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It may be several weeks away still, but why wait to the last minute to think about purchasing RRSP’s. For some people these investments are taken care of by their place of employment. However, if you’re like thousands of people, the ability to purchase RRSP’s is out of arm’s ‘financial’ reach.

So many people have held onto hopes of buying RRSP’s but year-after-year, maxed credit cards and a bad credit rating has stood in the way of getting a loan from the bank to make an investment. This need not be the case any longer.

It’s never too late to start making a contribution and the best time starts now. Even if you have never made any RRSP contribution in previous years, there’s no time like the present to get started. Don’t let the lack of cash stop you from taking advantage of purchasing an investment in your future.

An RRSP loan can help you realize tax savings, increase the eventual size of your investment and can help you stick with a savings plan. As an added bonus, the tax refund that you may get as a result of your contribution could help to pay down your loan.

There is a limit on how much you can contribute every year. The maximum contribution is generally 18% of the amount that you earned from employment during the previous year. This amount is set by the Canadian government. After your first year of filing your tax return, the Notice of Assessment you receive from Revenue Canada will let you know your maximum allowable RRSP contribution.

The main purpose of an RRSP is to help you save for your retirement. However, the government does permit a person to use those investments for other important life goals, and there are no limitations on when you can and can’t use your money.

Don’t let the fear of having a bad credit rating stop you from taking control of your future. Everyone falls onto bad times at some point in their life and there’s reason why bad times should prevent you from investing in your future. While a standard financial institution may not be willing to lend to those with less than stellar credit, there are lenders out there that will approve even those with bad credt.

There are loan options available for everyone. With a little research, you can find a reputable company who is willing to work with you in order to help you start contributing to your future.

BHM Financial is a trusted name in the Canadian car title loan industry and they may be able to help you start investing for your future. Visit our Car Title Loans
website or our Bad Credit Loans website and start investing tomorrow.

RRSP FAQ:

Question: Can I buy an rrsp then shelter it in a tfsa?

Answer: You can, but the real answer is why would you want to? The minute it is transferred to the TFSA, the RRSP funds are taxed as if withdrawn.

Question: Alberta, Canada, Income tax, my wife is a new comer to Canada, earned $32 000, does she qualify to buy RRSP?
Not sure if my wife is allowed to buy RRSP yet as it is her first year, don’t we need to wait for the government to send us the limit we are allowed to buy? Or we should just go ahead and buy as her income is over $16 000, so is mine?

Answer: You should wait. If the government has not yet sent you a limit, you probably don’t have one. Employment income during the year increases your RRSP limit in the following year. If she is new to Canada in 2009, her first limit will be available for 2010.

Question: If you take RRSP’s out, does this become income on your taxes (even if you paid at take-out)?
He makes approx $18,000 per year but took out $30,000 in his RRSP’s. Does this mean that he made $48,000 last year?

Answer: Taking cash out of an RRSP is taxable income in the year it was withdrawn. It is reported on line 129 of your tax return. The amount of taxes withheld by the financial institution is credited as a payment of taxes on line 437 of the return.

Question: Year-end bonus and RRSP contribution?
Can someone explain the rules around a year-end bonus and contributing this directly to a group RRSP through my company? I understand that the tax rate on this contribution is much lower than on a regular contribution. I don’t understand why there would be such a benefit for me whereas my wife (school teacher…no bonus) wouldn’t get the same benefit? Does it somehow all even out in the end if you contribute to your RRSP each year?

Answer: If a year end bonus (or other one-time large payment, such as a retro-active pay increase) is going to be put into an RRSP your employer can get permission to withhold less (or no) tax at source. This lets you put more into the RRSP since they don’t have to withhold part of it.

The result is that you pay the same taxes as you would with the same contribution, they’ve simply withheld less at source.

Yes, it all evens out eventually if you would have made the same contribution anyway.

Question: RRSP claim, how much should I claim of the 10,000 I have put in this year?
This is my first year with an RRSP so I transferred a lot of my savings into an RRSP and RSP Mutual Fund, because it was a lump sum of about 7,000 which has turned into about 10,000. Is it smart to claim it all now or should I claim some now and some later? Remember I have never claimed an RRSP and my NoA says my limit is 37,000. I guess what my concern is if I need to access some of that money in a year or so, would it be smarter to not claim it all so I don’t run into any penalties? And if I did claim it all, how steep are the penalties for withdrawing funds early?

