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How much should I have in my emergency savings fund?

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We all got the shock of a lifetime when the pandemic hit. We quickly learned that a closet full of toilet tissue may be less important than an emergency savings fund.

In the case of the pandemic, the government of Canada stepped in with numerous programs to help soften the financial impact. But is the support enough to cover all of your short-term fixed expenses? What about emergencies that require self-financing?

Are you prepared for these financial emergencies?

Employment insurance is
n’t available in every situation. According to the Canada Revenue Agency (CRA), your loss of employment must be “of no fault of my own”. As of January 1, 2020, in most cases, if you are eligible for EI you will only receive 55% of weekly insurable earnings up to a maximum of $573 per week. Will $2,292 per month (subject to tax at your tax rate for the year in which it was received) cover your fixed expenses? Self-employed people who don’t already pay into the EI special benefit program may have no financial fallback to cover short-term expenses.

According to the Transmission Repair Cost Guide, “the average cost of transmission replacement ranges from $1800 to $3400.” an expense not covered by your vehicle accident insurance premium. Also consider that if your otherwise perfectly good used vehicle is written off, you’ll need to be prepared for the replacement cost.

During the spring of 2017, Karrianne was at home and happened to look out her front window to find the City of Winnipeg spray painting a large X on her sidewalk and yard. It turns out the main water line to her house had sprung a leak and she was responsible for repairing it. This isn’t a surprise to everyone, but it was to her. Luckily her insurance policy had provision for water and sewage lines that paid 85% of the $8,000 bill. The moral of the story? Make sure you have that coverage on your property insurance and review your policy with a critical eye for what isn’t covered.

We’re fortunate in Canada to access healthcare services at no cost. Although most healthcare is covered, depending on your province of residence you may be responsible for payment of expensive dental work, prescription drugs, air and ground ambulance, and long-term care. If your privately-held health insurance doesn’t cover these expenses, you will have to.

We’re living longer than ever. On average Canadians are celebrating 82.52 birthdays.

If you lose your job you may find yourself without any disability or life insurance coverage. The risk is that you may find yourself without protection at a time when you need it the most.


Emergency savings strategies

Emergency savings vs. debt reduction

One way to minimize the impact of an emergency is to reduce your fixed expenses. One of the expenses to monitor in particular is the percentage of your income that is being used to pay for debt. Depending on your circumstances and the type of debt you’re carrying, you’ll need a plan to consider both savings and debt.


Save it away for a rainy day

Setting aside or having access to 3 to 6 months of your regular after-tax pay to cover expenses while out of work may be the right strategy for you.

  • TFSA – invest in a tax-free savings account to benefit from investment growth and withdraw funds at any time tax-free.
  • High-Interest Savings – review your current savings account rate and consider moving to an account that pays higher interest.


Protect your income in the event of an emergency

  • Critical Illness Insurance – usually pays a lump-sum payment if you are diagnosed with one of the diseases covered by the policy. The 3 most common illnesses covered are cancer, heart attack, and stroke.
  • Disability Insurance – if you don’t already have a disability policy through your employee group benefits, it may be a good idea to look at disability insurance. These policies replace 60-80% of your income up to a maximum amount for a specified period of time.
  • Health and Dental Insurance – extended health benefits pick up where Medicare leaves off. Most policies offer a variety of additional coverage: prescription drugs, hearing aids, upgraded hospital care, medical appliances, home healthcare service, massage therapy, accidental death, and dental.
  • Long-Term Care Insurance – Canada’s health act does not cover long-term care in a personal care home. Your coverage will depend on government assistance provided by your province but you can expect to pay $900-$5,000 per month to receive care according to the Canadian Life and Health Insurance Association (CLHIA).
  • Pet Insurance – this relatively new insurance can be expensive, but if you are a pet owner, you know that veterinarian bills can be too.


Borrow against an asset

  • Cash surrender value in your permanent life Insurance policy – if you need cash quickly you may be able to borrow against the cash (not the death benefit) in your insurance policy.
  • All-in-one account – with an all-in-one banking account all of your income is deposited into one account that services all of your debt. There are no fixed mortgage payments and you can access the equity in your house for short-term cash requirements if needed. Because it’s a consolidated picture of your finances, it’s in your face that you’re in debt until you’re not!
  • Line of credit – having a line of credit set up in advance of an emergency means that you don’t have to try to apply for credit when disaster strikes.


