God bless the PPP/C and its President.
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When a spouse loses their partner, benefits are available to them through the government, such as the CPP Survivorβs Pension.
What is the CPP Survivorβs Pension?
Thanks for your email, Kevin. Losing a spouse or common-law partner is one of the most challenging experiences we can face in our lifetimes. The Canadian government does offer a benefit payment program under the Canada Pension Plan (CPP) program for surviving spouses that could be payable to you if you qualify. It is called the CPP Survivorβs Pension, and it is a monthly payment paid to the survivor that helps to cover the pension payment the deceased would have received while still alive.
Who can qualify for survivor benefits?
The CPP Survivorβs Pension benefit is only payable to select Canadians. To qualify, the applicant must be legally recognized as the common-law partner to or married to the deceased. For married people, both peopleβs names are on the marriage license. And to be deemed common-law, partners must be two people in a conjugal relationship for at least one year. The Statutory Declaration of Common-law Union form needs to be completed to declare a common-law relationship.
How much is the CPP Survivorβs Pension?
The amount varies from couple to couple, as the survivorβs benefit payment is based on a calculation of a variety of factors, Kevin. Hereβs what you need to calculate how much you may receive from a survivor benefit:
- The CPP benefit amount that the deceased received before they passed away or would have received by age 65.
- The surviving spouseβs age. If they are older than 65, then they will receive 60% of the CPP pension listed in step 1. If they are younger than 65, they will receive a flat-rate portion and 37.5% of the CPP pension from step 1.
- This final step depends on whether the surviving spouse already receives other CPP benefits. For example, if they already receive a disability pension or the CPP retirement pension, they cannot accept the full survivor benefit. The payment is combined with other benefit payments. How much is paid depends on the type of pension and the maximum benefits. The Government of Canada has published a table that outlines the different benefits and can be found on their services and benefits page.
How to apply for a survivorβs pension?
Kevin, to apply for the CPP Survivorβs Plan, you have a couple of options available to you. However, regardless of which one you choose, you can expect to receive payments approximately six to 12 weeks after Service Canada receives your application.
Online
You can apply for the benefit by logging into your My Service Canada account and completing the application form. From there, you can drop off the requested additional information and documents to a Service Canada office closest to you. Remember that when dropping off paper documents, you should write both your and your spouseβs social insurance number (SIN) on every page, so the forms can be tracked to you.
By mail
You can print the application form found on Canada.ca, the federal governmentβs website. Fill it out and put it in an envelope along with all the required documents listed, and drop off or mail the package at the provincial or territorial Service Canada office closest to where you live. Donβt forget to include both SINs for you and your spouse on every page. And like with anything involving money, be sure to send it via registered mail if youβre not able to hand deliver it.
If more than 12 weeks have passed since you applied and you have no word from Service Canada, contact the Canada Pension Plan (1-800-277-9914). As of the date of this publication, the hold times were averaging about an hour. So, if you do call, I recommend settling in with a snack when youβre in the mood for elevator music.
Should you apply for the survivor benefit?
Kevin, the good news is that the CPP Survivorβs Pension is available to those who have lost their spouse or partner, and it can help with the loss of household income. With a little bit of homework filling out forms, you should see your payment come to you after approximately six to 12 weeks.
What tax returns should be completed when someone passes away? Why do these returns need to be filed?
Benjamin Franklin once wrote that βnothing is certain, except death and taxes.β Death is inevitable; however, how much tax we pay is unique to each Canadian. Not everyone βpays tax,β as it depends on income level. So, for the sake of this column, letβs tweak it to read: βNothing is certain, except death and tax returns!β
Also, taxes are not just for the living. When a person passes away, there are several tax returns to know about. And tax returns can be a complicated process on the best of days. For example, when someone passes away, navigating their taxes becomes an even more perplexing process as the taxpayer essentially files their taxes two timesβmore on that later. But first, four things to know when filing a tax return for someone who has passed away in the previous year.
4 changes for filing tax returns when someone passes away
There are items to be mindful of when preparing the final return for someone. To keep things simple, I will cover a few of the points most will encounter. If you find youβre dealing with a more complex tax return, consider working with an accountant.
- The type of tax return used when someone dies
The tax return prepared for the year someone passes away is called a βFinal T1 General Tax Return,β and it is commonly referenced by accountants as the βTerminal Return.β It works like a regular annual return but with a few differences you should be aware of.
- The deadline for a final tax return
Every Canadian is required to file a tax return for income earned in the preceding year by April 30. This year, that date falls on a Sunday, so May 1, 2023, is when the T1 General Tax Return for 2022 is due (unless you or your spouse are a business owner, then the deadline is June 15, 2023). The same is true when someone passes away, except the ending period of the tax return would be the date of death instead of December 31. And the deadline to file and pay taxes for someone who has died, if they passed between November 1 and December 31, 2022, is six months after the date of death. Otherwise, the May 1, 2023, deadline is still to be followed.
- The name of the deceased as it appears on the return
Typically, your tax return lists your legal name, like Jane Doe. However, on the final return for a deceased person, the naming convention would be: The Estate of Jane Doe.
- The disposition of assets
The last main differenceβand quite possibly the most intricateβwould be the disposition of assets and property. Canadians hold different types of assets throughout our lifetimes that we do not have to report on an annual tax return. That is until these are sold or disposed of, and we claim a capital gain or loss. Claiming a loss is trickier (see in this video), but capital gains tax is applied to 50% of the income earned, based on your tax bracket.
For example, if you bought a stock for $10,000 and then sold it 10 years later for $25,000, you have a capital gain of $15,000, and you would include a $7,500 taxable capital gain (50%) on your tax return.
The same holds true in the year of death. However, we cannot take our assets and possessions with us upon death, which means that death is a large tax event as everything we own is deemed to be disposed of and reported on this final tax return based on the market value on the date of death. Next, what is an estate tax return? Does your estate report income after your death?
Remember how I mentioned earlier that when someone dies, taxes are filed twice? On the final return, as noted above, income up to death is reported. However, the tax filing process does not stop there, as income may continue to accrue on assets after the date of death. This is when an estate is created, and it carries on until the executor wraps everything up. Therefore, starting the taxes for the βsecond time,β the estate (not the executor) assumes the responsibility of claiming any income earned from the date of death onwards.
It is no secret that wrapping up an estate is a lengthy and time-consuming process. This is because many steps are taken to finalize the paperwork for someoneβs death. Common delays include identifying assets that the deceased owned, all their debt, applying for probate, selling off assets like property and investments, and ensuring the estate is liquidated if applicable.
Since all these tasks take time, it is pretty typical for assets to earn income while held in their original date of death form. Dividends and interest may continue to be deposited to an investment account after the account holder dies. Their rental properties will still earn monthly income. And other assets may continue to rise or fall in value after death until these are sold.
All these extra earnings are reported on the estateβs tax return, also known as a T3 Trust Income Tax and Information Return. There are also less common optional returns like a Return for Rights or Things or a Return for Partner or Proprietor that may be filed to report income earned but not paid as of the date of death.
The trust return is filed for each year that the estate is active until all distributions are made to the beneficiaries, and the estate no longer holds anything and can be closed.
Also, an estate can report the Canada Pension Plan (CPP) death benefit paymentβwhich can be up to $2,500βon the T3 return.
- The deadline for a T3 return depends on the tax year-end for the estate, which is based on when the estate is created. A prudent executor should hire a tax professional to ensure that all tax points are covered and any tax elections that can be explicitly made based on the estateβs situation are appropriately done. Income taxes can be more complicated upon the death of a taxpayer. However, with planning and professional guidance, executors can take it one step at a time, one tax return at a time.
Planning for the unplannable
While taxes are predictable, someoneβs passing isnβt always something we can be ready for. By working with a Certified Financial Planner and a tax accountant, you can do some tax prep, learn about the optional tax returns available for your specific situation and, perhaps, save some tax along the way. And figuring out your estate planning, you are reducing the tax burden for our estate and our loved ones.
- https://www.moneysense.ca/save...gets-done-in-canada/
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In a flash, Judy Allen, 75, had $1.5M in mortgages on her bungalow, and she faces βfinancial ruin.β We asked Tony the Contractor and Harold the Jewellery Buyer, how did this happen?
Judy Allen wanted to age in place with some renos to her Willowdale home. She ended up with five mortgages, huge fees and nearly $1M in contractor bills.

βI want to age in place,β Allen, a retired nurse, told Tony Sinopoli. They sat on the cramped front porch of her small bungalow at Highway 401 and Yonge Street, drinking Tim Hortons coffees that Sinopoli brought. The contractor has a salt-and-pepper beard, and wears thick glasses because of a medical condition he says has made him almost completely blind. Allen is 75, stooped, white-haired. She uses a walker to get around.
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Allen told Sinopoli: βI have bad arthritis, cardiac issues, and I want to make my little bungalow a safe, happy home.β She hired him to expand her small garage, widen her porch, make the interior βopen conceptβ and build a solarium at the back.We can do that,β Sinopoli told her. He later told the Star that before that job, he had mainly done small basement renovations.
To pay for the work, Sinopoli says he connected her with a βmortgage finderβ for the first mortgage, then, for the next four mortgages, brought in Harold Gerstel, the man known from television commercials as βHarold the Jewellery Buyer,β promising βcash for goldβ and βfast, no hassleβ mortgages.
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In just eight months, five mortgages totalling $1.52 million were placed on Allenβs home, four of them (the Gerstel mortgages) at 22 per cent interest with other hefty βlending feesβ attached. Most of the money was split between Sinopoliβs renovation charges, and fees and prepaid interest on the mortgages. A generous estimate of the actual work done β which appears shoddy and unfinished β is $300,000, according to a realtor with knowledge of the property and the area.
Bottom line: There is no equity left in Allenβs North York property, and Gerstel has recently moved to foreclose and take her home. Allen says she did not realize what was happening until it was too late.n her own words, she is βfinancially ruined.β Her hope of βaging in place,β something more and more seniors hope to do these days, has ended. She is moving to a retirement home in June, having scraped together enough money for one yearβs rent.
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The renovation work on her bungalow? Unfinished. Wood joints are coming apart; there are several plumbing leaks; no safety railings on a narrow deck; her backyard is now inaccessible to someone with a walker; there is crumbling stone work; the narrow βheated rampβ off her porch barely accommodates her walker; and the electric heating coils in the cement never worked. It was an uneven, sloped ice path this past winter.
Thereβs also a growing black mould problem in the new garage because it leaks and the drywall was installed tight to the floor. Rats have moved into her basement, and a water leak during the renovation destroyed many of Allenβs possessions. Sliding doors in the solarium do not open properly. One handle broke off immediately. The new addition was installed without a full foundation β and a rickety plywood βskirtβ surrounds the bottom of the addition, the underside already open in places to the elements.
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Allen has no children to look out for her. During much of the eight-month renovation, Allen was in and out of hospital for heart and other conditions. The one saviour in this situation has been Jamie Erlick, a local realtor who by chance learned of Allenβs situation and has been trying to help. Erlick called the Toronto Star and we investigated.
βThe sad thing for Judy is that the house is a disaster, itβs worse than it was before, and itβs not worth any more than it was before this all started,β said Erlick. Heβs paying out of his own pocket to send cleaners and an exterminator over.
