Investment Services

OAS pension is a part of this program and It is also a government pension but based on legal residency for at least 10 years in between the age of 18 and 65 years old. You can apply for and receive full OAS pension at age 65 if you have stayed for 40 years ,You will receive a partial OAS pension (10/40 x Full OAS) if you have stayed for 10 years but you will continue to receive OAS pension only if you are living in Canada . If you have stayed for at least 20 years in Canada , You will receive partial OAS pension even if you are living outside Canada. OAS pension is a taxable benefit. In addition to the OAS pension, there are three types of OAS benefits which are non-taxable.

• Guaranteed Income Supplement (GIS ): You will receive this benefit while receiving OAS pension If you live in Canada and have a low income.
• Allowance : You might be eligible to receive this benefit , if you are 60 to 64 years of age and your spouse or common-law-partner is receiving the OAS pension and GIS.
• Allowance for the Survivor : You might be eligible to receive this benefit if you are 60 to 64 years of age and you are widowed.

It is similar to a Registered Retirement Income Fund (RRIF), but with certain restrictions. An LIF is a special type of account into which you can transfer funds that originate from pension benefits under a provincially regulated pension plan (LIRA) or Federally regulated pension plan (LRSP). There is a minimum annual withdrawal limit and also maximum annual withdrawal limit. Unlike a RRIF, a LIF cannot be commuted or cashed-out under most circumstances.

You have an option to receive income payments monthly, quarterly, semi-annually or Annually. All your LIF payments are taxed as income in the year in which they are received. There is a withholding tax for any withdrawal above the minimum payout amount. You can continue to get tax sheltered investment growth on the balance in the account and still you can control your investment options. You must convert into Life Annuity with the balance remaining in LIF account by the end of the year in which you reach age 80. You can nominate more than one beneficiary. There may be some restrictions as pension legislation dictates such funds be provided to your spouse should you have one.

It is a registered account that helps you to earn money tax free through eligible investments. You can open a TFSA account if you are 18 years of age or older and have a valid SIN . It is not designed specifically for retirement , but you can also save money to meet your short term financial goals. The amount you can contribute is based on contribution room not on your income and your contributions are not tax-deductible. You can continue your contributions for your life. You can also carry forward any unused contribution room from previous years .

You can withdraw your money any time and no tax on withdrawals. You never lose your contribution room When you make a withdrawal, you can put the money back into the account but not in the same year. TFSA started in 2009. The annual contribution limit was $5000 from 2009 to 2012,$5500 from 2013 to 2014, $10,000 for 2015 and $5500 from 2016 to 2018 . The total contribution room from 2009 to 2018 is $57,500.

It is a government pension based on contributions which are mandatory for both workers and self employed . All your earnings may not consider for pensionable earnings. The contribution rate is 9.9 % of pensionable earnings in between Yearly basic pensionable earnings ($3500) and Yearly maximum pensionable earnings (varies every year). If you are working ,your employer share contributions equally with you.

Employer’s contribution is tax deductible to employer and Employee contribution is eligible for non-refundable tax credit. If you are self employed, one-half of contributions is tax deductible and the other half is eligible for non-refundable tax credit. You will receive maximum CPP retirement pension if you have earned same or above yearly maximum pensionable earning for 40 years, otherwise you will receive proportionately.

You can apply for and receive a full CPP retirement pension at age 65 or receive it as early as age 60 with reduction, or as late as 70 with an increase. If you continue to work while on receiving CPP retirement pension, and are under age 70 you can continue to contribute .Your contributions will go to post retirement benefit which increases your CPP. In addition to CPP retirement pension and post retirement benefit , other types of CPP benefits are Disability benefits, Survivor pension, Death benefit and Children’s benefits. All CPP benefits are taxable

• Level payments: Your payment amount remains the same through out the payment period.
• Indexed payments: Income increases yearly by fixed percentage. You can select an increase between 1% and 4% at purchase . Not available for prescribed annuities.
• Reduced payment (Joint life annuities): Income reduces by a certain percentage selected at issue when one of the annuitants dies.
• Integrated payment: Income decreases when CPP or OAS payments begin. Not available for prescribed annuities.

Like RRSP, Investments held inside a RRIF grow in a tax-deferred manner. Unlike RRSP, further contributions cannot be made once conversion to a RRIF has occurred and also there is a minimum RRIF withdrawal limit. There is no withholding tax when you withdraw minimum. The minimum RRIF withdrawal each year is determined by a percentage that is calculated by your age and the total value of the plan on January 1st each year.