Emergency savings calculator


What’s the verdict? Are you prepared?

Whatever the verdict, this is an important time to check in with your financial advisor. If you have a financial life plan in place you know it’s dynamic and your advisor will be ready to help you navigate change.

The Conference Board of Canada studied the impact of financial advice on the Canadian economy for The Investment Funds Institute of Canada. Investment Executive (June 25, 2020) reported some of the highlights of the study:

“Early savers — those who start saving at age 25 — who don’t use an advisor spend 3% more during their working years and have 19% less savings in retirement. A financial advisor could have boosted an early saver’s retirement savings by 55% and retirement consumption by 23%, the report found.

Late savers — those who start saving at age 35 — who don’t use an advisor were also assumed to spend 3% more during their working years, ending up with 20% less savings in retirement. The report found an advisor could have boosted a late saver’s retirement savings by 60% and retirement consumption by 25%.”

Make sure the financial decisions you take today are strategy-driven, not panic-driven, and that your actions are aligned with your vision of the future.

The information in this commentary is for informational purposes only and not meant to be personalized financial planning advice. The content has been prepared by the team at Fraser & Partners from sources believed to be accurate.


The ultimate litmus test for your financial life plan.

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Risk management is a critical factor in financial life planning. Throughout the planning process we ask a lot of “what-if” questions, but we do not recall a time over the last 30+ years that we’ve ever asked, “what if a pandemic hit?”. This is a good time to take stock and review how well your plan is stacking up against the challenges the pandemic is throwing your way. Then ask yourself, which one of the emoticons on the right best describes how your plan is performing.


How has the pandemic changed my spending?

On April 20, 2020, Statistics Canada published that “Nearly 3 in 10 Canadians report that Covid-19 affects their ability to meet financial obligations or essential needs”

  • Do you have an emergency fund in place? Did you need to use it?
  • Did you require a mortgage and/or credit card deferral arrangement?
    • The Canadian Bankers Association (CBA) published that “As of May 13, 13 CBA member banks have provided help through mortgage deferrals or skip a payment to more than 740,000 Canadians, which represents about 15% of the number of mortgages in bank portfolios.”
  • How much are you spending on groceries?
  • Are you buying more local products?
  • Have you increased your online spending?
    • A Globe and Mail article on May 7, 2020 reported that Canadian Tire has had exponential growth in online sales. “The flagship site saw average order volumes increase to more than 80,000 a day in April, compared with an average of 5,000 a day before Covid-19.”
  • Are you saving money? Have you discovered your “latté factor”?


How has my income been affected?

  • Did you lose your job or have your hours decreased?
  • Are you working from home? Will you continue working from home?
  • Has your business been affected negatively or positively?
  • Have you considered retraining for another career because of the pandemic?


Has the pandemic changed my retirement plans?

  • Are you thinking you’ll need to extend your retirement date? Or, have you decided to move ahead sooner rather than later?


How does Covid-19 affect my property value?

The Canadian Real Estate Association released statistics on May 15, 2020 that found “national home sales and new listings fell by more than half in April 2020 compared to March.”

  • Has the pandemic changed your view on where you want to live or what type of home you want to live in?
  • Have you joined the masses in tackling Do It Yourself (DIY) projects around the house?
  • Have you jumped on the ‘staycation’ bandwagon? Are you fervently planting flowers and sprucing up your yard to host social distanced barbecues and garden parties?


When will I be able to travel again? Even when it’s safe to do so, how badly do I want to travel again?

According to the government of Canada’s travel advisory “Avoid non-essential travel outside of Canada until further notice.”

  • Do you have a robust bucket list of countries you wish to travel to?
  • What would need to happen for you to resume your travel plans?


How has the pandemic affected my family?

  • If you have children, how has having them at home changed your life?
  • If you have elderly family or friends, how has isolation and lockdowns implemented at personal care homes affected you and your loved ones?


How is it affecting my physical and mental health?

Whether you started a robust new exercise program or put on a few pounds, you’re not alone. Mental health issues have been a prevalent topic for good reason. The government of Canada website dedicated an entire section to it.


Have my priorities changed as a result of Covid-19? 

Covid-19 has turned many lives upside down. A shakeup like this might have you pausing to reflect on what’s most important. Visit the values worksheet to revisit your priorities.