To put this story together, the Star interviewed Allen (the homeowner); Sinopoli (the contractor); we have exchanged questions and answers with Melvyn Solmon, Gerstelβs lawyer (Gerstel would not agree to be interviewed); and we have been given access to all of Allenβs banking and renovation records. The Star has spoken to one of the lawyers referred to Allen to provide βindependent legal advice.β The other declined comment. Abraham Jonas, Gerstelβs real estate lawyer, hung up on a Star reporter when the first question was posed.
Judy Allen purchased the bungalow near Yonge and Highway 401 in 1987 for $211,000. She bought it with savings from a career as a nurse, help from her brother, plus a $150,000 mortgage from Canada Trustco Mortgage Co. She paid that off over time. Sheβd been married once, but has mostly lived on her own. A good friend had purchased nearby and she decided it was time to be a homeowner. It became her home base for jobs in health care, and at night she enjoyed gardening and relaxing on the porch.
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By 2020, she owned one of the last bungalows on Johnston Avenue. Most other bungalows had been replaced by two-storey homes. She had a $119,000 line of credit against title, but lots of equity. She did not want to move, though she figured her home could fetch $1.5 million-$1.6 million, even as a building lot. Thatβs when she called Tony Sinopoli and hired him for the renovation project. Sheβd spotted his company (AFS Contracting and Design β A for Anthony, S for Sinopoli) at the top of contractor ads in a local weekly.
To Allen, all seemed fine at first. Using sub trades β βI donβt actually do any of the work,β Sinopoli told the Star β walls were knocked down, the interior was cleared out, the old garage was demolished. Construction waste bins showed up, provided by Sinopoliβs sister. Allen was billed for 32. Sinopoli told the Star there were really only 18. Allen says she would be surprised if there were 10 used in total.
Sinopoli said the sliding doors were provided by his brother. Sinopoliβs son built the uncompleted backyard shed. (It is filled with 500 square feet of boxed βItalian tilesβ that Sinopoli ordered for the interior floors.) βI think he overestimated,β Allen says. Sinopoli also said his stepson did some of the work on the project.
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City of Toronto building records show that shortly after that Tim Hortons coffee on the porch, Sinopoli applied for and was granted a permit β which gives legal permission to build a new garage and covered front porch. But the permit does not cover the majority of the work, including interior plumbing changes, knocking down the back wall, making structural changes in the interior, and constructing a 16-by-13-foot addition out back. The lack of a proper permit was news to Allen, when the Star told her.
A few weeks into the demolition, Sinopoli had a chat with Allen. βYou need to pay for this somehow,β Sinopoli said. She had paid the first few weeksβ work out of savings. Sinopoli had a suggestion. He knew βa guy who does mortgages, Joseph.β Allen said she followed Sinopoliβs suggestion and did not seek a mortgage from a bank.
The First Mortgage: Dec. 15, 2020 β $400,000, 10 per cent interest
Enter Joseph Capogreco. In an interview with the Star, Capogreco called himself a βmortgage finder,β who told the Star he gets three per cent of a mortgage as a fee.
βTony called me,β Capogreco recalled. βHe said go see her. She said, βI need about $400,000.β β Capogreco, who is not a licensed mortgage broker, connected her with a lawyer he knew, Michael Collins. Collins represents the Cammalleri family, who provide private mortgages.
Collins told the Star that his clients provided a one-year, $400,000 mortgage at 10 per cent interest ($40,000). The interest was paid up front to the Cammalleri family.
While Collins represented the Cammalleri family, Allen required her own legal counsel. Capogreco, the mortgage βfinder,β suggested βa lawyer I use,β Derek Sorrenti.
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Allen did a video call with Sorrenti, using Capogrecoβs cellphone. Sorrenti told the Star in an interview that he had several other calls with Allen (Allen does not recall these) as they worked through the terms of the deal. What Allen did not know was that, just two months previous, Sorrenti had received a practice restriction from the Law Society of Upper Canada, which is investigating Sorrenti on charges that he βmay have knowingly participated in a fraud against his clientsβ in the Fortress Real Capital Inc. syndicated mortgage deal, according to law society documents.
Sorrenti is also alleged in the syndicated mortgage deal to have failed to βprovide competent adviceβ to clients and to have acted for both the lender and the borrower. An interim ruling dated October 2020 (around the time he started working on the Judy Allen mortgage) permits him to do small residential legal work (as he did with Allen) but places restrictions related to syndicated mortgage deals with more than seven lenders. In an interview, Sorrenti told the Star that he provided good legal representation to Allen, and nothing in the legal regulatorβs ruling required him to report to them about the ongoing law society case. None of the law societyβs allegations against Sorrenti have been proven and the case is still pending.
In the case of this first mortgage, once prepaid interest and mortgage, lender and legal fees were deducted, Allen received $334,105 toward her renovation, according to her bank statements. Allen passed most of that money to Sinopoli, the contractor, through bank drafts.
The Second Mortgage: March 2, 2021, $445,000, 22 per cent interest, lender fee $47,100
Enter Harold the Jewellery Buyer.
As Sinopoli proceeded with the renovation, he told Allen he needed more funds, and he had a suggestion.
βI heard through the grapevine about a buddy who used Harold, so I said, βLetβs call Harold, see what he has to say.β β
Harold Gerstel is one of those larger-than-life Toronto characters. Heβs been the target of robberies and a high-profile pistol whipping attack that made the nightly news; his old store was burned down in an arson attack that remains unsolved. Today, he operates out of a highly secure storefront office on Bathurst Street, south of Lawrence Avenue West.
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Gerstel has long been known for offering to buy, or advance money against, βgold, diamonds, watchesβ and other jewellery. βOur vision is to help our clients leave with money in their hands,β he says on his website. Some years ago, Gerstel got into providing private mortgages through a licensed business, Harold the Mortgage Closer Inc.
βWe know how difficult it can be to get a mortgage from the bank,β he says on his website. βOur process is different! All you need is equity in your home. Call Harold!β
Gerstel says he offers an βeasy and hassle-free process.β
He would only respond to the Star through his lawyer, Melvyn Solmon, who provided written answers to written questions.
Sinopoli, the contractor, referred Judy Allen to Gerstel. Mortgage documents show that on March 2, 2021 β a little more than two months after the first mortgage (the one from the Cammalleri family) β the first Gerstel mortgage went on Allenβs property, a $445,000 charge. Similar to subsequent mortgages, Harold the Jewellery Buyer had a 22 per cent rate.
Hereβs how the payments on that mortgage shook out. There was prepaid interest to Gerstel of $97,900, plus a βlender feeβ to Gerstel of $47,100. Of the $445,000 face value of the mortgage, $300,000 was earmarked for the homeowner.
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The Star has sifted through Allenβs bank statements and it is unclear exactly how much money from these and subsequent mortgages Allen actually saw. Allen said most went to the renovations, though she was able to pay off her $119,000 line of credit. Sinopoli, the contractor, told the Star that in the case of one mortgage, the money went directly to him, but he is not sure which one. Both Gerstel and Cammalleri (who advanced the first mortgage) say all money was advanced through the trust accounts of lawyers representing both sides.
As to Allenβs legal representation on the Gerstel mortgages, Allen said Gerstel recommended she use a lawyer named Kamele Barrett.
Barrett, who works out of a Pickering office, told the Star βit is not my practice to discuss with the public who has or has not retained me, or the legal services I may have provided to clients.β Gerstel, through his lawyer, said he does know Barrett from another legal file, but he did not say he recommended her.
The Third, Fourth and Fifth Mortgages from Harold Gerstel. March 18, 2021 ($270,000); June 14, 2021, $225,000; Aug. 11, 2021, $180,000. All at 22 per cent, with total βlender feesβ of $76,500 to Gerstel for the three mortgages.
Sinopoli kept working on the renovation. To hear Sinopoli and Gerstel tell it, Allen had an insatiable desire for more and more work.
βShe was like a little baby, more, more, more,β said Sinopoli.
βShe overspent like a drunken sailor causing herself to be in this mess,β said lawyer Solmon, speaking on behalf of Gerstel, his client.
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Allen, the homeowner, has a different take. βTony just wanted more and more money.β Yes, she was particular about what she wanted. Having been raised on a farm, she loved barnboard and wanted most of the interior to be barnboard. Sinopoli has told one person he sourced barnboard from Kentucky, and told another he sourced it βfrom the Mennonites.β To the eye of a Star reporter and photographer, the grey barnboard does not look authentic. It also smells.
Despite being in and out of the hospital seven times during the eight-month renovation, Allen said she did her best to keep on top of what Sinopoli was doing.
The Star was not able to do a full financial review of the project, as Sinopoli and Gerstel did not provide an accounting of how the money flowed. (Cammalleri, the first mortgage holder, and his lawyer were more forthcoming than Gerstel.)
Based on the available documents for the eight-month span, this is what we could determine. The face value of the five mortgages total $1.52 million. Roughly $500,000 came off that amount for interest and lendersβ fees, plus other charges (most of it to Gerstel).
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Of the roughly $1 million that was left for the renovation, Allen paid off the $119,000 line of credit, and most of the the remainder left Judy Allenβs bank account as βdraftsβ to Sinopoli. Some of the supplies she paid for directly.
Sinopoli told the Star he had βa signed contract,β but he did not provide it to a reporter. Allen gave the Star copies of three undated βcontractβ agreements over the eight months β each with only a few words of description. They total $749,761.30, significantly shy of the roughly $900,000 that apparently went into the renovation.
The Realtor
Jamie Erlick is a successful Toronto realtor. As realtors do from time to time, he puts flyers in homeownersβ mailboxes. Judy Allen was at witsβ end two weeks ago when she saw Erlickβs flyer.
Sinopoli, the contractor, had put two construction liens against her home, alleging unpaid bills totalling $105,861. Frantic, she said Sinopoli said he desperately needed the money, and she had gone to her bank and cashed in a mutual fund, which cost her $14,000 in early payout fees. She paid Sinopoli $36,000 (he insisted she deliver the draft to his home) and he dropped one of the liens. Still, with Gerstel now foreclosing, she needed help.
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She remembered the real estate flyer and called Erlick, and he went over immediately. Erlick said he was appalled, and contacted the Star.
βThis contractor convinced this naive older lady to keep mortgaging and paying him all this money,β Erlick said, standing beside Allen in her home. He had just done a full tour and spotted βdeficiency after deficiencyβ in the construction. βShe now has to sell because the mortgagee wants his money. She will be left with nothing and be on the street.β
Erlick is doing his best to help Allen navigate the problem. Heβs arranging to have the house cleaned (it was left a shambles by the contractors) and deal with the rat problem as a start. βI think she needs a really good lawyer,β he said.
The Star asked both Sinopoli and Gerstel if they had any concerns that they took advantage of Allen.
