Kewcorp Financial

Regardless of your method of paying income tax, CPP, or EI, tax planning will maximize your deductions, credits and/or transfers to a partner.  Many off-the-shelf tax programs will do this for you, however, this may be after the fact. (i.e. RRSP deadline) As a rule, we have our clients making RRSP lump sum contributions long before February 28th. Working out how to get the most for your tax credits ahead of time is also very beneficial, for instance when it comes to child tax credits.  Child tax credits are not taxable, and for a single income family, a maximum payment from this program is like another income. Each situation is unique. More complex situations call for analysis well ahead of filing time. For instance, a good flow thru share program can save thousands in income tax. This type of planning should be done when sober thought dictates choices as opposed to hurried choices when deadlines loom.

The financial services industry has become a confusion of names and vague titles. Many consumers assume that the service provided by all of these titles is the same, but nothing could be further from the truth! In simple terms, a Financial Planner works for the customer. To reinforce that arrangement, a planner will use a contract for service in a holistic scenario or a letter of engagement for specific situations. The ideal planner acts a conductor and assists the customer in picking and choosing the absolute best for the situation. A Financial Advisor usually works for an institution and provides a product or service on a onetime basis. This second scenario might get confusing in the case of your bank or insurance company! Your bank or insurance representative may provide different services or products over a period of time but in the end the relationship is one concerned with what is best for the institution!  This situation can be likened to a refrigerator salesperson. You buy the fridge, the salesman gets a commission and company or institution gets the profit. Is it that simple? In a word: Yes. Obviously, the salesperson or company does not want the fridge to quit working but if it does, it goes to the warranty department which brings up a different question.  By contrast, a financial planner works with you through all situations with the ultimate goal in mind – whatever that goal is. Perhaps it is retirement, or perhaps something else. It all depends on your wants and needs!  The key for the consumer is to be able to understand that there is a difference and what that difference means to their individual situation.

This question can be answered in many ways but I think the simple answer is best. You should contribute to an RRSP   because the government is paying you to contribute! In Alberta, for every $1000.00 you contribute to your RRSP the government pays you $400.00 (rounded).  This assumes the maximum tax rate in Alberta – federal and provincial combined.

A very definite strategy should be worked out as to when, where or how much (subject to maximums).  First and foremost, RRSP contributions should be maximized. TFSA contributions are not tax deductible. Secondly, determine the purpose for the TFSA account – the use of the money should determine the type of investment. If the money is to be used as an emergency fund, a highly liquid and safe investment should be used.  Remember – all TFSA accounts are not created equal. Many people chose TFSA accounts where fees were waived to get them in, but the fine print shows that fees will be charged at some point.  Needless to say, the income earnings of many interest bearing accounts would not cover the fees. It is also interesting to note that investments should be chosen that have little chance of loss. Since the income is not taxable any losses will not be deductible – in truth a loss will be a dead loss.