Now is the time to update your life plan to reflect what you’ve learned during the pandemic about yourself and your priorities. In the words of Winston Churchill “Don’t let a good crisis go to waste.”

The information in this commentary is for informational purposes only and not meant to be personalized financial planning advice. The content has been prepared by the team at Fraser & Partners from sources believed to be accurate.

10 neat things to do while self-isolating

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Bored dog on the couch

While we’re all at home working to flatten the curve we thought it would be fun to put together some things to do! We attempted to find something for everyone including kids. We hope the suggestions and links below peak your curiosity and creativity to find the best resources for you.

If you would like to share your ideas, please let us know what you find and continue adding to the list!


1. Enjoy learning about animals!

**Visit this “Spy in the Wild” tour for a chance to win a prize!**

Assiniboine Park Zoo – Creature Features on Facebook Live

Awwwwww!!! Check out these baby animals


2. Learn a new skill

Become a better photographer

Learn to code

Publish a book!

Learn to juggle!

Brush up on Microsoft Office

Negotiate like a pro

Master Karate


3. Stock up on home cooking

Canning and Preserves

Soup for Days!

Homemade Pasta

Delicious Casseroles


4. Take a virtual ride at Disney


5. Read

If your voice is becoming strained from reading to the kids, here’s a free resource. Amazon’s audible is providing free stories to listen to!


6. Work out!

know your own body and be cleared by your physician to exercise before you start, then go for it! We found a sampling of something for everyone with these fun workouts.







7. Stay in for a virtual dinner

Distant Dinner Parties by the West End Biz


8. Get crafty!


9. Take a virtual tour

Enjoy the Winnipeg Art Gallery (WAG) at home! 

Visit our very own Canadian Human Rights Museum!

Get up close and personal with world-famous art in museums around the world at Google Arts & Culture


10. Pause and RELAX

Catch up on lost sleep and take a nap or learn how to meditate.

Guided Meditations Deepak Chopra


The information in this commentary is for informational purposes only and not meant to be personalized financial planning advice. The content has been prepared by the team at Fraser & Partners from sources believed to be accurate.

COVID-19 Resources

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We’ve put together a list of helpful links from trusted resources. If you have any questions about how the pandemic could impact your financial life plan, contact us.

Stay well, stay safe, stay home – let’s flatten the curve!



  • Stop and reconsider before you click. If in doubt – DELETE
  • Watch out for gift card scams. If you want to purchase gift cards to support local, go directly to their websites.
  • When meeting online, set privacy controls, use unique/difficult passwords and lock your meetings

Canadian Centre for Cyber Security

Zoom 101: A starter guide for beginners, plus advanced tips and tricks for pros


Canadian Bankers Association

Mortgage Deferral Program

  • If you are considering deferring your mortgage payments be aware that the interest will continue to compound. As a result, your mortgage payments will be higher either when you resume payments or upon renewal at the end of the mortgage term.
  • When you are negotiating a deferral program with your financial institution, be sure to get in writing (date, time, representative’s name) that your credit rating will not be affected as a result of missed payments.

Bank of Montreal
Manulife Bank
National Bank
Scotia Bank
Royal Bank
Toronto Dominion Bank





British Columbia
New Brunswick
Nova Scotia
Prince Edward Island
Newfoundland & Labrador


The information in this commentary is for informational purposes only and not meant to be personalized financial planning advice. The content has been prepared by the team at Fraser & Partners from sources believed to be accurate.

When should you expect to receive your tax slips and receipts?

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Below are lists of the most common tax slips and receipts we encounter during tax season and time frames that you can expect to receive them.

Tax Slips

The following chart outlines the filing dates Canada Revenue Agency (CRA) requires for tax slips to be submitted.

You can expect to receive your tax slips within 5 – 10 days of the CRA filing date.


Receipts for RRSP contributions made to Aligned Capital Partners

Source: National Bank Independent Network (NBIN), custodian for Aligned Capital Partners Inc.


The information in this commentary is for informational purposes only and not meant to be personalized financial planning advice. The content has been prepared by the team at Fraser & Partners from sources believed to be accurate.

Meet the Denmarks: Can you get where you’re going without knowing where you are?

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We created the Denmark family to demonstrate financial life planning strategies without impacting the privacy of our clients. Although scenarios may be based on actual life events experienced by current clients, all information is 100% fictional.