βWhat was I going to do, leave her?β Sinopoli said. βIβve got a heart, I canβt leave people in the hole.β
The Star asked Sinopoli about the quality of his workmanship and his cost. Sinopoli said most of the work was done by βJohnnyβ (he did not recall the last name) and he agrees that βsome of the joints are twistedβ (referring to the carpentry). He said the high costs were related to the price of plywood and two-by-four studs that rose during the pandemic. Asked about the high-interest rates, Sinopoli said β22 per cent is outrageous,β and people who provide high-interest mortgages are βvultures.β
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Gerstel, through his lawyer, said he saw no problems with his own conduct. βShe was acutely aware of what she was doing and she had independent legal representation for every mortgage. Along the way, I would query her about how sheβs going to repay the mortgage debts. She kept reassuring me that there are other resources that she could draw upon to repay the mortgage debts.β
Two of the four mortgages Gerstel holds on Allenβs property (they are all closed, one-year terms) are past their date of maturity. Gerstel has moved to foreclose. The first mortgage is also past its maturity date. In the case of Gerstelβs mortgages, each one has a proviso that allows Gerstel to extend by three months the term of the mortgage and charge interest on the principal equal to 59.9 per cent. In Canada, the βcriminal rate of interestβ is 60 per cent.
Solmon said, responding on behalf of Gerstel: βAs long as my client advanced money he was the nicest guy, and when she did not honour her obligations under the mortgages and he took steps, he became (the) villain.β
Kevin Donovan is the Star's chief investigative reporter based in Toronto. He can be reached at 416-312-3503 or via email: kdonovan@thestar.ca
Selling your high-performing stocks or your cottage with a view can reap significant profits, and those moments are worth celebrating. But while youβre enjoying the spoils of your investments, keep in mind that youβll eventually have to pay tax on them. In Canada, most gains on capital assets are taxed. Letβs look at strategies to avoid paying more taxes than you need to come tax time.
A capital gain occurs when you sell an asset or investment at a higher value than its original purchase price, meaning you earn income from the sale. This applies to stocks, bonds and shares in mutual funds and exchange-traded funds (ETFs), as well as rental properties, cottages and business assets and equipment. On the other hand, when you sell an asset for less than its original purchase price, thatβs called a capital loss.
Certain types of property are not subject to the rules of capital gains. A home that has served as your principal residence is exempt from capital gains taxβas long as it has been your primary residence for all the years youβve owned it or for all years except one. (Thereβs not actually a βcapital gains tax,β but more on that below.) The same goes for other forms of personal-use property, such as cars and boats, whose value doesnβt usually increase over the years.
What is the capital gains tax rate in Canada?
Contrary to popular belief, capital gains are not taxed at a set rate of 50%, nor are they taxed in their entirety at your marginal tax rate. Rather, only half (50%) of the capital gain on any given sale is taxed at your marginal tax rate (which varies by province).
On a capital gain of $50,000, for instance, only half of that amount, $25,000, is taxable. And the tax rate depends on your income. For a Canadian who falls in a 33% marginal tax bracket, the income earned from the capital gain of $25,000 results in $8,250 in taxes owing. The remaining $41,750 is the investorβs to keep.
How are capital gains taxed?
To calculate the capital gain or loss on recently sold assets, such as property or stocks, youβll need the following details, according to the Canada Revenue Agency (CRA):
- Proceeds of disposition: The value of the asset at the time of sale
- Adjusted cost base (ACB): The amount originally paid
- Outlays and expenses: Total of costs deemed necessary before selling, such as renovations and maintenance expenses, findersβ fees, commissions, brokersβ fees, surveyorsβ fees, legal fees, transfer taxes and advertising costs
Once you have those three numbers in hand, you can calculate the capital gain by subtracting the ACB and outlays and expenses from the proceeds of disposition.
Proceeds of disposition β (ACB + outlays and expenses) = capital gain
A capital gain is taxed only once it is βrealized,β meaning the asset has been sold. As long as the gain is βunrealized,β meaning the assetβs value has increased on paper but the asset remains in your possession, you do not have to pay taxes on it. One strategy to reduce the amount of tax is to time the sale of the asset for a period when your income will be lowerβfor example, when youβre retired or on leave from work.
If you sell an investment for less than what you paid, you have a capital loss. You donβt pay any tax on capital losses; in fact, they can help offset the taxes you would otherwise pay on capital gains.
How to reduce or avoid capital gains tax in Canada
There are several ways to legally reduce, and in some cases avoid, paying taxes on capital gains.
The first thing to know is that capital gains can be offset with capital losses from other investments, until the balance of capital gains is reduced to zero.
If you have only capital losses in a given year, you can use them to offset gains reported to the CRA during the previous three years. You can also choose to carry those losses into the futureβindefinitelyβand apply them to another year. The only thing you have to remember is that you canβt claim a capital loss against regular income.
You may want to keep your investments in a registered account, such as a registered retirement savings plan (RRSP), a registered education savings plan (RESP) or a tax-free savings account (TFSA). Investments held in these accounts are tax-sheltered. With RRSPs and RESPs, youβll pay tax when you withdraw the funds, and TFSA withdrawals are tax-free.
You may also choose to donate securities, such as shares and bonds, by transferring ownership to a registered charity. Taxes on capital gains do not apply to capital transfers to charitable organizations. This allows you to give more than you would with cashβselling the asset first would result in taxes owedβand still receive a charitable tax receipt for the amount donated.
Capital gains on the sale of a property
There are many misconceptions about capital gains tax in Canada, including the belief that all gains are taxed at a rate of 50%. In reality, only half of a realized capital gainβ50% of the income you earn from selling an assetβis taxed at your marginal tax rate.
This means the amount you end up paying in tax will depend on the degree to which your asset has grown in value, as well as your other sources of income. And between tax-sheltered investment accounts, the principal residence exemption and the rules around capital losses, there are many legitimate ways to ensure you donβt pay more tax than necessary in any given year.
A: Itβs important to understand the difference between living trusts and wills if you hope to do any type of successful estate planning. First, the similarities. Living trusts and wills are both legal documents written to deal with property and both are important estate planning tools that can sometimes even be used together.
Living trusts appoint trustees to manage property. Trustees control property while you are alive. They can even manage trust assets if you are incapable and can distribute trust property when you die. In this way living trusts can be will substitutes.
Wills appoint executors who manage and distribute property when someone dies. But until someone dies, executors have no power to control property. So what if anyone becomes incapable of managing things themselves? They would need an attorney set up as a power of attorney to manage their property. This power of attorney is done in addition to a will.
Those are the basic differences but you need to know more.
Advantages and Disadvantages of Living Trusts
Persons who set up living trusts are called settlers. They settle or transfer assets into a trust using written documents. Trustees manage trust property. They can distribute trust property/assets when the settler dies.
Living trusts have advantages:
- Settlers can transfer valuable property like a business into a trust. The trust assets can be managed by trustees if the settler becomes incapable.
- When the settler dies, other trustees can take over. They can then distribute trust assets without a will. Trust assets are not subject to the costs and delay of probate.
- Unless the trust is contested, information about the trust assets remains private. Wills, on the other hand, become public when they are probated.
Disadvantages of trust include high costs for legal and tax advice with annual tax filings. A cost benefit analysis is also required because benefits may surpass costs to prepare trust documents and transfer assets into the trust
Canadians can transfer title to a family vacation property into living trusts. This transfer can be done tax-free and avoids probate.
IIf you have a living trust do you still need a will?
Everyone Needs A Will
Not all assets can be transferred into a trust. There are costs and tax consequences involved in transferring legal ownership of property into trusts.
Even if a living trust is created, everyone benefits by having wills and executors. Once someone dies, wills normally are confirmed in estate court. Wills then become public documents with loss of privacy.
Are Testamentary Trusts Different?
Living or inter vivos trusts are created when a person is alive. Testamentary trusts are created by wills. These trusts are less expensive to set up in your will.
Living trusts are more commonly used in the United States where costly living trusts are needed because of complex estate tax laws. That is why American estate planning is different from Canadian estate planning.
Testamentary Trusts
Testamentary trusts can also be created by a will. Typically, testamentary trusts are used to protect minor children, spendthrift beneficiaries or to manage property for spousal partners and are less expensive to set up.
Finally, preparing a will is less expensive and easier to change than a living trust.
https://www.moneysense.ca/colu...-changes-in-ontario/
Virtual signing and remote witnessing are now permanent options for clients and lawyers creating wills and powers of attorney in Ontario. Hereβs how these and other changes might affect your estate plans.
Ontario will see a few notable estate planning changes, now that Bill 245 has received royal assent.
Under that bill, the Succession Law Reform Act and Substitute Decisions Act have both been amended to allow for the remote witnessing of both wills and powers of attorney. Virtual signing was permitted on a temporary basis last spring following the onset of the COVID-19 pandemic, and has now become a permanent option for lawyers and clients.
As people have become more comfortable doing business with professionals remotely, this could have interesting ramifications. An estate lawyer in Timmins, Ont., can now more easily do business with clients living in Toronto. There may also be less hesitancy to get a will or power of attorneyβlegal documents so many people do not have in placeβgiven the efficiency and simplicity of remote meetings with lawyers who prepare them.
Bill 245 has also changed a section of the Succession Law Reform Act that caused wills to become invalid upon marriage. This amendment is particularly important given all the later-life marriages and second marriages that, until this point, caused a will in Ontario to be revoked, unless it was made specifically in contemplation of that marriage.
Ontario wills prepared prior to marriage can now continue to be valid after marriage. That said, getting married can have an impact on family law entitlements for a surviving spouse on death, as well as tax planning, so professional advice may still be prudent prior to a wedding.
Another spousal change to Ontario estate planning as a result of Bill 245 relates to separated spouses. If spouses are separated, but not yet divorced, at the time of a testatorβs death, the surviving spouse will have no default property rights. The will shall be construed as if the former spouse is also dead as long as the spouses were living separate and apart for at least three years and had a separation agreement or court settlement in place.
An additional change to the Successor Law Reform Act earlier this year also increased the entitlement of a surviving spouse in the case of someone dying intestate. Previously, if someone died in Ontario without a will, the first $200,000 of their estate went to their spouse. That has been increased to $350,000, with one half of the excess going to the surviving spouse and the other half to the children of the deceased. Although this is welcome news for surviving spouses, the best remedy for ensuring oneβs estate wishes are fulfilled is to have a valid and up-to-date will.
A final and important change arising from Bill 245 is to give courts the authority to validate a will or powers of attorney, even if they were not properly executed. This authority would apply if the Superior Court of Justice was satisfied that the document adequately sets out the intention of the deceased.
Professionally, I had a recent experience with a power of attorney for property that was signed by both spouses prior to one spouseβs incapacity; as a result, the document was deemed to be invalid. The resulting procedure to have someone appointed as power of attorney was stressful and expensive. I have heard of cases where a technical error in a will caused a will to be considered invalid, and the rules of intestacy decided the estate distribution, rather than that direction coming from the last wishes in someoneβs will. This new section 21.1 of the Succession Law Reform Act could permit leniency in similar circumstances.
On their own, these changes may not necessarily be a reason to update an estate plan, but they do reinforce the importance of revisiting estate, tax and financial planning on a regular basis.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.
WATCHING movies in the theatre has been a popular pastime for Guyanese since time immemorial, and once the local cinemas install a special filter to help constrict the spread of the virus, COVID-19, cinemas will finally be allowed to reopen.
This was highlighted by Minister of Health, Dr Frank Anthony on Wednesday during his daily COVID-19 Update. Then, the minister highlighted that an assessment of the cinemas geared at determining how they can be safely reopened was conducted. That assessment yielded the suggestion that cinemas can use Hepa filters.
The Mayo Clinic in the United States explained that High-efficiency Particulate Air (HEPA) filters are a type of air filter that removes small particles and contaminants from the air. They can be attached to ventilation and air conditioning systems.
