Category Archives: Retirement Planning

Terry Broaders

Weekly Update August 19 2014


We Had It All, Just Like Bogie and Bacall” -Bertie Higgins

TSX Ends Little Changed

North American markets came under pressure from a worsening in the Ukraine-Russia crisis. On Friday the S&P/TSX composite index climbed 13.06 points to 15,304.24. But the Dow Jones industrials closed down 50.67 points to 16,662.91, while the Nasdaq gained 11.93 points to 4,464.93 and the S&P 500 index slipped 0.12 of a point to 1,955.06. Markets backed off after NATO said that Russian military vehicles crossed into Ukraine during the night and the Ukrainian president said most of the force was quickly destroyed by his troops. Russia denied any incursion. The report persuaded traders to seek safety but the Canadian dollar was higher amid strong revised jobs data. The loonie rose 0.12 of a cent to 91.84 cents US as Statistics Canada said the economy added 42,000 positions last month. The agency said earlier this week that it had discovered an error in its jobs data originally released last Friday showing the economy had added a meagre 200 jobs.


CRA Cracks Down On Biz Owners “Zapping” Sales Records

The consequences are about to get pricey for businesses using technology to avoid paying all of their taxes. After an eight-month awareness campaign about electronic suppression of sales software, new monetary penalties and criminal offences under the Excise Tax will come into effect in September. Revenue Minister Kerry-Lynne Findlay said that small and medium-sized businesses are the economic drivers of Canada. She says the underground economy does give an unfair advantage to those who show a lack of respect for Canada’s tax laws. ESS software or “zapper” software selectively deletes or changes sales transactions in point-of sale-systems like cash registers and business accounting systems. That means there is no record of the original transaction and the business is able to under-report their revenue and avoid paying the full share of their GST, HST and income taxes.


Market Update as of August 15 2014

The TSX closed at 15304, up 108 points or 0.71% over the past week. YTD the TSX is up 12.35%.

The DOW closed at 16663, up 109 points or 0.66% over the past week. YTD the DOW is up 0.52%.

The S&P closed at 1955, up 23 points or 1.19% over the past week. YTD the S&P is up 5.79%.

The Nasdaq closed at 4465, up 94 points or 2.15% over the past week. YTD the Nasdaq is up 6.89%.

Gold closed at 1306, down -6.00 points or -0.46% over the past week. YTD gold is up 8.47%.

Oil closed at 97.02, down -0.57 points or -0.58% over the past week. YTD oil is down -1.61%.

The USD/CAD closed at 1.089552, down -0.0078 points or -0.71% over the past week. YTD the USD/CAD is up 2.48%.


Sources: Bloomberg; Investment Executive;

Odette Morin

The easy way to live on less so you can live on more.

retirement paycheque

Previous blogs addressed the fact that pension plans are underfunded and our Old Age Security is in jeopardy. Worse still, chances of winning a lottery are 1 in 13.9 million. So much for that back-up plan!

But there’s good news.

Most Canadians already make annual contributions to RRSPs. Plus, we earn a sufficient enough income to make those contributions while still maintaining a good lifestyle.

We’re accustomed to putting away money for food and shelter. So my suggestion is to add a bit more to that routine. It isn’t a dramatic shift. Yet, ultimately, you can end up with an impressive retirement paycheque.

Generally, you need about 70% to 85% of your current income to enjoy a comfortable future (conditional on life expectancy and whether your mortgage and debts are paid off). So, depending how far you are from retirement, saving just 10% – 15% of your income could help you reach your goals in time.

According to Stats Canada, the average Canadian household spends nearly $4,000 on recreation, not to mention about $1,500 on tobacco and alcohol. Let’s be honest, cutting back here and there is very doable.

Besides, imagine all the recreation you can enjoy when you have free time and big, fat retirement paycheque. Come in for a consultation and we’ll help you get there.

See Stats Canada details here

Odette Morin

New UK Pension Rules which will may affect your QROPS transfer

Major changes for UK pensions were announced in this week’s yesterday’s UK budget.  Here is the link to HMRC.

Our UK associate, Paul Bradley, prepared an outlined of the changes and what they mean for you:

1). The government has announced the retirement age, for accessing private pension savings without a tax charge, will rise from 55 to 57, to reflect increases to the state pension age, although not until 2028.

This is particularly relevant to people transferring pensions to Canada as their is a link between the UK and Canada and withdrawals are reported back to the UK.

If withdrawals are made which would not be allowed in the UK (I.e. Income before age 57 from 2028) AND the person making the withdrawals has been outside the UK less than 5 complete tax years there are UK tax penalties which could be applied.

2) “Capped drawdown limit increased to 150% of GAD”

It sounds like jargon, but in the UK the income you can draw from a pension is restricted by the Government. This simply means the limits are being lifted.

In this budget the Chancellor has relaxed the rules, but they remain more restricting than Canada.

Furthermore you would need to consider currency risk (the impact of a falling GBP vs the CAD) and the interplay of taxes between Canada and the UK; it’s all quite complicated!

2) The government has increased the size of pot that can be cashed in at retirement to £30,000 from the current £18,000.

The government currently allows people over 60 years old with total defined contribution pension savings worth less than £18,000 to take their entire pots as cash. This is known as trivial commutation.

The Treasury said: ‘From 27 March 2014, the government will allow people with defined contribution pension wealth more flexibility to access their savings by increasing the total pension wealth that people can have before they are no longer entitled to receive lump sums under trivial commutation rules to £30,000, subject to their pension scheme rules.’

This change is relevant to people who are over 60 with £30,000 or less in UK pensions (combined). If a pension is taken this way in the UK, 75% of the fund is subject to tax.

3. The government has abolished the 55% tax on pension withdrawals at retirement, meaning no one will have to buy an annuity.

From April 2015 people will be able to access pension savings as they wish at the point of retirement, subject to their marginal rate of income tax, rather than the current 55% charge for full withdrawal.

What you should do

If any of these changes are relevant to you, or your friends and family get in touch for a free consultation to help you make an informed choice.

We are the only advisors with expertise (Chartered Financial Planner) in the UK and expertise (CFP) in Canada.



Odette Morin
Terry Broaders

RRSP – Consider A Qualified Beneficiary

When you die, the taxman treats the fair market value of your RRSP as income, which is subject to tax at your marginal tax rate. That means that if you have $200,000 in your RRSP and you die Canada Revenue considers this $200,000 to be income in the year you die and will send your estate a tax bill of approximately $70,000 to $80,000.  Your estate can avoid that tax bill if you pick the right beneficiary. Certain beneficiaries, known as qualified beneficiaries will be able to receive the funds from your RRSP without anyone paying tax upon your death. Having a qualified beneficiary for your RRSP means you can avoid a big tax bill on the value of your RRSP when you die. Who is a qualified beneficiary?  It can be your spouse; common-law partner; financially dependent child or grandchild who is dependent because of a physical or mental infirmity or a financially dependent child or grandchild under the age of 18.

A qualified beneficiary can have the value of the deceased’s RRSP transferred directly to the qualified beneficiary’s own RRSP where the money can remain tax sheltered until it is eventually withdrawn. In the case of a minor child under age 18 the funds can be placed in a special annuity which would pay the funds out evenly over the years remaining before the child turns 18. This lowers the eventual tax bill by having the income spread out over several years at a lower rate rather than being hit all in one year at a higher rate. We should add that one should always seek professional advice before designating a minor child as a beneficiary.

Choose the right beneficiary and save your estate a lot of tax dollars.

RRSP Deadline is March 3, 2014

Odette Morin