Life had been particularly busy the last few weeks. The girls were busy with sports, dance and music lessons and April was spending a lot more time with her parents since her Dad’s heart attack last year. The reality of life for the Denmarks is family first. The only time Conrad and April had available for the next meeting was on a Saturday morning and they were thankful June could accommodate them.

June started the planning session with kudos and a question; “Well, you two are proving to be superstar clients! Thank you for providing your financial details so quickly. We have a solid baseline to start our work. How do you feel about the life aligned planning process so far?” April answered first “I can’t believe it was just 3 weeks ago that we started this process. We’ve talked more about our dreams, goals, and finances than we ever have. I feel as if we’re more in tune with what we want in life and with each other.” Conrad added, “I think my stress level is decreasing by the day. There were so many things I didn’t even realize I was worried about until it was on the table for discussion. From little things like realizing the cable bill is getting out of hand to big things like how the business could impact our family – life was starting to feel heavy.” June commented, “It sounds as if there have been some positive developments. Let’s delve deeper and discuss your values in the context of how you make financial decisions.”

This chart ranks the Denmark’s expenses according to their values.

“At the first planning session, we focused on your values. You identified that family, health, and achievement are your most important shared values. The expenses in your plan were ranked according to your values and the lifetime cost for each item. Do these rankings reflect your priorities? Is your spending aligned with your values? Financial decisions usually imply trade-offs. Is it more important to buy the new Dodge Ram this year or create memories with Jordan and Lily by taking your trip to Disney World?”

June continued “Now we’ll review your financial picture to see if you can achieve your life vision if you continue on the current path. By doing this we’ll be able to identify issues and opportunities and design your plan.”

They proceeded to review how their net worth, income-producing assets, and cash flow would change throughout their life. It was clear that their lack of attention to planning for retirement would keep them from realizing April’s dream of retiring at age 60. Unless they could depend on the business to provide their nest egg, they would need to make some changes.

The summary of their current income and expenses showed that April and Conrad have excess cash flow at the end of the month. They need to decide how to use that cash to more effectively achieve what really matters to their family.

Of more immediate concern is risk management. If either April or Conrad passed away suddenly, the family would not be able to count on a secure future.  If April became sick or was unable to run the business, the family’s security would also be at risk. The third risk that surfaced in the discussion was related to the business. June pointed out that the business was exposing them to potential personal liabilities that could be minimized through incorporation. These issues, coupled with not having estate documents in place, were jarring. The kids were at risk. Conrad and April’s sense of urgency was rising.

June remarked, “More questions than answers have emerged out of this discussion. Let’s make a list of the questions to create some ‘what if’ scenarios”. Conrad and April made quick work of listing what was most important to them:

  • What needs to be done to protect our family in the event of a death or a disability?
  • What steps need to be taken to insulate our personal wealth from the business?
  • Are we saving enough for education for Jordan and Lily?
  • Should we focus on paying down our mortgage or should we be addressing other issues first?
  • What do we need to do if we want to travel in retirement?
  • Is there anything we can do to stop paying so much income tax?

Conrad and April left the office and made their way over to The Common to debrief. Even though it was hard to acknowledge the shortcomings in their current situation, they were excited by the emerging opportunities!


The information in this commentary is for informational purposes only and not meant to be personalized financial planning advice. The content has been prepared by the team at Fraser & Partners from sources believed to be accurate.

Your year-end guide for income tax planning and preparation 2019

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Alarm clock on a white table with person in background working on preparing their 2019 taxes for year-end1. Assess your tax-year for planning issues and opportunities

a. How much tax is being withheld at source?

If no tax, or too little, was withheld at source on your RRSP and RIF/LIF withdrawals, employment insurance benefits and/or your CPP & OAS payments, you may find yourself owing additional tax. If you have a tax bill owing of at least $3,000 in the current tax year and either of the two previous years, you will be required to pay tax instalments.

b. Did you experience any significant life changes?

Be sure to make your financial planner aware of these changes – there could be additional benefits or tax implications to plan for.

c. Did you make your contributions?

Although unused contribution room can be carried forward, earlier contributions allow for more time for tax-deferred growth. This may include:

    • TFSA
    • RESP
    • RDSP

Consider setting up pre-authorized contributions in order to ensure that you are contributing to your plans.

d. Do you have taxable capital gains to offset?