βA HEPA filter does not kill the COVID-19 virus, but the elements that can transport the virus attach to the filter so they cannot circulate in your living area,β the clinic said.
And, Dr Anthony related that these filters have been suggested for cinemas so that even if a patron who is asymptomatic (infected with COVID-19 but not displaying any symptoms) occupies that space, the filter would be able to clear the air of the viral particles which can be transmitted from that person.
βSince those recommendations were made, I am not aware if any of the cinemas would have installed such filters and, therefore, we will have to get another engagement with them to see whether or not they would be installing these,β Dr Anthony said.
He also highlighted that if cinemas are to be reopened, there would be restrictions on the consumption of snacks and drinks, since this would require persons to take off their masks to consume, thereby providing some leeway for the transmission of infection.
Though cinemas have not yet been given the βgreenlightβ to reopen, President of the Tourism and Hospitality Association of Guyana (THAG), Mitra Ramkumar, highlighted that these businesses have felt the brunt of the restrictions due to the pandemic. And this was confirmed by General Manager of MovieTowne Guyana, Rochelle Parsram, who lamented that the mallβs cinemas β arguably its biggest attraction β have been closed since March last year.
EASE UP THE RESTRICTIONS
Other cinemas have been lobbying for an βease upβ on the restrictions to their operations as they have been forced to temporarily lay off their workers, and they would have not been able to generate any revenues since last year. Meanwhile, Netflix or Putlocker has been the go-to for numerous individuals while their favoured pastime has been restricted.
Should these cinemas opt to secure and implement these HEPA filters, there could be a limited amount of βmovie timeβ once more. Consideration, however, would have to be placed on cleaning these filters regularly and on ensuring that other COVID-19 measures, such as adequate sanitisation services, are in place. Updated COVID-19 guidelines have permitted places of religious worship to operate at 40 percent capacity. Meanwhile, indoor dining at bars and restaurants are also permitted at that 40 per cent capacity too.
In addition to ensuring that gatherings at these places of worship do not exceed 40 per cent, a well-placed source highlighted that these religious spaces would be tasked with ensuring that the place of worship is cleaned and sanitised immediately before and after all gatherings or services. Dining will only be permitted between the hours of 04:00 hrs and 21:30 hrs. Tables must be spaced six feet apart and no more than four persons are to be seated at one table, and each person must be three feet apart.
Sanitisation or handwashing stations should also be provided for persons to use at these spaces; persons should maintain a physical distance of six feet, once they are not from the same household; all persons must wear a face mask to cover the nose, mouth and chin; and, handshakes, hugs or other forms of physical contact should be avoided. The indoor dining at bars and restaurants is being monitored by the Guyana Tourism Authority (GTA); the national curfew remains at 22:30 hrs to 04:00 hrs daily.
β 325 jobs to be created, investorsβ confidence in Guyana βsky highβ
PRESIDENT Dr Irfaan Ali, on Wednesday, turned the sod for the construction of a spanking $1 billion state-of-the-art mall at Leonora, West Coast Demerara.
Speaking before the turning of the sod for the US$5 million shopping centre, the President said the investment is among the wave of development sweeping through the country that will see the creation of a number of economic hubs.
βIt is investments like these that are integrated in those hubs, that will act in a catalytic manner in bringing on investments in other sectors and this adds to the value chain in the creation of jobs and the expansion of the economy,β he said.
The new mall is being built by businessman and developer, Hemraj Albert. It is a private sector investment and the President reiterated his governmentβs support for the private sector in advancing growth and development of the country.
βTo the Albert family, I want to assure you that the government is not only aware of the environment you are investing in, but we are supportive of the investment by the private sector. We are supportive of the private sector becoming the leading implementer of growth and development whilst the government provides that facilitation role. And this is the role of government, to create the facilitating role so that wealth can be created, jobs can be generated and the private sector play a key and critical role in this,β the President said.

The mall, to come on stream, he said, will complement the massive development projects slated for the region.
βRegion Three has a growing population. Not only do we have a growing population, but we will have massive expansion of housing in this region. As a result of that, facilities like these become critical for the service of the region and the service of communities,β he said.
And collectively, he noted, all Guyanese must look pass βselfishβ and narrow political interest and focus on building a better Guyana.
βWe have a responsibility as Guyanese to promote the development of Guyana. I am not asking anyone to promote the development of a government or political party. We have responsibilities as patriots, as Guyanese, to positively position our country for every opportunity. We have the chance to do so. We have Guyanese sacrificing and making life- changing investments to create jobs, to create better communities, but yet, some in the society would seek to even be critical of that,β he told the gathering that included the family of Albert and other special invitees.
NEWS DEVELOPMENTS
The President also used the opportunity to announce several new developments in the region, including the expansion of banking facilities, the expansion of the housing sector and investments in agro-processing and in the hospitality sector.
βSo, we are talking about diversification in oil and gas, industrial development manufacturing, base and logistics facilities. And then we also have interests in investment in the hospitality sector here in Region Three and all of this is private interests. In addition to this, one of our largest, local housing developers will soon commence work on the development of a massive medium to upper scale housing communityβagain private investment.β
Babita Sukhraj, Albertβs daughter, who also spoke at the sod-turning, related that following consultation with family and stakeholders, the name βWest Central Mallβ was chosen. The mall will include a gym, shopping stalls, business centres, movie theatre, conference facility, fine dining restaurant, supermarket, bars, arcade, food court and adequate parking facility.
It is expected to create some 325 direct and indirect jobs when fully operational.
βThe management of West Central Mall will take pride in their social responsibility to the community, stakeholders and the residents of Region Three. All members of society will benefit from the giveaways, holiday hampers and celebrations. West Central Mall will be the apple of Region Three with the support and involvement of all stakeholders,β Sukhraj said.
President of the Region Three Chamber of Commerce, Halim Khan, said the US multimillion-dollar investment will stimulate growth in the region. Businessman and investor, Hemraj Albert, who has been in business since 1984, said he had a vision for the construction of the mall for a long time in his head and he is happy to see the commencement of its materialisation.
βThe hard work and dedication to my business has led me in achieving this vision, the West Central Mall. I am looking forward for the support from the region and government agencies and, most importantly, the residents of Region Three. I am sure the mall will bring comfort and joy to the consumers as we are going to ensure the highest quality of service,β the businessman said.
https://www.moneysense.ca/save...-savings-to-draw-on/
Financial planning advice is often catered to wealthier Canadians. What can retirement look like for those without healthy RRSPs or other savings?
Despite their best intentions some Canadians, facing a variety of financial challenges throughout their working lives, may not be able to save much towards retirement. Yet itβs difficult to know how to manage in those circumstances, as so much of the financial planning advice thatβs shared widely is catered to wealthier people.
Retiring with little to no savings can be difficult, but it is not impossible.
Canada Pension Plan (CPP)
For a retiree who has worked most of their life, the Canada Pension Plan (CPP) will replace a portion of their historical earnings. The CPP retirement pension is meant to replace 25% of what you earned, on average, over your career, up to a certain limit. A CPP enhancement began in 2019 that will gradually increase that replacement rate to 33% over time.
In 2020, the maximum CPP retirement pension payment at age 65 is $1,176 per monthβthatβs $14,112 per year. However, not all retirees have made enough CPP contributions during their careers to receive the maximum. A CPP Statement of Contributions can be obtained from Service Canada to help estimate a future CPP pension.
However, the average CPP retirement pension recipient currently receives $697 per month, or $8,359 per year. Thatβs only about 59% of the maximum.
CPP payments can start as early as age 60 or as late as age 70, and the later you start your pension, the higher the benefit you will receive. There can be a lot of factors to consider related to timing your CPP pension, and payments are adjusted annually to account for increases in inflation and the cost of living.
Old Age Security (OAS) and the Guaranteed Income Supplement (GIS)
Beyond CPP, retirees can also expect to receive an Old Age Security (OAS) pension. OAS is not based on work or contribution history, as it is a non-contributory pension. It is based on residency. A lifetime or long-time Canadian resident may receive up to $614 per month at age 65 as of the third quarter of 2020, which is $7,362 annualized. OAS is adjusted quarterly based on inflation.
Thereβs a window in which recipients can apply to receive lower or higher OAC payments for starting earlier or later. OAS can begin as early as age 65 or as late as age 70.
A low-income retiree with little to no retirement savings may be well advised to start OAS at 65, especially if they are no longer working. The ideal timing of a CPP retirement pension is a little more variable, but the main reason to consider applying for OAS at 65 is a related benefit called the Guaranteed Income Supplement (GIS).
GIS is a tax-free monthly benefit payable to OAS pensioners with low incomes. Single retirees whose incomes are below $18,600 excluding OAS may receive up to $916 per month, or $10,997 per year, as of the third quarter of 2020. The maximum income and benefit for couples varies depending on whether both are receiving OAS. If both spouses are receiving the full OAS pension, their maximum combined income to qualify for GIS is $24,756 excluding OAS, and their maximum monthly benefit is $552 each ($6,620 annually). If your spouse is not receiving an OAS pension, the income limit rises to $44,592 excluding OAS, and a $916 monthly ($10,997 annual) maximum benefit applies.
It should be noted if a GIS recipient receives any taxable income other than OAS, they will receive less than the GIS maximums above.
If we combine these three pensions, a single retiree at age 65 who is entitled to the maximum CPP and is no longer working may receive $14,110 per year at age 65. They may also receive $7,362 per year of OAS, assuming they have been longtime or lifelong Canadian residents. They would not get the maximum GIS but would still get $2,249 per year.
Thatβs $23,721 per year in total between CPP, OAS and GIS, or about $1,977 per month, with little to no tax payable depending on the retireeβs province of residence and eligible tax credits.
Other forms of retirement income
There are a bunch of other factors involved with all three pensions, but the point is they can provide a solid foundation for a seniorβs retirement income and should be evaluated individually by potential recipients.
Other federal and provincial benefits, often tax-free, may also be payable to retirees. The Government of Canada has a Child and Family Benefits Calculator to try to estimate them. The eligibility for these benefits is generally determined by simply filing a tax return.
What could retirement look like with $10,000, $50,000 or $100,000 in savings?
What if you have saved $10,000, $50,000, or $100,000 towards retirement to supplement your government pensions?
At age 65, a sustainable initial annual withdrawal from your investments might range from 3% to 4% or more, depending on your investment risk tolerance, investment fees, and life expectancy. That means a saver with $10,000 could withdraw between $25 and $33 from their savings per month, or $300 to $400 per year, and increase those withdrawals by inflation each year.
With $50,000 in savings, those withdrawals could be $125 to $167 per month, or $1,500 to $2,000 per year.
And at $100,000, withdrawals could be $250 to $333 per month, or $3,000 to $4,000 per year.
Consider these calculations just rough guidelines with plenty of other factors to take into account. The tax implications would depend on the type of account youβve saved in, but even fully taxable Registered Retirement Savings Plan (RRSP) withdrawals may be subject to little or no tax for a low-income retiree. Tax-free savings accounts (TFSAs) may be preferable saving options for savers with low taxable incomes late in retirement, as RRSP deductions are less beneficial in such cases, and withdrawals may reduce access to future government benefits.
