Financial Planning Updates
November 22, 2021 – Sun Life Policy Holders can now Switch to Independent Agents
Effective October 1, 2021, Sun Life Financial Inc. insurance policyholders may now request an independent advisor or Agent of Record (AOR). This provides greater flexibility to clients wanting to consolidate all of their financial resources with an independent advisor outside of the Sun Life organization. Commissions will remain with the Sun LIfe advisor. If at some point the policy is converted, the commission split is 90% to the AOR and 10% to the Sun Life advisor. This change will make it easier for AORs to access insurance information and help clients manage their insurance products through Sun Life. It is an indication of how the industry is moving to more independent channels in an effort to provide more flexibility to clients.
November 17, 2021 – TFSA Contribution Limit for 2022 Confirmed
The indexation adjustment for personal income tax and benefit amounts has been updated. The contribution amount allowed for 2022 is $6,000. The lifetime amount that can be contributed to your TFSA as of 2022 is $81,500.
There is no allowable overcontribution amount to your TFSA. Any overcontribution is subject to a 1% monthly penalty tax until you have either withdrawn the excess or until the additional room becomes available in the new year. If you are unsure of your contribution room, you can check online using CRA’s My Account. You can create an account or log in using your sign-in information for one of their sign-in partners.
November 1, 2021 – CPP Maximum Pensionable Earnings for 2022 Announced
The Canada Revenue Agency (CRA) announced that the maximum pensionable earnings for CPP for 2022 will be $64,900, an increase from the 2021 amount of $61,600. Contributors will not be permitted to make additional contributions on income over $64,900.
2022 basic exemption rate: $3,500
2022 employee and employer contribution rate for CPP: 5.7%
October 1, 2021 – CRA Publishes Q4 Prescribed Interest Rates
If you are in arrears to the government, for example, late paying your income tax instalment, you will be charged interest. Each quarter CRA calculates and publishes prescribed interest rates. Visit Interest rates for the fourth calendar quarter – Canada.ca for the Q4 rates.
July 19, 2021 – Changes to Intergenerational Transfer of Family Business now Law
The Department of Finance confirmed that new tax rules outlined in Bill C-208 are now law. Bill C-208 is an act to make provisions for small businesses, family farms, or fishing corporations to transfer shares to children or grandchildren without the current adverse tax consequences. These changes should make it easier and more tax-efficient for families to transfer their business to the next generation.
June 25, 2021 – CRA Publishes Q3 Prescribed Interest Rates
If you are in arrears to the government, for example, late paying your income tax instalment, you will be charged interest. Each quarter CRA calculates and publishes prescribed interest rates. Visit Interest rates for the third calendar quarter – Canada.ca for the Q3 rates.
April 20, 2021 – Budget 2021: Increases to OAS
In August of 2021, OAS pensioners who are over the age of 75 (as of June 2021) will receive a one-time payment of $500. Furthermore, the government is proposing a 10% increase effective July 2022. This increase would provide an additional $766 in 2022 and would then be indexed to inflation in subsequent years.
April 19, 2021 – Budget 2021: Businesses to Continue Receiving Covid Support
To continue supporting hard-hit businesses, the budget proposes extending the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy, and the Lockdown Support until September 2021. The plan is to gradually reduce rates from July to September.
April 19, 2021 – Budget 2021: You Might Want to Buy a Luxury Vehicle Before the End of 2021
Positioned to take effect January 1, 2022, the government is proposing a tax on luxury vehicles and aircraft valued at $100,000 or more and boats valued at $250,000 or more. The tax will be 10% of the purchase price or 20% on the amount over the threshold, whichever amount is less.
April 19, 2021 – Budget 2021: Improved Access to the Disability Tax Credit (DTC)
If you or someone you support suffers from a severe, prolonged impairment, the Government of Canada acknowledges you will be impacted by additional costs and may grant eligibility for a tax credit to reduce the amount of tax you pay. This credit is called the Disability Tax Credit (DTC). Eligibility for the DTC can also provide access to other federal, provincial/territorial programs such as the Registered Disability Savings Plan, the Working Income Tax Benefit, and the Child Disability Benefit. Read our blog on the Disability Tax Credit.