If you have sold investments at a gain in your non-registered account this year, consider selling securities with accrued losses before year-end to offset these taxable capital gains. If you sell a position at a loss, the loss can be applied to offset capital gains in the current year or the previous three years. Note that if the security is repurchased within 30 days of the sale, the loss cannot be applied.


2. Collect all relevant tax receipts

You may be missing some receipts or have some that are not compliant with CRA requirements. Starting the process of collecting your receipts now allows you to follow-up on any missing information before you file your taxes.

Are you self-employed?

If yes, keep reading, if no skip to “New in 2019”

If you are self-employed, you must be aware of your tax obligations. In addition to the information above, you may also require:

  • Income and expenses for the year: If you do not have accounting software you can use a simple spreadsheet or, if your needs are more complex, you might want to consider an accounting program. We are affiliates of XERO, a small business accounting software. If you would like to discuss this, contact us.
  • Mileage log: If you deduct vehicle expenses related to your business, you are required to keep a mileage log and all relevant receipts.
  • Vehicle expense receipts
    • Gas
    • Maintenance and repairs
    • Parking
    • Insurance
    • License and registration fees
    • Eligible interest charges paid on your vehicle loan
    • Eligible leasing costs
  • Home Office Expenses: If you are a home-based business, you may be able to write off a portion of your home expenses. This may include rent, mortgage interest, property taxes, utilities, and home insurance.
  • Capital Cost Allowance (CCA): Consider if you would like to claim your CCA deduction for the year or carry-forward for higher income years. If you disposed of capital property this year, you may have to report your recapture of CCA as income or be eligible to deduct your terminal loss.

New in 2019:

  • The annual TFSA contribution limit was increased $5,500 in 2018 to $6,000 in 2019
  • The Home Buyers’ Plan limit has been increased to $35,000 starting March 19th, 2019
  • The First-Time Home Buyer Incentive was introduced, allowing first-time home buyers who meet the income threshold requirements to borrow 5-10% of the purchase price from CMHC.
  • 2019 changes for Canadian Controlled Private Companies (CCPC) include:
    • Manitoba has increased the small business corporate tax threshold from $450,000 to $500,000.
    • The small business corporate tax rate decreased from 10% to 9%.
    • If passive income earned is >$50,000, the small business corporate tax threshold begins to reduce. At $150,000 of passive income, the threshold is completely eliminated, and no active income is eligible for the reduced small business tax rates.


The information in this commentary is for informational purposes only and not meant to be personalized financial planning advice. The content has been prepared by the team at Fraser & Partners from sources believed to be accurate.

Meet the Denmarks: Why is it important to gather detailed and accurate financial data?

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We created the Denmark family to demonstrate financial life planning strategies without impacting the privacy of our clients. Although scenarios may be based on actual life events experienced by current clients, all information is 100% fictional.

Shortly after their first meeting with Fraser & Partners, the Denmarks received a follow-up email that included a financial questionnaire to collect information about their personal household and April’s business. The email provided secure options for transferring confidential information and documents back to Fraser & Partners. As a computer systems analyst, Conrad appreciated the attention to cyber-security. He knew all too well that regular email is not a safe form of confidential communication.

As manager of the household finances, Conrad was tasked with filling in the questionnaire. It was thorough and he was prepared!

Annual Income:

Annual Lifestyle Expenses:

Annual Family Expenses:

April and Conrad built a new home in 2003 when housing prices were low. The cost at that time was $200,000 and they were able to make a down payment of $25,000 using a combination of wedding gifts and a $10,000 gift from April’s grandparents. At first, it was hard to pay both the mortgage and their student loans, but they persevered. As Conrad filled in their monthly mortgage payment, he thought to himself “we have the capacity to pay off this debt much more quickly now. If only the mortgage prepayment options were more in line with what we could afford to pay…” The mortgage is up for renewal in a couple of months, so this was a topic he wanted on the table for planning.

Primary Home Owned Jointly Conrad 50% / April 50%


Annual Home Expenses

Conrad’s parents had purchased a family cottage back in the 70’s. They wanted their kids to grow up at the lake enjoying all the perks of lake life. Although his parents hadn’t transferred the title to the boys yet, they were thinking about it and Conrad knew this would soon be an asset for their family. He and his brother Ben were already splitting the property taxes and expenses.