You may elect to withdraw an amount greater than the minimum RRIF amount for that year but subject to withholding tax . The withdrawal remains taxable as income , but is eligible for tax credit to reduce federal income tax by 15% of the first $2000 withdrawn, if you are 65 years or older. Provincial tax credit is also available in most provinces. There are two formulas to be used to calculate the RRIF minimum payments. They are :

• 90-Age Formula: Minimum amount = Value of RRIF x1/90-Your current age as of Dec 31st.
• Percentage Formula: Minimum amount = % based on age x Value of RRIF on Jan 1st. There are two types of RRIFs:
• Qualifying RRIF : Was opened before 1993, and has not accepted any funds after 1992; or was opened at any time, and has not had funds transferred in after 1992 except from another qualifying RRIF. Uses 90-Age formula for under 78 and Percentage formula for age 79 or over.
• Non-Qualifying RRIF : Was opened after 1992 or was opened before 1993 and has funds transferred in from a plan opened after 1992. Uses 90-Age formula under 71 and Percentage formula for age 71 or over.

A registered pension plan is pension plan that has been set up by your employer, and regulated by either federal or provincial pension legislation and registered with Canada Revenue Agency (CRA) , to provide you with a pension when you retire. It provides an opportunity for you to save for retirement and for employers a key component of a competitive compensation package. The employer is required to contribute an RPP and the employees may or may not be required to contribute. All Contributions made to an RPP are tax deductible. Investment income is not taxed until it is paid out of the plan . There are two types of registered pension plans. They are

•Defined benefit pension plans (DB) : You know in advance approximately the amount of your pension when you retire. Your pension amount is based on predetermined formula and usually based on years of service and pre-retirement income . This plan may be contributory (Your contributions are required ) or non-contributory (only employer contributions ).Monthly pension benefits will be paid out over your life time after retirement. If you have a spouse, the survivor benefit is also there , unless the spouse has signed a waiver. You have no control over how the pension funds are invested.

•Defined contribution pension plans (DC) : These are also known as Money purchase plans. Your employer’s and your contributions are known in advance. You do not know in advance the amount of your pension when you retire but you do have some control over how your pension funds are invested. You and /or the employer make contributions on behalf of you which are usually a percentage of your current income. The limit is 18% of your current income subject to a dollar maximum . Your retirement income from the plan is based on the total value of the accumulated contributions and the investment income earned by the time you retire that will vary, depending on market performance and selected investments.

Employees who have RPP and who remain with their company until retirement age will receive income for life at the time of retirement. However , at the time of termination of membership in a company pension plan preceding retirement, death before retirement (whereby funds become property of surviving spouse or partner), or the breakup of marriage or common-law relationship, holders must transfer their funds into LIRA/LRSP and hold them there until retirement. LIRA/LRSP are a type of locked in accounts , similar to Registered Retirement Savings Plans (RRSP), but with certain restrictions. Like RRSP, LIRA/LRSP also expire by age 71.

It is a government registered savings plan that helps Canadians with disabilities and their families save for long term financial needs like future medical and living costs. You can open RDSP , If you have a long term disability and are:

• eligible for the disability tax credit;
• under the age of 60;
• A Canadian resident with a SIN; and
• the age of majority and has a capacity to manage your finances.

The legal parent of a child with disability who has not reached the age of majority; or a guardian or other representative who is legally authorized to act on behalf of person with disability can open RDSP. You may contribute any amount to your RDSP each year, up to lifetime contribution limit of $200,000, with written permission from you (RDSP holder ) , anyone may contribute to your RDSP. Your money goes into qualified investments When you open RDSP .Your contributions are not tax-deductible but growth in RDSP account is tax sheltered . You will also receive the below powerful government incentives:

• Canada Disability Savings Grant (CDSG) : Your contributions qualify for CDSG up to $3500 annually ( 300% on first $500 + 200% on next $1000 ) if your net income is under $ 93,208. Your contributions qualify for CDSG up to $1000 annually ( 100% on first $1000 ) if your family net income is more than $93,208. To receive the full amount of grant every year, you will need to contribute either $1500 or $1000 , depending on income level. A lifetime CDSG limit is $70,000. You will receive CDSG until the end of the year in which the beneficiary reaches 49 years of age.
• Canada Disability Savings Bond (CDSB ) : You will receive CDSB of $1000 annually , if your family net income is below $30450 . You may receive proportionately if your family net income is between $30,450 and $46,605. No CDSB if it is more than $46,605 .A lifetime CDSB limit is $20,000. Your contributions are not required to get this benefit.

Withdrawals : A beneficiary can withdraw from RDSP in Two ways :

• Disability Assistance payments (DAP ) : It is a one time withdrawal that can be paid to your beneficiary any time after the RDSP is opened but any CDSGs or CDSBs received within last 10 years must be partially repaid at $3 for every $1 withdrawn
• LifeTime Disability Assistance Payments (LDAP) : These are the annual payments that begin by the end of the year in which the beneficiary turns 60 , then continue for the life of the beneficiary.