The 2021 budget proposes expanded access to the DTC for individuals with compromised mental functions for everyday life. In addition to the current mental functions covered (memory, adaptive functioning, problem-solving, goal-setting, and judgment) the new proposal includes attention, concentration, perception of reality, regulation of behaviour and emotions, and verbal and non-verbal comprehension.
Furthermore, the budget takes into consideration time spent on activities related to life-sustaining therapy including:
- time spent on monitoring diet and physical exertion to adjust medication dosage on a daily basis
- medical appointments for therapy or to adjust medication
- medical recuperation to recover from therapy
April 19, 2021 – Budget 2021: Postdoctoral Fellowship Income to Add Contribution Room to RRSP
In the budget for 2021, the government of Canada announced postdoctoral fellowship income will be included in “earned income” which will translate into more RRSP contribution room. This includes income earned during 2021 and beyond. Income earned between 2011-2020 may also be claimed if requested in writing.
November 30, 2020 – New Rules for Employee Stock Options
The Liberal government announced a $200,000 limit on employee stock options taxed at a preferential capital gains rate effective July 1, 2021. Canadian-controlled private corporations (CCPCs) and non-CCPC employers with annual gross revenues of $500 million or less are excluded in an effort to give smaller companies more flexibility in enticing top talent. Read the full article at Employee stock option changes to take effect July 1 | Investment Executive
November 30, 2020 – Feds Announce Changes to RDSP
The government confirmed in the Fall Economic Statement, that it is making provisions for people who experience “episodic disabilities”. As of January 1, 2021, when a beneficiary becomes ineligible to receive the Disability Tax Credit (DTC) the Registered Disability Savings Plan (RDSP) will be able to remain open. Under current legislation, when a beneficiary is no longer eligible for the DTC, all contributions into the plan must cease. Generally, the RDSP must be closed the following calendar year (the first full year the beneficiary is not eligible for the DTC). For more details read Government moves ahead with relief for RDSP holders who lose DTC eligibility | Investment Executive
November 30, 2020 – The Government of Canada Announces $400 Write-off for Working From Home
Canadians working from home due to the pandemic will be able to claim expenses up to $400 without having to track or submit any expenses. The government’s goal is to simplify the tax filing process. Taxpayers may still opt to claim under the existing rules related to home office expenses, which requires the employer to sign Form T2200: Declaration of Conditions of Employment to prove the employee is working from home. Feds to allow up to $400 for home office expenses | Investment Executive
November 30, 2020 – Federal Government Releases Fall Economic Statement 2020
In lieu of a full budget, the Government of Canada released a Fall Economic statement outlining how Canadians would be supported throughout the ongoing pandemic and what the recovery plan will look like. Click here to read the full statement.
November 20, 2020 – CRA Allows for Tax-Free Home Office Reimbursement
November 20, 2020 – The Government of Canada Officially Releases 2021 TFSA Contribution Rate and New Tax Brackets
For the year 2021, you can contribute another $6,000 to your TFSA. In addition to the $6,000, you can also contribute any unused room you currently have plus whatever you withdrew during the previous year. Overcontributions are subject to a 1% monthly penalty tax until you have either withdrawn the excess or until the additional room becomes available in the new year. If you are unsure of your contribution room, you can check online using CRA’s My Account.
There were no changes to Federal tax brackets with the exception of income over $151,978 up to $216,511, which will be taxed at 29.32% in 2021 as opposed to 29.22% in 2020. Visit Tax Tips for more information.
September 27, 2020 – The Government of Canada Transitions from CERB to Employment Insurance
As of September 27, 2020, the Canada Emergency Response Benefit provided by the government of Canada is discontinued. Changes to EI benefits have been made and are in effect for 1 year. Qualified recipients will have access to these benefits in place of CERB. Visit the Government of Canada for more information.
