Tax Tips for 2019

The New Year brings many tips to kickstart every age group’s 2019 financial resolutions. Need some inspiration to get organized? A Financial Post Article recommends steps to get your plans for wealth building this year kickstarted.

HEY KIDS … YOU CAN EARN $12,000 TAX FREE

Canadians can earn $12,069 under the basic personal exemption amount. High school students can earn this and don’t necessarily need to file a tax return. If you are a post-secondary student with an RESP, withdrawals called EAPs are taxable in the students’ hands. EAPs can be included within this exemption which shelters these EAPs and you can also claim a credit for the cost of tuition.

Tax Free Savings Accounts (TFSA) limits are increasing to $6,000 for 2019. As Canada’s most popular savings plan it works for all age groups and tax brackets.

RETIREES DEFER CPP AND ADD EARN 142%

The standard figure cited for delaying CPP to the age of 70 is that it increases benefits to 142 per cent of what they would be at 65. This is equivalent to a 9% per year return or better. Debt reduction is a higher priority than retirement this year for Canadians. A recent retirement survey indicated that paying down debt was the top financial priority for survey respondents, followed by keeping up with bills and getting by (14 per cent), growing wealth (12 per cent) and saving for a vacation (7 per cent). Almost a third (29 per cent) said they’ve taken on more debt in the past 12 months.  Retirement came in only at 5%.

CPP is ENCHANCED

Another Financial Post article provides the good news that CPP will replace 33.33 per cent of the average worker’s lifetime earnings to a higher pensionable earnings limit of $65,400 over the next 50 years. Learn more read the article here.

GET MORE ACTIVE IN 2019

“There’s rarely enough money to do everything, so it’s critical to make the most of the money you earn by prioritizing both sides of your balance sheet – not debt or savings, but both,” said Golombek. “It boils down to trade-offs, and balancing your priorities both now and down the road.  Regardless of your goals, being active with your financial plan and investment portfolios ensures you reach your goals. Our Hampton Securities Advisors can help you build a plan, manage a financial plan and more- reach out to us here.

Entrepreneurial Insights from Budget 2017

Entrepreneurs and those business owners who operate through a private corporation, known in tax lingo formally as a “Canadian-controlled private corporation” (CCPC), often do so for a variety of tax reasons. While the recent Federal Budget in March 2017 did not change the corporate tax rates or the tax treatment of CCPCs, the various tax strategies these structures rely upon may need to be re-examined proactively.

Tax Planning for Business Owners

Recent federal budgets introduced new legislation aimed at preventing the inappropriate multiplication of the small business deduction among multiple corporations. To date, no changes were made to the ability for a CCPC, including a professional corporation, to continue to be able to claim the deduction on active business income.

Often the decision for business owners is to determine how much income is left within the private corporation when compared to other tax strategies as income splitting. Make sure to refresh your approach with the new focus in recent budgets. The EY budget summary may also assist:  EY Tax Alert 2017

What does a private corporation mean?

For those that need a reminder of what the use of a Private Corporation can provide please consult a tax professional. Often CCPCs over a significant tax deferral advantage by leaving the after-tax corporate income inside the corporation as opposed to paying it out immediately. This deferral advantage ranges from a low of 35 per cent in Alberta, B.C. and Quebec to a high of just over 40 per cent in Nova Scotia.

Entrepreneurs: Have the “Money Talk”

Time to have the “Money Talk”. Financial and Tax Planning are common catalysts in the first quarter of each year, regardless of when you file your taxes. Our Advisors at Hampton Securities would recommend entrepreneurs take it a step further. It is an ideal time to have the “Money Talk” with family and partners to safeguard your Estate Plans and confirm they are up-to-date. While it begins with a Will, it is not a ‘one and done’ process.

Your Estate and Business Succession Plan is Dynamic

There have been significant changes to Estate Law in the last Federal Budget. Implications of an aging population and prevalent challenges around the legal treatment of mental competency create a common sense need for succession planning. We suggest it is an opportune time to take a fresh look at your Estate Plans. The upcoming Federal Budget on March 22, 2017 will offer another strong incentive to review your business Succession and Estate Planning needs.

Your Will and the Estate Plan that surrounds it, is like you and your family – it is dynamic. In addition, there is new legislation that may impact your Estate Plan, such as the treatment and record keeping requirements for your principle residence. Also consider your health care directives, formerly living wills, need to be updated to be effective with recent changes. In both cases, there are new requirements that business owners and their families need to be aware of.  Ensure your business is anchored to a proactive estate plan. We encourage you to contact your Hampton Securities Advisor or call us at 1-877-225-0229 to help you have the “Money Talk”.