RRSP is a government tax assisted retirement savings vehicle which helps you to contribute and accumulate more retirement income in addition to CPP and OAS. There are contribution limits on RRSPs. Through a RRSP, you can put your savings into eligible investments. You can contribute to RRSP every year based on allowable limit, unused contribution limits are carried forward each year. Your allowable RRSP contribution limit or deduction limit or deduction room for the current year is the lower of:

• 18% of your earned income from the previous year and
• the maximum annual contribution limit for the current year
• Minus Pension adjustment if any
• Add unused contribution limit of last year if any

If you verify the most recent Notice of Assessment of CRA, you will find out the exact amount you can contribute for the current year.If your income is significantly more than your spouse , you will get one of the best income splitting opportunities by contributing to spousal RRSP.If you have a RRSP room , You can contribute to RRSP up until December 31 of the year you turn 71. After this age if you continue to have earned income , You can contribute to Spousal RRSP up until December 31st of the year your spouse turns 71. Your contributions are tax deductible and growth is tax sheltered until withdrawn. You can borrow amount from RRSP without paying tax only for the below two purposes:

• Home Buyers plan (HBP) : It is a program to assist first-time home buyers . You can borrow a maximum of $25000 from your RRSP in a single tax year and you have 15 years to repay it starting from 2nd year after the tax year you made initial withdrawal. In each year repay 1/15 of the total borrowed amount until the amount owed is paid back to RRSP. Less or missed repayment due is added back to you as taxable income. Any excess repayments reduces future repayment amounts .
• Lifelong learning Plan (LLP) : It is a program to assist you to finance full-time studies at a qualifying school if your spouse, or you or both are going back to school. If you are a disabled student, you may qualify for part time studies. You can borrow up to $10,000 a year from your RRSP to a maximum of $20,000 each in total or $40,000 for both in total. You will have 10 years to repay 1/10 of the total borrowed amount each year starting from 5th year from the year of withdrawal or from 2nd year if you are not claiming educational tax credit for three consecutive months. No or less repayment due is added back to you as taxable income . Excess repayment reduces future repayment amount.

It is a registered investment vehicle available for you to save for your children’s post secondary education ( college , university or trade school). Parents, grandparents, other family members and friends can open an RESP for a child . There are three types of plans:

• Family Plan :This is ideal if you have more than one child. The children must be related to you, either by blood or adoption and must be under 21 when you name them. They may be your children , step children, grandchildren, brothers or sisters.
• Individual (Non Family ) Plan : You can open this account for any beneficiary who does not have to be related to you. You can open this plan even for yourself or for another adult.
• Group Plan : This is also for one child who does not have to be related to you. This is ideal if you can make regular payments throughout the term of RESP. In this type of plan , your savings are combined with those of other people. How much each child gets depends on how much money is in the group account, and on the number of students of the same age who are in school that year.

Your money goes into qualified investments When you open RESP .Your contributions are not tax-deductible but growth in RESP account is tax sheltered . Maximum contribution limit is $50,000 for each child. You will also receive the below powerful government incentives:

• Canada Education Savings Grant (CESG): Every time you contribute to RESP, Canadian government will add CESG to your RESP account to the extent of 20% of first $2500 annual contributions made until the end of the year in which your child turns 17. Unused CESG amounts for the current year carried forward for possible use in future years. In this case, the maximum grant is $1000 per year per child on $5000 contributions per year per child to take advantage of unused CESG if any. Depending on your income , you may get either extra 20% or extra 10 % on the first $500 as additional CESG .The maximum lifetime CEGS is $7200 per child.
• Canada Learning Bond (CLB) : If your income is low and receiving national child benefit supplement , you could get $500 when you open RESP and $100 every year until your child age 15. In total, your child could receive up to $2000. Your contributions are not required to get this benefit.

if you want to open RESP for your children who are 16 or 17 years old. you can only receive CESG if at least one of the following conditions is met :

• A minimum of $2000 was contributed to (and not withdrawn from) the RESP of the child before the end of the calendar year child turned 15 ; or
• A minimum annual contribution of $100 was made to ( and not withdrawn from ) the RESP in at least four of the years before the end of the calendar year the child turned 15.

  Withdrawals:As a subscriber (who sets up RESP) only you are allowed to request payments from the account, not the student. All withdrawals of your original contributions can be sent to either you or beneficiary (your child , student ), while grant , bond and investment growth can only be sent to the beneficiary. Once you have your child’s proof of enrolment in college or university, you can start to withdraw the money in two different parts as mentioned below :

• Post-Secondary Education Payments (PSE) : This is your contribution amount which can be withdrawn any amount and any time-tax free. There is no restriction about withdrawing PSE
• Education Assistance Payment (EAP ) : This includes benefits like CESG,CLB along with any investment income (Dividends , Capital gains, Interest ).You can also withdraw EAP and it will be taxed to your beneficiary (student) who probably has a low/no income which is obviously at a lower rate than you. There is $5000 limit applied to EAP withdrawals in the first 13 weeks of schooling.

  What happens if your child does not go to school? :

  • You can use your RESP account for your beneficiary’s education for up to 35 years after the year you opened the account.
  • If you have family RESP, You can shift all money from one beneficiary to another very easily.
  • You can withdraw your contributions tax-free at any time.
  • Any CESG , CLB will be returned to the government if an RESP collapsed ; any investment income (up to $50,000 ) in your RESP account can be rolled into your RRSP provided you have the RRSP contribution room.