying at a participating hotel – no strings attached).

Enjoy the summer………………get out and explore our beautiful province!!  Safe travelling!!

Deb, Gary and Kelly

Perspectives of a new Canadian

With everything that is going on in the world today, we sometimes forget that our country, Canada is one of the best places to live in the world.

Fiona joined our Lifeview Financial team in March.  After much research, work and patience and despite Covid delays, she and her husband chose to leave their home in Albania and make Canada their new home. 

Although it is officially Spring here ….. the other day was minus 17.   We all felt the cold, but especially Fiona as it doesn’t get that cold in Albania!

We thought we would share some initial comments from Fiona (in her words) below:

“Moving to Canada, the journey that exchanged dreams into reality.  This was one of the toughest decisions we have had to make in our life so far and has turned out to be the best.  First days were not what we expected it to be, feeling like a stranger in a whole different continent, however, what we came to know in the upcoming days and weeks is that every single person in Canada (well almost everyone), is eager to help newcomers and embrace them in this warm and welcoming society.

We went through a culture shock (and are still going through it) on our first week as we kept comparing everything with Albania, our home country. Eventually, we learned how to see things through a Canadian perspective and try to adapt to this new culture.

Another big change we had to adapt to was the fact that Spring here comes with a few snowfalls and freezing rain - totally different of what I am used to. I still have not put away my jacket and I probably won’t for another couple of weeks.

Finally, (and the most important of all) I happened to encounter a great team like Lifeview Financial, who helped me feel at home and gave me a great opportunity to express myself and start my first steps towards a long and beautiful career path.”

We felt like sharing Fiona’s comments with you …… we live in a great country and it is nice to hear a new Canadian’s perpective on our home country!!

 “I believe the world needs more Canada.”

                                            Bono - Musician