Family Cottage – Ownership Conrad’s Parents

Family Cottage – Expenses Conrad 50% / Ben 50%             

Conrad liked to own a truck – you never know when you’re going to need to haul something, especially out at the lake. April, on the other hand, wanted something that was environmentally friendly and practical for chauffeuring the kids around town.


Once Conrad completed entering the information, he continued to collect all the documents as requested:

  • Pay Stubs
  • Banking statements
  • Investment statements
  • Most recent tax returns and Notices of Assessment
  • Mortgage document and most recent year-end statement
  • Household and auto insurance
  • Loan document and most recent year-end statement
  • All insurance policies
  • Employee benefit booklet
  • Will, Power of Attorney for Property and Power of Attorney for Health Care (Health Care Directive)
  • Balance Sheets & Income Statements for the business

Conrad felt bad as they had no Wills to provide. This had been on their list for a long time and they just never seemed to get around to it. Once April had prepared the information on her business, they submitted it all through the secure portal. Shortly after, the Denmarks received confirmation from Fraser & Partners that the documents had been received and in order. The email also included some options to meet online and verify the information. The Denmarks were excited to see how everything would look.

The Online Meeting

As April rushed home from visiting her parents, she was grateful that the next meeting was online as they both had busy schedules. Conrad pulled out the laptop and clicked on the online meeting invitation.  Seconds later, they heard June’s voice over their speaker and could see her screen on theirs. They stepped through the numbers and it wasn’t long before April noticed something was amiss. “Conrad, you forgot to mention our family gym membership. That adds another $2,000 a year.” Conrad paused for a second, “you’re right. I’m glad we gave this a second look.”

After a few other changes, Conrad and April were confident that the data gathering process had accurately captured their current situation. They could see how the work they had put into it would pay off. They looked forward to analyzing the impact of the numbers in relation to the vision they had carved out in the first planning session.

The next installment of The Denmarks will review their current financial picture to uncover planning issues and opportunities.


The information in this commentary is for informational purposes only and not meant to be personalized financial planning advice. The content has been prepared by the team at Fraser & Partners from sources believed to be accurate.

CRA wants to know more about your foreign property

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Year-end is a great time to start organizing your tax information. Refer to your Fraser & Partners ‘Go-To Tax Envelope with the general income tax checklist on the front that identifies paperwork you’ll need to gather for submitting your taxes. Or, click here to visit the income tax checklist on our website.

The T1135 is a form that is required by CRA for reporting on foreign property. The form is meant to crack down on taxpayers who are avoiding or under reporting their offshore income. It is a supplement to the T3 (Statement of Trust Income Allocations and Designations) and T5 (Statement of Investment Income) slips.

Are you required to submit a T1135?

The form applies to Canadians who own foreign property with a total cost amount of more than $100,000 at any time in a given year including:

  • foreign bank accounts, shares of foreign companies other than foreign affiliates, shares of Canadian corporations held outside Canada;
  • debts owed by non-residents (including government and corporate bonds), debentures, mortgages and notes receivable;
  • interests in certain non-resident trusts;
  • interests or units in offshore investment funds; if you have Canadian mutual or segregated funds investing outside of Canada on your behalf, in most cases the tax reporting is done by the investment firm;
  • real estate situated outside Canada, other than personal-use property or property used in business; rental property needs to be reported;
  • and other tangible and intangible property such as patents and copyrights situated or deposited outside Canada.

What information is collected on the T1135?

  • Names of specific foreign (financial services) institutions
  • Countries where offshore assets are located
  • Foreign income earned on those assets
  • Maximum cost amount of those assets during the year
  • Month-end values of your holdings for tax reporting

Don’t forget to include this information when you package your tax materials.



When is the best time to take CPP?

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Piggy bank with word CPP. Canada Pension Plan concept.

Without knowing how long we will live, there’s really no right or wrong answer on the best time to start taking Canada Pension Plan (CPP) benefits; there is no one-size-fits-all solution. What worked for your neighbour or your co-worker may not be the best decision for you. Canadians are fortunate to have the flexibility of selecting their CPP start date; but with 120 months to choose from between ages 60 and 70, that decision can be daunting. There are a variety of factors to consider and discuss with your financial planner before applying for CPP.