Answer: When filing in your tax return this year, you’ll have to fill in a copy of Schedule 7. On this form, you’ll report the entire amount, but you have the option of carrying forward all or part of the contribution to a future year. You might have to play with the numbers a bit to figure out how much would be the right amount to claim, but it’s to your advantage to claim the amount against income in the higher tax brackets. Perhaps you should lower your income to the cusp of the next lower bracket or something like that, especially if you expect your income to be somewhat similar to what it is in 2009.

As to your question about needing it next year… the CRA does not charge a penalty for withdrawing early, but you will be required to include any amount withdrawn in your total income in the year of the withdrawal. The financial institution will withhold tax and issue you a T4RSP, but the amount of tax withheld is normally not enough to meet your tax obligation. In addition, while the CRA will not charge a penalty, the financial institution can charge any fees they like.

By the way, when you make the claim for RRSP on your return, you claim when was contributed, not the current value.

Question: What is the difference between RPP, CPP, and RRSP? Are they all taxed differently?

Answer: RPP = registered pension plan. Where some of your pay is used to fund a private pension plan.

CPP = Canada pension plan. Government plan where you have to contribute when you have earned income. It is taken off your pay if you are employed. If you are self-employed you pay as part of when you file your taxes.

RRSP = Registered Retirement Savings Plan. A tax shelter where you put money in, and you can take it out later. The contributions are taken off your income to calculate taxes owing, but added in when you cash it out.

You can generally cash in an RRSP anytime. To get the pension incomes you have to qualify, depending on the rules of the pension plan. For CPP you can collect it after you turn 60 (at a reduced rate) or after 65 (full rate).

Contributions to each of these are treated differently for tax purposes. When you get them back, whether cashing in the RRSP, or receiving pension income, they are treated more or less the same, as income.

Question: What is difference between an RRSP and a RRSP GIC?
With my bank, there is an obvious advantage with interest gained through the RRSP GIC, so I’m uncertain on why a regular RRSP is even an option.

Answer: An RRSP is registered tax sheltered investment plan. The funds in the RRSP can be invested in many different types of investments, such as GICs, mutual funds, stocks, bonds, etc. The decision of what type of investment best meets your needs depends on many factors and it may be advisable to consult with a financial planner.

In your example, I assume that the “Regular” RRSP is just a savings account. GICs normally pay a higher rate of interest than savings accounts because the GIC funds are often locked in for a fixed period of time. Since RRSP funds are meant to be used for long term retirement savings, it may make sense to lock in the funds in order to earn a higher rate of return.

One reason that a person might prefer to put their RRSP funds in a low interest savings account rather than a GIC is that they may be planning to invest the funds in some other investment in the near future and therefore need the funds to be available on demand.

Question: How much do I pay deposit for RRSP to avoid paying taxes?
Here’s some details: I work at two places, neither is aware of the other one so no adjustments to the deductions are made. At place #1 I earn $50.000/year before taxes, and they deduct the taxes from every paycheck. At place #2 I earn $6.000/year before taxes, and they also deduct taxes from every paycheck.

Rough calculations say I have to pay a little over $11.000 in taxes, and that company A has already deducted (if they’re doing their accounting well) around $9.500, which leaves me owing the government about $1.500.

So now, are the above rough calculations somewhat accurate, or are they way off? And how much money in RRSP do I have to deposit so I don’t have to pay the $1.500 I owe the government? Or, if I am not allowed to pay that much, what’s the maximum I can pay in RRSP, and by paying that much, how much in taxes will I have to pay?

Answer: I’d say those calculations are fairly accurate, but it doesn’t seem to take into account that you would also be paying CPP and EI premiums. There is a maximum to each, and you will easily reach it on the $50,000 job. Any CPP or EI collected from the $6,000 will be credited to you as an over payment, and will also reduce your income tax obligation. This won’t amount to very much, though. Probably about $225.

In either case, take a look at the calculator again. Each dollar that you put into your RRSP will reduce your income tax by the Marginal Tax Rate. For example, if you’re in Ontario, you would have a marginal tax rate of 31.15%. If you contribute $1,000, your income tax would be reduced by $311.50 ($1,000 * .3115).

Before you make a contribution, check your Notice of Assessment for 2008, or contact the CRA to find out what your RRSP contribution limit is. Over contributing doesn’t help you, and can subject you to some rather stiff penalty.