Home equity may also be available to supplement retirement spending. Some combination of downsizing, selling and renting, borrowing using a secured line of credit, or applying for a reverse mortgage, could top up investments or turn real estate value into cash flow. Conventional retirement planning often ignores home equity and, in a perfect world, it would not be necessary to use equity to fund retirement. But in a perfect world, many Canadians would retire at 55, spend winters down south and help their children buy homes of their own. We donβt live in a perfect world, and home equity may be a part of some retireesβ retirement plans.
Anyone approaching retirement should engage in planning on their own or with a professional to identify their retirement income sources relative to their spending. Those with little to no savings may have less access to third-party advice, but this makes it even more important to learn about government pensions and benefits, and consider sources beyond savings, including home equity.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.
BTW I did use the calculator and it did give me a fairly accurate calculation.
https://www.thestar.com/busine...how-to-find-out.html
One of the most frustrating practical challenges in planning for retirement when itβs still many years in the future is trying to get an accurate estimate of your Canada Pension Plan (CPP) benefits.
If you are ready to collect, Services Canada will accurately calculate your CPP benefits. It can also provide a reasonably accurate advance estimate of your basic benefits if youβre within a year or two of starting them (online at My Service Canada Account). But farther out than that presents a real challenge.
Until now.
For the first time, there is a free online calculator (at CPPcalculator.com) that can help you calculate in advance what precise CPP benefits to expect when you retire.
The calculator was created by Doug Runchey, a well-regarded CPP calculations expert, and David Field, a certified financial planner β with a knack for programming β at Mississauga-based Papyrus Planning.
The launch of a new calculator isnβt normally a big deal in this online age, but the mind-boggling complexity of CPP calculation makes this one surprisingly notable. There are other spreadsheets and online tools that give ballpark CPP projections, but this is the first that I know of that can credibly claim precise accuracy for basic calculations. (That said, it doesnβt yet cover certain special situations such as raising young children, having a severe disability or combining and splitting CPP benefits.)
The unequalled credibility of this calculator owes much to the testing and endorsement of Runchey, a 66-year-old retired federal civil servant. He mastered the intricacies of CPP computations during a 32-year career with predecessors of Service Canada, the federal governmentβs point of public contact for many of its services. He was once manager of outreach for CPP and Old Age Security for B.C. and the Yukon.
Since 2013, Runchey has made a modest second career producing CPP estimates by hand for a small fee. He works from home in the Comox Valley on Vancouver Island. As far as I am aware, Runchey β and now the Runchey-Field calculator β are the only publicly available sources of reliably accurate estimates of future CPP benefits.
If youβre trying to plan for what your CPP benefits might be many years ahead, the Service Canada estimates can be way off. Thatβs because your future payout depends in part on the amount and pattern of your CPP contributions and earnings in the interim. The Service Canada estimates assume simplistically that you continue making the same average level of contributions as you have in the past.
These misleading government estimates can distort important decisions about when to start CPP. It often comes into play for people who retire early, and then must decide whether to then start CPP payouts at age 60 or defer the start of their benefits until age 65 or later. In that case, the government estimates typically assume you continue to contribute to CPP at the same relatively high average level that you did through your working years, whereas in reality, youβve stopped working and contributing.
How those zero-contribution years factor into the complex calculations varies. In some cases it has no impact. But in other situations it results in the Service Canada estimates being too high by up to two per cent a year, estimates Runchey. In that case, if you fully retire and stop contributing at age 60, but delay collecting your pension until age 65, Service Canada could be overestimating your CPP pension payout by up to about 10 per cent.
Of course, your monthly CPP payout is still going to be higher over-all if you start it later (to compensate you for taking fewer payouts over your shorter remaining lifetime). It just might not be as high as Service Canada lead you to expect.
I have tried the Runchey-Field CPP calculator and found it easy to use. You follow the simple instructions at CPPcalculator.com. You will be sent a link to upload your past contribution and pensionable earnings data from your Service Canada account directly into the calculator. Type in your projected pensionable earnings for future years and hit βcalculate.β The calculator tells you what your basic CPP pension payout would be (in todayβs dollars) if started at each age from 60 to 70.
The calculatorβs major limitation is that, for now, it doesnβt include special situations where your basic CPP benefits need to be adjusted. These include where you have: low-income years raising children under the age of seven; low-income years due to severe disability; the combination of a regular CPP pension and a CPP survivorβs pension; or the need to split your CPP benefits due to divorce or separation. Of course, the Service Canada future estimates donβt cover those special cases, either. For now, if you want accurate future projections in those special cases, you probably need to engage Runchey (drpensions.ca) to get a manual calculation. As an example, he will estimate your CPP benefits including the child-rearing adjustment with two optional start dates (e.g. ages 60 and 65) for $50. Getting those calculations for every age from 60 to 70 will cost $125.
Meanwhile, Runchey and Field are hoping to extend their calculator to cover the child-rearing adjustment and possibly other special situations. At some point they will likely charge a small fee to use the calculator, at least for enhanced features.
That prompts the question of why Service Canada doesnβt provide better help with CPP estimates.
βThe government has made the CPP calculations so complex, but they donβt provide the proper tools to help you with it,β says Field.
If the government canβt produce accurate future CPP estimates on its own, I think it should hire Runchey and Field as consultants to help develop proper software to do it.
In the meantime, getting accurate CPP projections remains utterly dependent on how Runchey chooses to spend his golden years.
βIf Doug decides to fully retire and this goes away as a service, then weβre really sunk,β says Field.
The COVID-19 outbreak has dealt a shock to our economy, shuttering entire industries and leaving many more businesses in limbo, forcing layoffs and loss of income on many people. Fortunately, the Canadian government and several other institutions are offering financial relief for Canadians during the COVID-19 pandemic. If you have lost your job, have decreased income, need to stay home to take care of someone else, need to isolate or are sick yourself, the following emergency measures can help cushion the blow.
Canada Emergency Response Benefit (CERB)
This is a COVID-19 emergency aid measure set up by the federal government to help get financial relief to Canadians quickly and efficiently. It is a taxable benefit that pays $2,000 per month for up to four months, retroactive to March 15.
Who qualifies for CERB?
- Workers who have lost their jobs or cannot work because of the COVID-19 outbreak
- Workers who are sick, quarantined, or caring for someone else who is sick
- Working parents who canβt work because schools and daycares are closed
- Workers who have still have jobs but, due to required workplace shutdowns and layoffs, are not working right now
- Independent contractors and self-employed workers who donβt usually qualify for Employment Insurance (EI)
How is CERB different from EI?
The CERB is specifically designed to fill in the gaps that surround the current EI system. It will be easier to apply for, benefits will arrive sooner and more people will qualify. If you are already receiving EI or sickness benefits, then do not apply for the CERB.
If you have already applied for EI and your application is still being processed, you do not have to reapply. If you are still unemployed after the four-month period, people who qualify for EI can still access the standard EI benefits.
How to apply for CERB
Online applications will be available in early April and benefits will be paid out within 10 days of applying. Check here for more details and updates as they become available.
Canada Emergency Wage Subsidy
This is a brand new federal subsidy that is designed to help small businesses retain employees on their payroll (or to rehire them) during this outbreak. The federal government will pay qualifying businesses 75% of the first $58,700 of an employeeβs payroll salaries for up to three months, retroactive to March 15, 2020. All businesses and non-profits whose revenues have decreased by at least 30% because of COVID-19 should qualify. More details on eligibility and how to apply will be shared here in the days following the March 30 announcement.
Indigenous Community Support Fund
The federal government has also started a new Indigenous Community Support Fund that will provide assistance for the immediate needs of the First Nations, Inuit and Metis Nation communities. The funds will be administered by community leaders where they are most needed.
Employment Insurance (EI)
EI is a federal program available for Canadian workers who have been laid off, and have been paying into EI benefits, and have worked between 420 and 700 hours in the past year (depending on where you live). It pays 55% of your average weekly earnings, to a maximum of $573. Benefits will continue to be paid for a period of between 14 and 45 weeks, depending on how many insurable hours you have worked.
How to apply
You can apply online within four weeks of losing your job with the appropriate documents (which are listed online). There is typically a two-week waiting period before receiving your first payment.
Note that, right now, it is better to apply for the federal governmentβs new CERB support. The applications should be processed faster, with fewer obstacles, and you will still be able to receive EI benefits later, if you should need them.
Provincial employment relief
Some provinces are offering a one-time payment of around $1,000 for people who have lost their jobs due to the COVID-19 outbreak.
British Columbia and New Brunswick will make a payment to anyone who has lost income, even if they qualify for federal support.
Alberta and Saskatchewan offer payments for anyone who is unable to receive federal aid.
Quebec has a province-run temporary aid program for those who are affected by this outbreak and donβt otherwise qualify for federal or employer-provided unemployment assistance.
In addition to these employment measures, most provinces, territories, Indigenous communities and municipalities are increasing the availability and the amount of aid that is offered by programs that were already in place before COVID-19. Visit the websites of your municipal government and local organizations, to see if there might be other extras you can count on during this time. Here is a link to the economic support provided by the city of Toronto, for example, including information on property tax payment grace periods; this link offers information provided by the Northwest Territories, including a full list of subsidies and programs that are available during the COVID-19 crisis.
Extensions on income tax filing and payments
The federal government has extended the deadline for filing personal income tax to June 1, 2020. As well, the payments of any outstanding tax balance can be deferred until August 31, 2020, without incurring any interest charges or penalties. More details can be found here. Quebec is the only province that collects personal income taxes separately, and it has also extended the tax deadlines for this year.
Increased federal benefits
The federal government is automatically raising the amount of Canada child benefit (CBC) that is paid to every family by $300 per child per month. The payment increases will begin in May. The government will also make a one-time payment for families with modest incomes through the GST/HST credit. Individuals can expect close to $400, and couples can expect around $600 in mid-May.
Student loan extensions
As of March 30, the repayment of Canada Student Loans and Canada Apprentice Loans has been automatically suspended for six months, until September 30, 2020, and no interest will accrue. Quebec, Alberta, British Columbia, Saskatchewan, Nova Scotia, Prince Edward Island and Ontario are also providing similar payment freezes on their student loan programs.
Registered Retirement Income Funds (RRIFs)
The minimum withdrawal for RRIFs has been reduced by 25% for 2020, reducing the total amount of taxable income that retirees will have to claim and, thus, reducing how much tax they will owe.
Utility bill deferrals
Many provinces and municipalities are mandating that utility payments can be deferred for 90 days. Please check with your local service providers to see what options are available to you. BC Hydro is also offering grants of up to $600 for people who have lost income due to the COVID-19 outbreak.
Mortgage and other debt repayment deferrals
Canadaβs largest banks and many credit unions are offering mortgage deferrals of up to six months for people who are struggling to make ends meet during this crisis.
They are also offering payment deferrals on other debt, such as lines of credit and credit cards. Itβs important to understand that this is not mortgage or debt forgiveness, and that you should assume interest will continue to accrue on the outstanding balance (talk to your lender about the specifics that apply to your mortgage, line of credit or loan). Since it will take you longer to pay off your mortgage and interest will continue to accumulate, it is possible that deferring payments now might end up costing you more in the long runβso only defer payments if you truly need to. You may also want to consider other measures, such as increasing your amortization so your repayments are smaller, and spread out over a longer period.
So, should I defer my payments?