September 3, 2020 – CRA Increases Rates for Meal Claims
Employees travelling or working overtime can now charge more (from $17 to $23) for meals without the claim being added to their income on their T4s. This change is retroactive to January 1, 2020. Visit the Government of Canada for more information
July 27, 2020 – CRA Extends Income Tax Filing Deadline to September 30, 2020
The CRA announced they have “further extended the payment due date for current year individual income tax returns, as well as for instalment payments, from September 1, 2020, to September 30, 2020. Penalties and interest will not be charged if payments are made and returns are filed by the extended deadline of September 30, 2020.”
July 10, 2020 – Genetic Non-Discrimination Law Protects Insurance Applicants
The Supreme Court of Canada voted to uphold the act that forbids genetic testing as a requirement for purchasing insurance and other products. People can have genetic testing done without the worry of being declined by an insurer. Penalties for non-compliance can be up to a million dollars and 5 years in prison. Read the full story on CBC News
July 8, 2020 – Research Identifies Money Continues to Cause the Most Stress Even in the Face of a Pandemic
FP Canada released the results of a research project called the Financial Stress Survey. Half of those surveyed (49%) reported they were losing sleep over their finances. This was relatively unchanged from the results of previous surveys prior to the pandemic. When respondents were asked, “What causes you the most stress?”, 38% said money ahead of personal health at 25%. The findings suggest that money worries continue to be the leading source of stress.
July 2, 2020 – Planning Software Heightens Functionality for Self-Employed Individuals and Corporations
Our planning software is continually adding features and functionality. The update as of July 2, 2020, includes additional tools to model the self-employed expenses and corporate details for more detailed accounting in the system.
July 1, 2020 – The Manitoba Government Announces There Be No Probate Fees on an Estate
Beginning on July 1, 2020, applications made to Manitoba’s Court of Queen’s Bench for the probate of an estate of a deceased person will no longer require the payment of any probate fees.
June 23, 2020 – BC Proposes Allowing Electronic Drafting and Witnessing of Wills
Due to the pandemic, the BC government has been allowing electronic drafting and witnessing of Wills. The proposed legislation seeks to allow drafted, signed, and witnessed Wills to be accepted by the courts. Read the full story on Investment Executive.
April 1, 2020 – FP Canada Reports on a Landmark Year
FP Canada is the organization that works in the best interests of Canadians to set standards and educate financial planners to maintain integrity in the financial planning profession. in its 2019/2020 Annual Report, FP Canada reported significant growth, a 216% increase in certifications over the previous year. The organization reports there are currently 16,948 Certified Financial Planners in Canada.
February 18, 2020 – Minister Morneau Announces Changes to the Benchmark Rate for Qualifying Insured Mortgages
Lenders use a mortgage ‘stress-test’ to ensure that homeowners will continue to be able to afford their homes should interest rates rise, in the event of a job loss, or some unforeseen event taking place (such as a pandemic). The formula used is based upon the benchmark rate set by the government of Canada. Minister Morneau announced the new benchmark rate will be the average 5-year fixed term mortgage rate posted by the largest Canadian banks plus 2%.
March 21, 2019 – TFSA Owners to Be Liable for Tax Owing on Day Trading Income Made Within Their Accounts
As reported in Investment Executive “Under current legislation, if a tax liability arises from the carrying on of a business in a TFSA, the TFSA itself and the financial institution that issued that TFSA are “joint and severally” liable for the tax owing, but not the account holder.”
Financial institutions raised concerns with this legislation, arguing it leaves them on the hook to pay taxes owed on a TFSA account when the tax liability exceeds the amount in the account or when the account has been moved. Budget 2019 addressed this concern proposing the joint and several liability be held up for only the amount held within the TFSA. The proposed changes would have any amount owing over and above the amount in the TFSA be the liability of the account holder. The carrying on of a business within a TFSA refers to carrying on excessive trading activity within a TFSA as defined by specific factors that CRA investigates.