Now that the school year has come around again, you’ve probably spent some thinking about how to fund your child’s (or children’s) education without indebting the whole family to the government and to the banks. The good news is, from a tax and investment perspective, there has never been a better year to bring education funding into your financial plan.

Using a combination of two widely available investment programs, you can put your family ahead of the game: the Registered Educations Savings Plan (RESP) and the Tax-free savings account (TFSA). The RESP is a tax-deferred savings account that allows you to save money for your child’s education (or the education of an unrelated child whose educational needs you are looking out for) without worrying about paying tax on the earned interest or dividends. When you contribute to an RESP, unlike the similarly named RRSP, the contributions are not tax deductible – so keep in mind that this strategy won’t get you a refund cheque. What you will get (assuming you’ve taken advantage of this program when the child beneficiary is young enough) is a partially matched government grant that will add potentially hefty contributions to the savings plan.

When you contribute to an RESP, you will receive a 20% matching contribution in the form of the Canada Education Savings Grant (CESG). The maximum CESG amount for each year is $500 (With a lifetime maximum of $7200). Using this strategy, it wouldn’t be practical to deposit more than $2500 into the RESP on a yearly basis, since you won’t get any more matching dollars over that amount. The grant, along with your RESP contributions, will grow on a tax-free basis. When the RESP beneficiary withdraws the money to pay for educational expenses, the income is taxed in the young one’s hands. Considering that most students have very low annual taxable income, and considering the tax deductions and credits available for most full-time students, the amount of tax they should expect to pay after withdrawing RESP money is usually fairly low – if anything at all.

The Tax Free Savings Account is another useful tool for stashing away long-term education savings. Like the RESP, investment growth inside the TFSA is not taxed while it remains invested. Unlike the RESP, there is no government matching. That’s okay – the TFSA has a special perk which more than makes up for that. When funds are withdrawn from the TFSA, none of the growth is taxed. At all.

Each year, every Canadian over the age of 18 is allowed to make a flat $5000 contribution into a TFSA. In the case of a two-parent household, it’s not unusual for the higher income earner to make all of the contributions (i.e., deposit $5000 into his or her own account, then deposit another $5000 into the account of the lower income-earner), to get a nice break on taxable investment growth. Which means that $10,000 of savings per year can grow tax-free in every household.

Now here’s where the fun part starts. You can contribute $2500 each year to your child’s RESP (and pick up the $500 grant), and then deposit any extra available savings (up to $5000) in your TFSA. When your bright, young prodigy hits 18, you can then withdraw the funds tax-free from your own TFSA, and deposit it into a TFSA set up in the student’s name. The student can then withdraw the funds as necessary, pay no tax on the withdrawals and, at the same time, you have freed up room to make TFSA contributions for your own long-term savings.

Being financially fit includes giving your children a headstart on their education, helping them understand the true value of money and making sure your family doesn’t get saddled with debt for that academic pursuit.

Many Blessings,

Andray Domise
Independent Financial Advisor
Change your life one dollar at a time, with REAL help for building wealth and reducing debt:
http://www.andraydomise.com

Education Savings Plan FAQ:

Question: Registered Education Savings Plan?
How much does a provider or agent (or whatever they are called) make? I was told by someone that they make up to 1500 dollars on every child they register.

Answer: Depends on the company and payment structure, but usually its based on the underlying investments. On average around 2-3%. But that isnt a direct expense to you. It is usually paid to them by the company they work with/for.

Question: What is the best type of long term savings plan to save for my children’s education from middle school up?
I plan on having my children attend private middle school and up and want to start saving. We live in Maryland.

Answer: Your best bet is to talk to a financial adviser that can tell you what is best for your individual situation. As far as a starting point, either a 529 plan or Coverdell Savings account.

Question: What is the best college savings plan for me?
My savings account is with ING and I can’t complaint. Yet, my plan is to work to get a master’s degree sometime around 2010. I’m doing my BS in education.

Answer: Since you will need the money relatively quickly, you should stick to a safe and conservative investment vehicle. I would move money for your education to a 1 year CD.

Question: Do you have or do you plan to start a savings account for your child’s college education?
And did your parents have one for you?

Answer: Not yet and I don’t know if we will. My parents didn’t have one for me, but they still helped for part of my college and the rest I have student loans for. There is a part of me that doesn’t think it’s a parents responsibility at that point. My husband parent’s had an interesting deal with him. They didn’t pay for anything until he finished, but now they are paying back his student loans.