Maybe. If you are worried about having enough money to survive in the short term, then not having to meet a mortgage payment or two will certainly help. Melissa Leong, author of the finance guide Happy Go Money, says that if you do defer, itβs smart to find out how you can repay any extra money back into your mortgage. βSay youβre getting a mortgage deferral to put the money [you would have used for repayments] in an emergency fund. If you donβt end up spending the money on basic necessities, put it back into your mortgage. Look into what your payment options are, whether that be lump-sum payments or top-ups,β says Leong.
In general, if you are worried about making ends meet during this outbreak, look carefully at ways to decrease your expenses. Leong suggests doing a line-by-line examination of your financial statements and cutting out as much as you can. βNegotiate with your telecommunications company, your insurance company, to reduce your fees. Meal plan to stretch your grocery bill,β she says. If you have to borrow money to get by, be smart about it. Leong says, βAccess cheap debt if you canβ through a line of credit, for example. Use as little of it as possible, and create a plan to pay it back when things normalize.β
our best defence against a recession is to structure your financial life according to some basic principles: save up for a rainy day, donβt put all your eggs in one basket and sharpen your resume.
The last recession scarred me. I was just about to graduate from university when it hit in 2008: the fallout from the subprime mortgage crisis created a deluge of fear, anxiety and pure panic from all corners. The S&P 500 plunged by 57%, U.S. GDP declined by 3.8% and employment dropped by 6%. Similarly, in the EU, GDP sank by 4.4% in 2009 and they lost about 6.7 million jobs from 2008 to 2013.
Never mind that Canada barely suffered compared to the United States and Europe (Canadaβs GDP fell by 3.6% for only three quarters across 2008 and 2009 before recovering, while employment dipped by just 1.8% in the same time frame); mass uncertainty still swept the air. Homeownership and retirement plans washed away and headlines screamed that there were no more jobs to be had. The only sensible course of action was to hide out and let it all rumble over. I enrolled in graduate school.
Eventually, the global economy did recover. But it never forgot.
Since then, the U.S. has been in its greatest-ever period of economic expansion. The stock market hit record highs in both Canada and the U.S., while unemployment figures are at near-historic lows around the world.
Ironically, those positive data sets just appear to be fuelling widespread disquiet that a recession is just around the corner. After all, what expands must contract and weβre well overdue for a recession, which traditionally hits every eight to 10 years.
Sometimes it felt like weβre all on a plane clutching the armrests of our seats, just waiting for turbulence.
And then it happenedβthe fire-starter that weβve all been waiting for. A new virus emerged in December and spread outward from China, stoking fears of a global pandemic. The stock market reacted spastically in response to potential quarantines, supply chain disruptions and travel restrictions. The DOW tumbled more than 3,500 points the last week of February, only to quickly recover by Monday of the following week, only to again plunge 1,1000 points on March 5. Both the Federal Reserve and Bank of Canada slashed interest rates by half a percentage point.
Now the question on everyoneβs mind is: is a recession just around the corner?
What is a recession?
Technically, a recession is two quarters of negative GDP growth. And since it has to last for six months to even qualify, you may not even notice youβre in the midst of a recession until itβs almost over. Most recessions arenβt as serious as the last one we had; they usually last for just under a year.
But part of the reason weβre all so on edge now is because of whatβs often thought to be a harbinger of recession: the yield curve inverted last year, for the first time since 2007.
What is an inverted yield curve?
An inverted yield curve simply means that interest rates on long-term bonds become lower than the interest rates on short-term bonds.
Typically, the opposite is true: you get a higher interest rate on long-term bonds because youβre taking on a greater risk; interest rates could rise over time while youβre locked into a lower rate. Conversely, thereβs less risk in lending out your money at a fixed rate for a shorter term of a year or two; rates usually change incrementally and donβt swing erratically.
So, itβs really strange when interest rates for short-term bonds are higher than rates for long-term bondsβitβs like saying the near future will be riskier than the long-term. And an impending recession is one of the only reasons why that would be the case.
Indeed, the media clamour would have you believe an inversion of the yield curve is a portent equal to three bloody crows standing on a spire. But while the phenomenon has been somewhat predictive of a recession in the United States, itβs been less prophetical in Canada, says David Macdonald, an economist with the Canadian Centre for Policy Alternatives.
In other words: no one can see the future in a crystal ball. The yield curve doesnβt foretell anything. When a recession will hit, why it will hit, and how deeply it will affect you are all questions that no oneβnot economists, not analysts and certainly not your brother-in-lawβcan predict with the remotest bit of accuracy. (If they could, we wouldnβt have been so caught off guard in 2008.)
What will a recession look like in Canada?
Weβve had nine recessions since the last World War, says Craig Alexander, chief economist at Deloitte. Three were light, three were moderate and three were severe.
The cause of a downturn is what determines its magnitude. A single over-leveraged marketβthink early-aughts tech sector, for exampleβwill lead to a milder recession than would a massive imbalance in the economy, as was the case in 2008 when subprime mortgage loans were packaged and sold around the world.
So, itβs impossible to say what the next recession will look like or how it will affect you. Each downturn is caused by a different issue in the economy, and your proximity to that issue influences the ramifications.
One thing is certainβsome sectors will be hit far harder than others. Since Canadaβs economy is primarily export-driven, any downturns that our trade partners experience will likely reverberate throughout our own country, especially in natural resources, commodities and manufacturing.
If the next recession is due to a shock in energy prices, the Prairies will probably suffer. If itβs due to a decline in housing values, Vancouver and Toronto will likely take a hit, as will related businesses such as construction and mortgage companies.
Across the board, weβre likely to see rising unemployment, especially among young and part-time workers. While mass firings are unlikely, says Macdonald, employers may put a freeze on new hires and reduce staffing through natural attrition. We may also see a dip in the stock market.
What will cause the next recession?
If the next recession is due to the COVID-19 virus, it would likely result from the need to shut down big cities to control its spread, as is already happening in China, Italy and South Korea, Macdonald says. If people stopped going to work, or going shopping, then weβre likely to see slow or negative economic growth.
Alexander and Macdonald, however, both identified the huge run-up of corporate, government and household debt as the biggest risk factors for the next recession.
U.S. corporate debt now equals half the nationβs GDP, or almost $10 trillion. Global government debt has almost doubled since the last recession to around US$66 trillion, or almost 80 percent of global GDP. Here in Canada, household debt is mostly in the form of mortgages and stands at $2.2 trillion, which actually exceeds our countryβs GDP. Because the Bank of Canada recently slashed interest rates by half a percentage point, household debt is only likely to increase in 2020, as mortgages become cheaper.
But if, how and when that debt will spark an economic decline? Nobody knows.
Donβt be afraid of a recession
Fear of a recession can easily affect you more than an actual recession. So, whatever you do, donβt panic.
In December 2018, for example, the North American stock market was getting hammered, with Nasdaq, S&P 500 and the DOW sinking to 15-month lows. But in fact, the stock market returned around 20% just a month or two later.
βIt was a very volatile risky year and the economic conditions weakened,β Alexander says. βIf you sold in 2018 and didnβt invest in 2019 because you were scared a recession was going to happen, then you missed one of the best years in the stock market.β
How can you prepare for a recession?
The best way to prepare for a recession is to structure your financial life according to some basic, defensive principles (all conveniently summed up in popular sayings): save up for a rainy day, donβt put all your eggs in one basket and sharpen your resume.
βPeople need to be mindful that recessions do occur,β says Alexander. βThe question isβif a recession hits, can you get through the 16 to 18 months that it will last? A recession is a valley and what you really need to do is get to the other side of the valley.β
Here are a few strategies to insulate yourself from the effects of the next recession.
Build an emergency fund
Aim to save three to six months of living expenses. While many Canadians are currently using their line of credit in lieu of a cash fund, be aware this may leave you in a precarious situation since credit may not be so easily available during a recession.
Make sure you have a diversified portfolio
That means across asset classes (i.e., stocks, bonds, real estate, commodities) and across securities and sectors (banks, energy, consumer goods, technology, etc.). Blue-chip, large-cap stocks in mature industries tend to weather economic storms better than smaller companies in newer industriesβthink healthcare and utilities over cannabis and blockchain.
I personally have been using UFile for many years and have had no problems.
https://maplemoney.com/ufile-tax-software-review/
Now that itβs tax time, you are probably thinking about how you will prepare your taxes. While some Canadians with especially complex situations are better off with a professional accountant, most of us do just fine with the help of tax software.
As much as I have recommended TurboTax for preparing taxes in the past, I think itβs important to know about other options that might serve you better. There is another well known program that has been gaining momentum. UFile is a serious contender in the Canadian tax preparation market, and itβs one that I recommend as the #1 tax prep software.
I like that UFile automatically gets you the tax credits you should have coming to you, without the need to fill out a lot of extra forms or answer a lot of questions. UFile is updated regularly so that it includes the most up to date information from the CRA, so you donβt have to worry about missing out on what youβre entitled to.
If you are trying to find a viable alternative to TurboTax, here is what you need to know:
What to Expect from UFile
The interview process in UFile works well, although it is not quite as comfortable to use as the TurboTax interviewer. UFile also includes the MaxBack Refund Analyzer, which looks at the whole family to best suggest deductions, credits, and pension splitting. This is a great feature that can help you figure out how to file your taxes in tandem with your partner so that you get the best possible tax refund. The process works well, and you can save information for later, if you need to.
UFile is secure and safe, and has been around for more than 15 years. You can also use information from last yearβs return in this yearβs return to speed up the process and make it a little bit easier. UFile also supports the import of desktop versions of H&R Block and TurboTax, so if you are switching tax software, itβs possible to enter your information quickly, without the need to add it manually. UFile also offers customer support and options for contacting professionals who can help you answer questions if you get stuck.
Itβs also worth noting that UFile is certified for NETFILE, so you can submit your tax return electronically, increasing the speed at which you receive your refund. This is something that is increasingly important as more Canadians go paperless, and as our society looks for more in terms of quick results.
What Does UFile Cost?
UFileβs biggest strength is in the pricing. While there are free tax programs like StudioTax and SimpleTax, you may be willing to pay for a more polished and user friendly product. UFile is valued only $19.99 for four tax returns, while TurboTax Standard charges $34.99 (although you do get eight returns). UFileβs cost effectiveness becomes even more apparent when compared to higher versions of TurboTax, many of which add features that are in the one version of UFile.
The fair pricing for UFile is based on the online version, which starts at $17.95 for individuals. You can add a spouse for only $10, which makes it relatively inexpensive for you to file your return online. TurboTax Standard online starts at $19.99 per return. You can see that, already, you have the potential to save more money with UFile.
One of the nice things about UFile is the fact that it is pretty straightforward, with fewer versions and pricing options. There is a UFileT2, designed for corporations that need to file a T2, for $129.95. If you donβt need to file a T2, the online or desktop versions of UFile can help you report self-employed and investment income on your T1. You can also access UFile PRO, which is designed as professional tax software, starting at $129.99. This is ideal if you need to file more returns, and save money.
There is also the UFile Free offer, which is free if you have a simple return or are a new filer, a student, or have an income of less than $20,000. If you add dependents that fit these requirements, you can add them for free as well. This is a nice touch, since some tax preparation software programs will nickel and dime you for every little form or dependent. If you have a simple tax return, consider using this program from UFile to save money on your filing costs. You get the benefit of help preparing your tax return without having to pay anything. This is useful for new filers as well, since they wonβt have to pay. Itβs a good way to test out the program and decide if you like it.