March 19, 2019 – Federal Government Permits Deferral on Withdrawal of Some Registered Savings to Age 85
Historically, Registered Retirement Income Funds (RRIFs) require minimum withdrawals to begin at age 71. If the budget is approved, Seniors will be able to purchase an advanced life deferred annuity (ALDA) to defer withdrawal of a portion of their savings to age 85. There are several conditions including: lifetime limit of 25% of the value of any registered plan and a lifetime limit from all qualifying plans of $150,000 indexed to inflation and rounded to the nearest $10,000.
The amount in the ALDA will not be included in the calculation of the minimum RRIF withdrawal. ALDAs will be available in the 2020 tax year under the following plans: RRSP, RRIF, deferred profit sharing plan, pooled registered pension plan and definied contribution pension plan.
March 19, 2019 – New First-Time Home Buyer Incentive Announced by the Government of Canada
When purchasing a home in Canada with less than a 20% down payment, loan insurance on the mortgage is required to protect the lender. The cost of insurance is passed on to the home owner usually as part of the mortgage payment.
Minimum down payments are based on the cost of the house as follows:
- the minimum for a house that costs $500,000 or less is 5% ($25,000)
- for a house that costs more than $500,000 it is 5% on the first $500,000 then 10% on the rest. For example: the minimum down payment on a house that costs $700,000 would be $500,000 x .05 ($25,000) + $200,000 x .10 ($20,000) for a total of $45,000
- CMHC mortgage insurance is not available on a house that costs over $1,000,000
The Government of Canada’s Budget 2019 announced a ‘First-Time Home Buyer Incentive’. The incentive allows for the first-time homeowner, who has the minimum down payment, to apply for a portion of their mortgage to be financed by a shared equity loan through Canada Mortgage and Housing Corporation (CMHC).
The loan amount is:
- 10% on a newly constructed home or,
- 5% on an existing home
To qualify, the homeowner’s household income per year must not exceed $120,000 and the mortgage for the home cannot be greater than four times the participants’ annual household income. Although these loans are interest free, they must be paid back to CMHC, most likely on the sale of the property, as 5% or 10% on the sale price of the home.
Budget 2019 also proposed changing the RRSP withdrawal limit for first-time home buyers from $25,000 to $35,000.
March 19, 2019 – Federal Crack Down Announced on Transfer of Defined Pensions to IPPs
Tax rules provide for the transfer of proceeds from a defined benefit pension plan (DB) into another defined benefit plan, an RRSP, or an individual pension plan (IPP). This maintains the tax deferred status of the pension proceeds. There are prescribed transfer limits, however, that apply to the amount that can be transferred to an RRSP. The portion of the pension benefit that exceeds the prescribed limit must be received by the plan holder as taxable income. This is often about 50% of the commuted value of the pension.
The federal government is tightening the rules to discourage taxpayers from incorporating for the sole purpose of setting up an IPP in order to shelter 100% of their pension proceeds.
December 21, 2018 – Residency-Based Tax Bill vs Citizenship-Based Proposed by US Congressman
Both Republicans and Democrats are showing support for a bill introduced by a Republican congressman George Holding (R-North Carolina) to move from a citizenship-based taxation system to a residency-based one. The US is one of only a few countries administering tax on citizenship. This has made it difficult for Americans living in Canada who can be taxed in both countries as per the Foreign Account Tax Compliance Act (FACTA).
Investment Executive reported that under the new system the proposed definition of a non-resident citizen would be:
- is a US citizen;
- has a tax home in a foreign country,
- is in full compliance with US income tax laws for the previous 3 years; and
- either establishes that he/she has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or is present in a foreign country or countries during at least 330 full days during such taxable year.
November 20, 2018 – TFSA Annual Contribution Limit Boosted to $6,000 for 2019
The government announced the annual contribution limit for TFSAs will rise from $5,500 to $6,000 for 2019. This makes the cumulative limit $63,500 for a Canadian who has never contributed to a TFSA and was 18 years of age at the time the program was launched (2009).