Question: What are some options for saving for my childs college education?
My child is 11. I am a single parent. Should I buy into my states college credit savings plan? What if my child ends up with a sports scholarship, would I lose those college credits? Should I buy bonds instead?

Answer: There are many ways that people save and fun their child’s education. Two popular ones are state sponsored college plans, and 529 Plans.

You would have to read through the specifics on your state sponsored plan as it will have provisions for scholarships and also if the student decided to attend school out of state.

A 529 plan gives you more flexibility. 529 refers to the lines in tax code that say – for money invested in the plan, any growth is available to you tax free when the funds are used for education. There is no provision as to what state the funds are used in, and there is a provision included that deals specifically with scholarships and how to withdraw equal parts from the plan to offset those. Many financial services companies carry these plans – an example is American Funds, also Oppenheimer. The plan has professionally managed portfolios and options that can automatically move to safety as the student gets closer to college. See your financial advisor who can specifically explain the plan to you.

Question: How are you saving for your child’s college education? Specific Plans, etc.?
I’m looking into beginning college savings plans and was wondering what plans you are utilizing to save for your child. We are looking into a UPromise account which is a dressed up 529 account but are there other plans that are as effective?

Answer: We put aside $20 dollars a week for our daughter and at every $500 we put in in a 12 mo. CD. We started when she was born so she’ll have a good start for college between what we’ve saved and the intrest it draws.

Question: What is a tax-free savings account in Canada?
I saw an ad at my bank about opening up a tax-free savings account. That surprised me, because how is the government supposed to know how much you have in your bank account? I never saw that anywhere on the tax forms. I thought the government only taxed you based on how much you make per year. What does a tax-free account mean and should I get one?

Answer: If you have a bank account and earn interest on your money, that interest is taxable. So if you have a lot of money in the account and make, let’s say $200 in interest, that $200 is taxable. The government will know how much you made in interest because the Bank will tell them and issue you (and the Gov’t) a tax form indicating how much money you made in that account.

A Tax Free Savings account is one where the money you earn on your savings (the interest) is NOT taxed; you get to keep it all. You will likely have a maximum of $5000 that you can put into such an account each year (which is more than most people need) and all the interest grows without being taxed. The bank will register that account with the government so they know there will be no tax owing on the interest you make. It was established to help encourage people to save for retirement.

Question: I have vested Restricted Stock Units. Is it smart to transfer them (in kind) to a tax free savings account?
I’ll probably sell them in 3 years or so and I expect that they will increase in value.

Answer: If you transfer any property into a TFSA, you will be deemed to have sold them at whatever their fair market value is on the date of transfer. In the case of stock, this would normally result in you having to report a capital gain. You would not be able to claim a loss as the TFSA would be considered an affiliated person, and the transaction would fall under the superficial loss rules.

Is it smart? Well, essentially, you would be stopping any taxes that will accrue on gains after the transfer. In addition, you would no longer be taxed on any dividends that are paid from the stock as these amounts would be paid to your TFSA. That last would not necessarily be an advantage due to you having lost the ability to use the dividend tax credit.

Hope that helped. You’ve got a decision to make, and a few things to consider before you do it.

Contributing to your RRSP is one of the most beneficial and efficient ways to both save for retirement and reduce your taxes.

RRSPs offer immediate tax relief by lowering your taxable income. There are also ways to lower how much tax your employer withholds from your pay-cheques ensuring that you do not over-pay on your income tax – which is essentially providing the government with an interest free loan for the year.

RRSPs are also designed with the objective of long-term investing. The very nature of this type of investment vehicle is such that there is great incentive to avoid “dipping” into your savings. This encourages individuals to stay invested over the long-run and reap the full benefits of market activities. Remember, the tortoise wins the race.

Any income you contribute to your RRSP is not taxable until you withdraw it from your account. This means your investments can grow on a tax-deferred basis right up until your 71st birthday and fully benefit from compound growth.

Things to keep in mind with RRSP’s

· You have 60 days after the calendar year end to make an RRSP contribution and deduct that contribution on the previous year’s tax return. This usually results in a deadline on or around March 1st

· Generally your RRSP contribution limit increases by 18 per cent of your previous year’s earned income to a specific dollar maximum.