UFile is my #1 recommended Canadian tax prep software. If you have especially complicated taxes, you might want to consider hiring a professional instead of using tax software at all. Many consumers find that UFile is a great choice because of its easy product offerings and low prices. Even though I think TurboTax is a solid program, UFile is my favorite Canadian tax prep software, and I highly recommend it.
Made your RRSP contribution yet?
Wait, keep reading. This isnβt another tedious piece on tax-free compounding, using a retirement plan to split family income, making a contribution without having any money, how to remove funds without being taxed nor how the entire system is dramatically skewed to benefit high income-earners, medical professionals, lawyers and the self-employed. You already know that stuff.
Instead, letβs revisit a fav topic: how pooched everyone else is.
How much do you need to retire? That depends on when you hang βem up and how much you spend, of course. Plus if you have kids or wish to leave an estate for others to squander on stuff youβd never buy. There is no static answer. Some people say 30x your annual working income is the right number. Investment giant Schwab suggests $1.7 million is a reasonable goal. Fidelity says you need enough saved/invested to replace 80% of your work salary. Anyway, the Internet teems with financial calculators you can use to come up with your own target.
Then compare your readiness with this dismal set of facts:
- As mentioned before, people retiring without a defined corporate pension have an average of $3,000 saved. Yeah, they probably have a house, too. But you canβt eat that.
- About a third (32%) between 45 and 64 have saved⦠nothing. Seriously.
- Roughly a fifth (19%) have less than fifty grand. But the average amount Canadians have saved/invested for the future is $184,000. That tells us a small slice of folks have saved a boodle. A giant slice of people are heading for a future of KD and CPP.
Now on that point, we all need to understand clearly the public pension system in Canada will not save you. Not with the recent enhancements, either. If youβre a Millennial, the higher benefits (a max of just over $20,000 a year) donβt click in until the average moister is 76.
Today the max someone can collect in CPP is $1,175 a month, but very few qualify. So the average received is $672, or eight grand a year. Grocery money. Old Age Security goes to everyone at age 65 (for now), and that adds $613. So the total in government pogey the average person receives is $15,420. If that were your only income, then the GIS (Guaranteed Income Supplement) kicks in at a max of $876 per month, bringing the grand total of public assistance to $25,932 β or about two thousand a month.
Married people get less GIS, but itβs still possible for an average household of two to receive a total of about $45,000 annually. Maybe all the people with little or nothing think this is enough to get by on, which is why they donβt save or invest. Given that the median household income in Canada is north of $90,000, this translates into a 50% drop in retirement. So ask yourself, could you suddenly live on half the money youβre getting from employment?
Letβs compare with the deplorables in Trumpland (which some people think may soon be the home of Bernieβs Sandersnistas).
The average monthly Social Security payment in the US is $1,471, or about $1,900 in moose money. Therefore itβs three times more than CPP pays (on average). By the way, the max SS payment of $2,210 at age 62 is about twice as generous as CPP β and it grows from there: $2,900 a month if you wait until 66 and $3,770 monthly ($45,300 US) at 70. So a couple of wrinklie old pensioners who worked all their lives could actually see up to ninety grand a year.
But what about household savings?
A new survey by TD Ameritrade says 50% of Americans have more than $100,000 β way better than us. Most of this is in the hands of people over the age of 40 (no surprise there), yet Millennials in the US are the ones most often stuffing their Roth IRAs (the American equivalent of our TFSA).
Hmm. The average American has saved more money for retirement, and the US system is far more generous with public pensions. So how did we get so smarmy and snooty, believing the States is a land of dumpster-divers, people who spend everything on Glocks and trailer park rednecks where financial illiteracy reigns supreme and society is divided between billionaires and losers?
Beats me. The CBC maybe. Or our political elite. Maybe itβs the whole real estate-government complex.
After all, the US rate of home ownership is lower than in Canada by almost 10%. American households carry far less debt, and actually reduced borrowing a ton after the housing market blew up. Plus the median cost of an American house is just $228,000. The average paid by first-time buyers is $219,000. There are porta-potties in Vancouver worth more.
Thus, when it comes to the financial state of Canadians, this pathetic blogβs thesis stands. Itβs suicide by house.
The regulations outline specific conditions that entitle travellers to compensation, and even a full refund of their airfare
https://www.moneysense.ca/spen...nger-bill-of-rights/
Passenger rights in Canada have been a sore spot for travellers for many years. Historically, if you were delayed for reasons within the airlineβs control, you werenβt entitled to any compensation. As you can imagine, this was frustrating for many passengers who had their travel plans interrupted.
That all changed in May of 2019, when the Canadian Transportation Agencyβs Air Passenger Protection Regulations came into play. These new regulations are meant to provide Canadians with compensation when there are airline delays, as well as some basic rights to make their journeys slightly more comfortable. Airlines are required to follow these new rulesβbut, for your own protection, you should also know what youβre entitled to.
Compensation if you are denied boarding
Under the new passenger bill of rights, if you have a valid ticket, yet are denied boarding due to reasons within the airlineβs control (for example, overbooking) but not required for safety, then youβll be entitled to compensation. How much youβll get depends on the length of the delay when you reach your final destination:
Length of delay | Compensation amount (CAD) |
Up to 6 hours | $900 |
6 to 9 hours | $1,800 |
9 hours or more | $2,400 |
The compensation must be paid as soon as youβre informed, or within 48 hours if itβs not possible to issue right away. For those not in a rush, you could benefit from these new rules by volunteering to give up your seat in exchange for vouchers you can apply to future travel, and other benefits. The airlines will also have to rebook you onto another flight at no extra charge.
Delays on the tarmac
If youβve ever been stuck on the tarmac, then you know the frustration is real. Under the new rules, you must be allowed access to the washrooms, proper ventilation, food and drink, and the ability to talk to people outside of the plane. In other words, they canβt force you to stay in your seat and have your phones in airplane mode during tarmac delays. If the delay lasts three hours at a Canadian airport, then the airline must return to the gate so passengers can disembark. There is an additional 45-minute grace period for airlines if the plane will likely take off during that time period.
Lost or damaged luggage
If your luggage is lost or damaged on domestic flights within Canada, you are now be entitled to up to $2,100 in compensation. The important thing to know is that if your luggage is damaged, you must file a claim with the airline within seven days of receiving your luggage. If your luggage is lost, then you have 21 days from the time it was supposed to have been delivered to make a claim. If your luggage is lost or damaged, airlines will also need to reimburse any baggage fees you paid.
Compensation for flight disruptions
Passengers are now entitled to compensation up to $1,000 for flight delays or cancellations based on the length of the delay and the airline theyβre flying:
Length of delay | Compensation (large airline) | Compensation (small airline) |
3 to 6 hours | $400 | $125 |
6 to 9 hours | $700 | $250 |
9+ hours | $1,000 | $500 |
Although you get up to one year to make a claim, airlines have 30 days to respond by paying you what youβre owed or they can provide you with a reason why they donβt think youβre owed anything. Since this compensation only applies when flight delays are out of the airlineβs control and not safety-related, they may have a lot of reasons to not pay.
Another thing to consider about the compensation is that it only applies after youβve made a claim. If youβre in an airport and delayed, you may need to pay out-of-pocket for food or even get a hotel for the night. Having a travel insurance policy in place that has defined payouts in the event of delays or cancellations would likely give you some added peace of mind as youβd be able to make arrangements knowing that youβll be reimbursed. Donβt forget, many credit cards come with travel insurance included.
Rebooking and refunds
Whenever there is a flight delay or cancellation, the airline must ensure that passengers are able to complete their journey. As soon as a delay reaches 3 hours, airlines need to rebook the passenger on the next flight. With large airlines, if that next available flight doesnβt depart for 9 or more hours after the passengerβs original departure time, the airline would have to book you on a competing airline.
If the rebooking makes your travel pointless (for instance, you would miss your meeting) then youβd be entitled to a full refund on your ticket, plus $400 when flying on a larger airline or $125 on small airlines because you were inconvenienced.
Now, letβs say your flight disruption is outside of the airlineβs control. In such cases, airlines must rebook you with a competing airline if their own next available flight isnβt scheduled to depart within 48 hours. This gives passengers some protection, but not many people would be happy about waiting up to two days to get on with their travel plans. A travel insurance policy that includes flight delay insurance may allow you to book on another airline much sooner, and at no cost to you, which is another reason why you should always have travel insurance.
The seating of children
As strange as it sounds, before the Air Passenger Protection Regulations were introduced, airlines werenβt required to seat children near their parent, guardian or tutor, but thatβs no longer the case. Parents are now ensured that children under the age of 14 will be seated near themβbut the proximity may not be acceptable to some:
Age of children | Minimum seating distance required |
Under the age of 5 | Must be in an adjacent seat |
Ages 5 to 11 | Same row, separated by no more than one seat |
Ages 12 and 13 | Separated by no more than one row |
Thereβs no extra cost for these seating arrangements but, as you can see, if your child is between the ages of five and 13, itβs possible they may not be seated as close to you as youβd like. If you want to ensure that youβre getting the seats you want, then youβre going to have to pay for advance seat selection.
Final thoughts
The airlines will have to pay for this somehow, and itβs likely to be through higher airfare costs for all travellers. Still, new passenger rights are a step in the right direction; however, the wording gives airlines a lot of wiggle room so they donβt have to pay. Even if youβre clearly entitled to compensation, it may take time for you to collect and your travel plans may be severely affected. To give yourself some extra protection, youβll want to ensure you have travel insurance that includes trip cancellation, trip interruption and flight delays.
Nearly half of Canadians expect to receive an inheritance. But while itβs important to consider those potential funds in your own retirement planning, counting on them is downright dangerous. Hereβs what you need to know.
My mother passed away three days after her 66th birthday, leaving me with an inheritance I never expected.
Until two years ago, I assumed she would live into her 80s. But she had a terminal illness that progressed significantly in the final months of her life. Her care costs were minimal. We had great support from family and from government-funded resources.
But I have also seen things go the other way. Families burn through savings to cover full-time care for an aging parent at costs that can exceed $10,000 per month. In those cases, at the end of an aging relativeβs life, there may be no inheritance left to pass along to loved ones.
At our financial planning practice, one thing we ask clients is if they are expecting an inheritance; itβs a question on our intake form. We ask because it is relevant, both for retirement planning and discussion purposes. But as the two scenarios Iβve just described show, the most we can ask for is a best-guess answer. On the benefactorβs side, nobody knows how long they will live, nor what potential long-term care costs may be incurred during oneβs later yearsβso a beneficiary may or may not receive an intended inheritance. That makes planning to receive an inheritance challenging.
On the flipside, counting on an inheritance to cover your living expenses in retirement can be both difficult and risky. I have worked with widows and widowers who have married late in life and leave part of their estate to their new spouse and part to their children from another marriage. I have seen wills changed prior to death to include or exclude family, friends or charities.
The point is, the timing and amount of an inheritance may be a wild card. If you are expecting a significant or highly likely inheritance, it may be unrealistic to ignore it completely; but at the same time, counting on an inheritance that may not be as much or arrive as soon as you expect could make for a risky retirement plan.