Here are 4 factors to take into consideration before you make the decision

1. How CPP payments are calculated

The trade-off for receiving CPP early is that your benefits will be reduced. The reduction for collecting your CPP benefits before your 65th birthday is 0.6% per month or 7.2% per year. If you begin receiving CPP benefits at age 60, you’re looking at a permanent reduction of 36%.

Those who delay their CPP past age 65 are rewarded for their decision to wait in the form of an increased pension. The increase is 0.7% per month for every month that you collect CPP benefits after your 65th birthday; totaling 8.4% per year. If you hold off on receiving CPP until age 70, the permanent increase is 42%

If you are unsure of the estimated amount of CPP you will receive, you can request a statement through your My Service Canada Account.

2. How much CPP you will receive at different ages

As of November 5, 2019, the average monthly amount received by new beneficiaries was $664.41 at age 65. Let’s compare how this amount would look if CPP were taken at age 60, 65, or 70:

Comparison of CPP payments taken at ages 60, 65, and 70

You may have heard reference to the breakeven age – the age at which the benefits received would be equal when taken at different ages. Electing to take CPP early means that you receive more payments, but at a lower amount throughout your lifetime. If you choose to begin receiving the reduced CPP payments at age 60, by age 74 you will have received the same accumulated benefits as you would have had you waited until age 65. This is the breakeven age. After this point, it is more beneficial to have taken CPP later. Simply put, if you expect to live past age 74, your accumulated benefits will be higher if you wait until age 65. The breakeven age for taking your CPP at age 65 compared to age 70 is approximately 82 years old.

Bearing in mind only this math, it’s hard to argue against delaying CPP until age 70. The payment at age 70 is a 122% increase from the payment at age 60. By age 90, you’ve received over $75,000 more than someone who began receiving CPP benefits at age 60. So why do more Canadians take CPP at 60 than at 70?

3. Your specific circumstances 

Although the math is quite convincing, there’s more to the decision than the numbers.

One of the biggest uncertainties surrounding when to take CPP is life expectancy. As of 2017, the life expectancy for Canadians at age 65 is 20.8 years. Delaying your pension and receiving an increased benefit into your eighties is enticing but that’s assuming you live a long, healthy life.  And although CPP does offer a survivor benefit for the surviving spouse, the benefit is quite modest with an average CPP Survivor’s Pension for those 65 and older of $302.01 per month as of November 5, 2019. If you are healthy and anticipate living into your eighties, delaying your CPP will maximize your lifetime benefits.  But for many Canadians, receiving a reduced pension is a fair trade-off for the peace of mind of receiving benefits

Another factor to consider is your cash flow needs in retirement. Perhaps you plan on traveling more in the early years of retirement or want to enjoy yourself while you’re young and healthy and find yourself needing more cash flow in earlier years. When you contemplate taking your CPP, it is important to have a clear picture of your retirement income and expenses and determine if gaps exist. Without adequate sources of retirement income, those delaying may find themselves rapidly depleting their retirement savings. If receiving CPP is necessary for you to meet your current spending needs, you may have no choice but to apply for early CPP.

There are many factors that may influence your decision on when to take CPP, including your marital status.  This decision is not isolated but made in the context of your life plan.

4. Tax implications 

If the success of your retirement cash flow plan is not dependent on receiving CPP, but you plan to take it early and invest it for peace of mind, be sure to consider the trade-offs. CPP income is taxable so you will be investing after-tax income. Unless you have contribution room available in your registered accounts, the income and growth earned on the investment will be taxable as well. This, coupled with investment fees charged, makes it difficult to beat the 7.2% you could earn annually by delaying another year before age 65.

Summing it all up

Chart summing up considerations for when to take CPP

Most of us contribute to the Canada Pension Plan (CPP) our entire working career, so it’s no surprise that the decision on when to begin receiving CPP benefits is one of the more difficult decisions that we make regarding our retirement.  Although the standard age to start CPP is 65, benefits can be received as early as age 60 and as late as age 70; allowing for a 10-year span to choose a start date. And once that decision is made, you are locked in for life. We take all these factors into consideration in relation to your financial life plan and can look at the bottom line in terms of dollars and cents to help you determine when to start. When you’re ready, you can apply for CPP benefits online.


The information in this commentary is for informational purposes only and not meant to be personalized financial planning advice. The content has been prepared by the team at Fraser & Partners from sources believed to be accurate.