Building, Preserving and Transferring Wealth Tax Presentation

IT’S NOT JUST WHAT YOU EARN, IT’S WHAT YOU KEEP

SALARY RRSP TFSA HOME PENSIONS INVESTMENTS PROPERTY BUSINESS ASSETS INSURANCE

“RETIREMENT” How do I access the accumulated wealth in the most tax efficient manner

CRA PROBATE

2015 COMBINED PERSONAL TAX RATES Marginal Rate Taxable IncomeTaxIncome 40,120 5, ,236 19, ,401 21, ,586 42, ,000 82,

SALARY RRSP TFSA HOME PENSIONS INVESTMENTS PROPERTY BUSINESS ASSETS INSURANCE

EXAMPLE 1 Husband is a lawyer with a big firm. Wife is a doctor. Both are early 40’s. Both earning $300, children under age 10. They own their own home. They’ve just found a lovely cottage in Muskoka and they wish to purchase.

PRINCIPAL RESIDENCE Only one at a time

EXAMPLE 2 Individual and spouse are both in their late 50’s Husband earns $500,000 per year – wife has no income Husband will have a pension at retirement in excess of $200,000 Husband had previously contributed to spousal RRSP’s Considerations: Is pension split available? Does it make sense for wife to draw down her RRSP’s now

EXAMPLE 3 Individual and Spouse both are 63. Wife continues to work, Husband is retired His pension is approximately $50,000 per year Wife’s salary is $150,000. Considerations: Wife may not want to collect CPP now, given that she’d lose almost ½. She could continue to contribute and increase her base Husband may want to start collecting. How long lived are their families.

EXAMPLE 4 Husband and wife both in their early 60’s and are still working because they enjoy their jobs. They make approximately $65,000 per year (each) They both will have generous company pensions and significant savings. Both have contributed to RRSP and each have approximately $600,000 saved. Considerations: Should the couple still be contributing to RRSP’s OAS clawback

EXAMPLE 5 Husband and wife are both 66 and own a growing and successful business with significant retained earnings. Considerations: Is the business a saleable asset? Lifetime capital gains exemption? Family situation Possible solutions Holding Company or Family Trust Trigger the capital gain Ability to dividend out retained earnings

Deemed disposition of all assets at time of death – unless…….

Gifts prior to death – no tax on the “gift”, but there may be tax to the individual if they transfer assets with gains RRSP, RIF, TFSA – designate your beneficiaries Joint Accounts - right of survivorship transfers to surviving individual (not part of estate) Securities – may have to go through probate if solely owned, but if spouse is beneficiary, there may be no capital gain implications.

OTHER PLANNING CONSIDERATIONS Donations – Consider donating investments with a capital gain to get “double dip” Properties in foreign countries – Capital gains tax in those countries, beware double taxation RIF - New RRIF rules require someone who turned 71 in 2015 to withdraw 5.28% of the Jan. 1, 2015 market value of their assets this year. Old rules were 7.38% TFSA - $10,000 for 2015 and 2016

CRA I HAVE A FEELING THIS ISN’T GOING TO BE A GOOD DAY… HI… BUS STOP