Anecdotally, I have found that many clients ignore, or significantly understate an expected inheritance in their retirement planning. However, surveys suggest Canadians may be overly optimistic overall. In fact, a BMO survey from 2014 found that 40% of Canadians are counting on an inheritance that will help fund their retirement. The same survey also found that almost the same percentage, about 34%, are counting on lottery winnings to fund their retirement. The lottery expectation makes me question both numbers.
More recently, a 2019 Edward Jones survey found a similar number of Canadians are expecting an inheritanceβ44%. The good news is 63% of Canadians are expecting to leave an inheritance. But, as always, expectations can be thwarted by long-term care costs, despite best intentions.
CIBC reported in 2016 that the average inheritance received in the previous decade by Canadians aged 50 to 75 was about $180,000. The amount differed significantly by province, with BC, Quebec and Ontario all exceeding the national average, likely in large part due to real estate prices.
Practically speaking, I would be inclined to underestimate inheritance expectations and overestimate the life expectancy of anyone who you might expect to receive an inheritance from in the future. There is about a 50% chance that a 65-year-old man will live to 89, according to FP Canadaβs 2019 Projection Assumption Guidelines. A 65-year-old woman has a 50% chance of living to 91.
Being conservative when setting your own retirement savings and debt repayment targets may help ensure receiving an inheritance is what it should be: a windfall, rather than a necessity for funding your retirement.
From a planning perspective, if you are expecting an inheritance, there are proactive steps to take. In a 2017 CIBC poll, only 38% of seniors over age 65 have talked to their children about how to manage their finances if they can no longer do so themselves. Only 22% of boomers aged 55 and over have βlegal documents,β like a will or power of attorney, in place.
My mother was a good example of how quickly health can deteriorate at a fairly young age. Her financial affairs were in order, but there were certain discussions even I wished weβd had earlier than we did.
One of my favourite pieces of financial planning advice is to beware of rules of thumb. But one rule that I do like is the β40-70 ruleββmeaning, by the time you are 40, or your parents are 70, you should aim to discuss money and health with your parents.
I was 40 when my mother died earlier this year at age 66. I knew all the details of my motherβs finances, and enough about her care and end-of-life wishes to make the right decisions with my family. You may not need to know specific numbers and intimate details of your own parentsβ finances if they do not want to share them, but there are a few things you should know.
- Do they have up-to-date wills and powers of attorney/personal directives/mandates?
- Where are their legal documents located?
- Who is named as executor, attorney, agent or decision-maker?
- Do they have a financial, tax or legal advisor whom you should know?
- What are their long-term care and end-of-life wishes?
There are planning techniques to minimize income tax, probate fees and estate costs with an inheritance, but I see these strategies as being secondary to having an initial discussion with a parent about their estate and later life planning. Sometimes, the basics are much more important.
For someone banking on an inheritance as part of their retirement plan, I would urge caution. It is better to be conservative and re-evaluate retirement planning and inheritance expectations on an ongoing basis. An inheritance means you have lost a loved one. But it should not mean the difference between being able to retire or not.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.https://www.moneysense.ca/columns/ask-a-planner/how-to-plan-for-expected-inheritance/
https://retirehappy.ca/ten-ide...uccessful-and-happy/
Retirement is really supposed to be the best years of your life. For some this is a reality, but for others reality is not so promising. What makes the difference between a prosperous, happy retirement versus a retirement filled with stress and worry?
I recently had a reader write saying that the only people who understand retirement are people who are retired. I think there is some truth to this so I went to some of my clients who are already retired to try to find out what things they thought were keys to a successful retirement.
- Plan ahead. John and Sylvia have recently retired and despite the state of the markets, they are grateful they planned ahead. It was through planning that they set some goals and determined what they needed to do to retire. Their circumstances have changed over the last 5 years but the plan kept them on track and their goals were reached. Too many people fail to plan their retirement properly.
- Be conservative in your assumptions. Assumptions are an important part of any retirement plan. Too often assumptions do not leave room for variability or margins of error. According to John and Sylvia, βit is better to be conservative with your assumptions for rates of return, inflation and spending. Specifically, we are thankful that we did not project our investment returns at 10% to 15%.β
- Have a diversified portfolio. Ray and Betty have been retired for only 2 years. They are concerned about their portfolio but are happy that they added some income trust investments to their portfolio for income. In their words, βMake sure you have a diversified portfolio of investments. We have a diversified portfolio of GICs, bonds, equities and income trusts. At a time when stocks are losing money, we are very happy that we have other asset classes to balance the portfolio.β
- Account for inflation. For Suzanne, a widow in retirement, it was enlightening to find out how inflation impacted the future income needs in retirement. She says, βFor the last few years, my costs have been increasing steadily and I have had to make some adjustments to my income. My hope is that everyone planning for retirement makes sure they account for higher costs of living.β
- Develop hobbies and interests before retirement. For Larry, retirement came as a result of some downsizing by his company. Although he was somewhat prepared financially, he found himself with too much time on his hands. It took Larry a while to fill his time with interests and activities. His advice is to plan what you want to do with your time before you actually retire.
- Understand the sources of retirement income. Jill attended a seminar because she was thinking about retirement. For Jill, she was unsure where she was going to get income from in retirement. With a little planning, Jill determined that she would benefit by taking Canada Pension Plan early. For Jill, she was completely unaware of the rules surrounding the government benefits. Jill thinks everyone should know about your sources of income whether it is pension plans, RRSPs or government benefits.
- Minimize tax. Phil and Sue have been retired for over 10 years. For Phil and Sue, they made some changes a few years back that has changed the way they think about finance and investing in retirement. βIt is so easy to get caught up worrying about safety of capital in retirement when really the focus should be on minimizing tax. The bottom line is good tax planning made a huge difference to our retirement.β
- Be conservative when it comes to investing. Rose has been retired for quite some time and financial advisors have always tried to convince her that GICs were too conservative and that she was missing out on higher potential returns from other investments. For Rose, she thinks her success comes in the fact that she stayed conservative and lived a modest life. βIt is times like these that I can sleep at night. Sure, I don't spend money foolishly but I am not losing 30% like some of my friends. Retirement is about living a comfortable life with what you have.β
- Live a healthy retirement. It sounds all too obvious but for Marvin, he had a heart attack only 2 years into his retirement. Today Marvin is much more conscious of what he eats and makes sure he goes out walking at least three times a week. The healthier you are, the longer you will likely live and the more you will enjoy your life. You can have a lot of money, but if you don't have your health you really can't benefit from a lot of your money.
- Just be happy with what you have. According to Susan, retired for 21 years, βIt is so easy to get caught up in the wants of life and too often people, (especially you young ones), don't appreciate what they have. I don't have a lot of money but I have enough to get by. I've had a good life and the one thing that is very important to me, is my family. They bring joy to my life.β
So there it is . . . a little advice from some experts. Living proof that retirement can be the best years of your life.
The Old Age Security (OAS) pension is one of the three main pillars of Canadaβs retirement income system. The two other pillars are the Canada Pension Plan (CPP) and Employment Pension Plans/Individual Retirement Savings.
The universal OAS pension is a taxable monthly payment available to seniors who are aged 65 and older and who meet the eligibility requirements. Unlike the CPP, Old Age Security benefits are not tied to your employment history. You may be eligible to receive the OAS pension even if you have never worked or are still employed.
In addition to the universal OAS pension, there are three other benefits that low-income seniors may also qualify for: The Guaranteed Income Supplement, Allowance and Allowance for the Survivor. I discuss them in a separate article.
Related: How Much Income Will You Need in Retirement
Eligibility for Old Age Security Pension
- You must be at least 65 years of age.
- If living in Canada: You must be a Canadian citizen or legal resident and must have lived in Canada for at least 10 years since you turned 18.
- If living outside Canada: You must have been a Canadian citizen or legal resident before you left Canada and must have resided in Canada for at least 20 years since you turned 18.
- There are a few other scenarios where you may be eligible for the OAS; for example, if you have lived in a country with which Canada has established a social security agreement.
How to Apply for OAS Pension
If you wish to start receiving your OAS pension at 65 years of age, you can send in your application the month after you turn 64.
Service Canada will sometimes enroll seniors automatically and send them a notification letter. If you are not automatically enrolled, complete and mail the Application for the Old Age Security Pension Form.
How Much OAS Benefit Will You Receive in 2019?
The amount you will receive on a monthly basis depends on how long you have lived in Canada after turning 18.
To qualify for a full OAS pension, you must have lived in Canada for at least 40 years after age 18. You will receive a partial pension benefit if you havenβt resided in Canada for the full 40 years. The partial pension benefit is 1/40th of the full pension amount for each complete year you lived in Canada after age 18. For example, if you had lived in Canada for 20 years as an adult, you may qualify to receive 20/40th or one-half of the full benefit.
- OAS benefits are adjusted quarterly in January, April, July, and October based on the prevailing Consumer Price Index. For the last quarter of 2019 (i.e. October to December), the maximum monthly OAS benefit is $613.53.
OAS Deferral Option
Since July 1, 2013, individuals can voluntarily defer their OAS pension for up to 5 years after the date they become eligible. This deferral will make them eligible for a higher monthly pension later. For every month the OAS is deferred, the monthly pension amount increases by 0.6% up to a maximum of 36% at age 70.
OAS Clawback
Officially known as the OAS recovery tax.
Your OAS benefit may be reduced by a clawback if your net income for the previous calendar year exceeds $74,789 (2017), $75,910 (2018), and $77,580 for 2019. If your net income exceeds this amount, you must pay back 15% on the excess income up to a maximum of the total OAS benefit received. This deduction is like an additional 15% tax on top of your current tax rate.
OAS clawback example: For example, for the 2017 year, the income threshold was $74,789. If your net income was $85,000, the excess of $10,211 would trigger a clawback of $1,531.65 (i.e. 15% x $10,211). This would result in a monthly reduction in OAS benefits of $127.64 for the July 2018 to June 2019 period.
For the October to December 2019 quarter, if your net income exceeds $126,058, your OAS benefit will be reduced to zero.
How To Minimize OAS Clawbacks
A few strategies that may be deployed to limit OAS clawback if applicable include:
Income Splitting: Splitting eligible pension income including workplace pensions, RRIF, and utilizing spousal RRSPs. This can lower individual spousesβ overall income and limit or eliminate OAS clawback.
Defer OAS/CPP: Seniors can defer OAS pensions for up to 5 years from when they are eligible. CPP can be deferred as well. However, note that deferring OAS or CPP will increase your benefits later down the road and could then trigger OAS clawbacks at that time. In some cases, taking CPP much earlier may be a better option.
Prioritize TFSA Contribution: Income generated from investments in a TFSA are not taxable and do not count towards your net income.
Utilize RRSP Contribution Room: You can contribute to an RRSP until the end of the year in which you turn 71. If you have unused RRSP contribution room from previous years or still have employment income, contributing to an RRSP will lower your net income for OAS calculations. Making spousal RRSP contributions will achieve the same result.
Optimize other Investments: Interest income from Guaranteed Income Certificates, savings, etc., are taxed fully. Dividends are grossed up (138%) and may push your income over the maximum threshold. Only 50% of capital gains are included in taxable income.
If you have questions about your Old Age Security pension, you can contact Service Canada as follows:
- If you reside within Canada or the United States, the toll-free number is 1-800-277-9914.
- If you reside outside Canada and the United States, the number to call is 1-613-957-1954.