Answers Archive

Re: How to handle a clause in my father’s will?

Under the rule in Saunders vs. Vautier, you may terminate a trust that goes against the wishes of the settlor or trustee. For this rule to apply, all the beneficiaries of the trust must agree and have the capabilities (i.e., be mentally competent and are 18 and over). The interests of the beneficiaries must also … Continue reading

Re: Creating a trust to help allocate University funds

Hi, it sounds like you want to set up an income-splitting trust. In this type of trust, you need to identify your non-minor children as the income beneficiaries and your husband as the capital beneficiary. When preparing the income tax return for this trust, it is important to identify the income and capital beneficiaries and … Continue reading

Re: Should I withdraw from my RRSP, or use an LLP?

Hello There are many variables, some of which you cannot know right now (e.g., will you get a government job with a pension and not need RRSP room?).If you are young, it is usually more tax efficient to us the LLP. If you take out the money as income, you lose that contribution room permanently. … Continue reading

Re: Buying a home?

Hello How you should invest depends on a few factors. The first is your timeline. You do mention five years, but how solid is this deadline? The next is your market, and how badly you want a house. If you are in Vancouver, you may choose to rent instead of buying, this would push timeline … Continue reading

Re: Receiving commission in Canada from the USA

The short answer to your question is as follows: 1) Please prepare a T4A slip for each independent contractor. This is similar to the 1099 slip in the US for independent contractors. One copy of the slip is also provided to the CRA (Canada Revenue Agency) along with a summary report. 2) You should keep … Continue reading

TFSA plus a savings account?

I would recommend that you max out your TFSA at $31,000 before you start to contribute to your savings account. You should use your TFSA to save for long term investments (retirement), your savings account for medium term investments (car, vacation) and your chequing account for everyday purchases. Also, make sure you never carry over … Continue reading

Re: Contributing between RRSP and TFSA?

Hello. I would recommend you max out your TFSA first, because all the earnings and growth are tax-free. RRSP’s are tax-deferred. One thing to consider is your investment savings rate, and allocation. If you plan to save aggressively, the 19k TFSA room will be used up and future savings will default to RRSP. In this … Continue reading

Re: Renting to family

I will begin by saying that if you have rental income, by law it must be declared. As far as saving on taxes, the first issue is that the principal portion of the mortgage payment is not deductible. Only the interest portion is. The second is that any rental losses from renting a property to … Continue reading

Re: Borrowing to invest?

Hello. $80 per month for 10 years is $9600 in interest losses, and around $8k after the tax break. After your capital gains tax, you will basically have broken even on this 10-year investment. The investments have returned 4.5% over the last 10 years, and you have paid around 4% interest. Because of this, I … Continue reading

Re: Can I open multiple TFSA’s?

You can have as many TFSA’s as you like, but their contribution limit is shared. To do what you are describing without over contributing, you would have to make a transfer from one account to another. Contact tangerine (the receiving brokerage), and they will have the transfer forms. I would keep your e-series TFSA, as … Continue reading

Re: What is the best option for obtaining a new mortgage?

Hello, Number two is the cleaner option overall. Option one might get you better results in a hot market, as you are buying with all cash. Also, with option one you can get everything lined up in advance. I would prefer number two, but one might be more pragmatic. You could also split the difference, … Continue reading

Re: Emergency fund in TFSA?

Hello, I do not believe you should keep your emergency fund in your TFSA. The whole point of the TFSA is that you do not pay capital gains tax on investments; you should not have your emergency fund invested. All it is doing is taking up contribution room in your TFSA, room that could be … Continue reading

Do I declare money recieved as rent from a relative?

Hello, According to the CRA website, there are drawbacks to renting to a relative. If you a renting below market value, you do not report this amount in your income. Therefore, you cannot claim expenses. This is considered cost sharing, and is ineligible for rental losses. If you are renting at fair market value, you … Continue reading

Re: Going back to school?

Hello, Tuition fees are not deductible. They give rise to a tax credit, and must be used to the maximum extent possible against earned income. For example, you may not choose to defer claiming tuition until a later year. Ordinarily, you would only be able to claim fully deductible childcare expense against the lower earning … Continue reading

Re: Should I Cash out My RRSP’s?

Hello, First, you make want to speak to a realtor. It is often simpler to find out while the house is not selling, rather than take the drastic step of liquidating your RRSP. If you do withdraw from your RRSP, the money will get added to your regular income. You will lose your RRSP contribution … Continue reading

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