November 2, 2018 – CRA to Boost CPP Maximum Pensionable Earnings in 2019
Canada Revenue Agency (CRA) announced an increase in maximum pensionable earnings for CPP from $55,900 in 2018 to $57,400 for 2019, a 2.7% increase. The increase was made to reflect the growth in average Canadian weekly wages and salaries. This means the maximum employee/employer contribution will rise to 5.1% from $2,593.80 in 2018 to $2,748.90 in 2019. The maximum self-employed contribution will be 10.2% or $5,497.80. The basic exemption amount remains at $3,500 annually.
Example (source CRA)
Joseph receives a weekly salary of $500 and $50 in taxable benefits. Calculate the amount of CPP contributions that you have to pay.
Step 1: Calculate the basic pay-period exemption
$3,500 ÷ 52 = $67.30 (do not round off)
Step 2: Calculate the total pensionable income
$500 + $50 = $550
Step 3: Deduct the basic pay-period exemption from the total pensionable income
$550 – $67.30 = $482.70
Step 4: Calculate the amount of CPP contributions
$482.70 × 5.1% = $24.62
Step 5: Calculate the amount of CPP contributions you (the employer) have to pay
$24.62 × 2 = $49.24
September 19, 2018 – Financial Planning Standards Council Announces National Organization to Advance Financial Planning in Canada Named FP Canada™
The mandate of FP Canada is “to lead the advancement of professional financial planning”. The organization has two distinct divisions:
- FP Canada Standards Council™: An independent structure that sets a high level of competence, professionalism and ethics standards.
- FP Canada Institute™: provides tools and services to help prospective and existing financial planners provide more effective service. This includes education to develop essential technical skills.
February 2018 – FinaMetrica Awarded WealthBriefing Swiss Award 2018
Risk tolerance tool FinaMetrica announced their award for ‘Best Risk Profiling Solution’. The WealthBriefing Swiss Awards focus on experts, products, and services for wealth managers and clients to award top class performance and innovation. These awards are granted by two expert judging panels that include bankers and trusted advisors.
February 9, 2018 – FPSC Announces Digital Credentials for CFPs
The Financial Planning Standards Council (FPSC) announced the launch of digital credentials for Certified Financial Planners (CFPs). The digital credential will allow consumers to verify in real time that their financial advisor is in fact, a CFP in good standing. This technology uses a blockchain-verified platform that is more reliable than traditional printed credentials.
September 7, 2017 – Equifax Announces Information Hack
Equifax, an American based consumer credit reporting agency, announced they had become aware of a security breach on July 29, 2017 that compromised the personal information of approximately 182,000 U.S. consumers. According to the company, limited information for certain UK and Canadian residents was also exposed. Equifax responded with apologies and access to free credit monitoring and identity theft protection for all impacted Canadian residents.
An article in the Investment Executive published on September 13, 2017, reported that “Equifax Canada’s customer service agents are telling callers that only Canadians who have had dealings in the United States are likely to be affected…” read the full story
To contact Equifax Canada about the incident, you can call 1-866-699-5712
or email [email protected]
April 28, 2017 – Title Restrictions for Financial Planners Announced by Ontario Government
In the 2017 budget, the Ontario government committed to restricting the use of the title “financial planner” and other titles that could confuse or mislead consumers, to individuals who are qualified and accountable for their professional conduct. Currently Quebec is the only province in Canada that restricts who can call themselves a “Financial Planner”. The Province of Ontario is working with regulators on enforceable standards. The government will also examine the feasibility of a universal best interest duty for all professionals providing financial advice. This standard ensures the client’s interests come before all others – a standard already adhered to by Certified Financial Planners.
November 2016 – Manulife Vitality Program Highlights Trends in the Insurance Industry
Manulife recently announced a program that tracks your health and rewards you with reduced premiums for living a healthy lifestyle. Once a Vitality life insurance product has been purchased, the insured registers for the program. An online quiz provides a Vitality Age™ as an indicator of overall health. A customized health plan is provided along with tools such as a wearable device that tracks health activities. The insured begins accumulating Vitality Points™ based on healthy activities. As the points accumulate, rewards levels may be achieved that result in reduced premiums for the next policy year.