· If you did not contribute the maximum to your RRSP each year, the contribution room not used has been carried forward and is available for use in subsequent years

· The best way to determine your RRSP contribution limit is to look at your most recent Notice of Assessment sent to you by the Canada Revenue Agency after you file your tax return each year

Without Further ado, here are 7 key tips for RRSP planning:

1.) Maximize your contribution

The less tax you pay, the more money you will have working towards your retirement goals. Your RRSP is one of the most powerful ways to protect your investments from taxes. Not only do you enjoy an immediate tax deduction, but your earnings within the plan grow and compound on a tax deferred basis until you withdraw money from the plan.

· A $10,000 RRSP contribution

· Equals $4,500 in deferred tax savings

Remember – a $10,000 RSP contribution could equal $4,500 in tax savings (if you are in the 45% tax bracket)

2.) Spousal RRSP

In 2007, the federal government introduced the ability for couples to allocate up to 50% of their ‘eligible pension income’ from one spouse to the other for taxation purposes. This is called Pension Income Splitting and it could reduce a family’s combined tax bill. “Eligible pension income” is income the qualifies for the federal Pension Income Credit and includes periodic pension income plus RRIF income where you have attained age 65.

A Spousal RRSP is an RRSP for the benefit of one spouse, but the contributions to the plan are made, and deducted, by the other spouse.

Spousal RRSPs are a good strategy if you expect one spouse to be in a lower tax bracket in retirement because they provide the benefit of balancing retirement income between spouses.

3.) Make “tax efficient” deduction decisions

You may not realize that if you expect to have a significantly higher income in the coming years, you can defer taking the tax deduction this year. Make the contribution now but take advantage by claiming the deduction when you’re in a higher tax bracket.

10,000 RRSP contribution @ 29% tax rate

$2,900 in tax savings

$10,000 RRSP contribution @ 45% tax rate

$4,500 in tax savings

4.) Go for growth

Often by playing it safe financially, you think you’ve protected yourself from investment losses. Think again. Sometimes the price of playing it safe is the erosion of your money over time thanks to inflation.

Certain investments often thought of as being safe may not keep pace with inflation, especially after considering taxes. The best way to ensure your investment stands the test of time is by investing in a diversified portfolio.

A diversified approach should include exposure to higher yielding equity mutual funds. If your portfolio is appropriately diversified and tailored to your time horizon and emotional tolerance for volatility, you will ultimately be playing it even safer over the long run.

5.) Tax-Efficient Investing

All investment income earned inside an RRSP compounds on a tax deferred basis, but once withdrawn from your RRSP it is 100% taxable. This includes realized capital gains and dividends.

• Interest income, which is earned from investments such as bank accounts, GICs and Money Market Funds is 100% taxable – the same as withdrawals paid out from your RRSP.

• Eligible Dividend income – which are profits paid out to shareholders of public corporations resident in Canada, non-Canadian controlled private corporations, and Canadian controlled private corporations subject to tax at the general corporate rate (i.e. not eligible for the small business deduction) – are tax preferred. Generally dividend income gives the best tax break if you are in the lowest federal tax bracket.

• Capital gains is the profit you receive when you sell a “capital property” such as a mutual fund for more than its cost. With capital gains you are only taxed on half of the increase in value. These are also tax-preferred.

If you have both RRSP and non-registered investments, it makes tax sense to hold your interest bearing investments inside your RRSP – since they are 100% taxable anyway – and hold investments that produce dividends and capital gains outside your RRSP. This strategy must be implemented to ensure that your overall asset allocation plan remains in place – so it’s important to discuss this with your financial Consultant.

6.) Resist “Dipping” Into your RRSP

Usually there is nothing to prevent you from accessing the investments in your RRSP (with the exception of ‘locked in’ plans). However, you should consider the consequences before you do it.

First of all, withdrawals attract tax at your marginal tax rate. Tax withholding at the time of the withdrawal may be as low as 10% but could be as high as 30%. You need to check with your tax advisor before you withdraw to determine how much more tax you’ll have to pay when you file your tax return.

Secondly, you cannot restore the contribution room. The amount that you can contribute to an RRSP in your lifetime is limited. A withdrawal erodes some of this potential.

7.) Start Early

Contribution Example

When Jim turned 22 he began investing $2,000 per year right up until the age of 30. That’s nine $2,000 installments. When he turned 30, he decided to stop contributing to his RRSP and simply let the accumulated money in his account sit untouched until retirement.

Bob on the other hand started investing when he turned 31 years old and began investing the same amount as Jim, $2,000 per year, but he continued to contribute this amount right up until retirement at age 65. That’s thirty-five $2,000 installments, nearly four times as many as Jim!

As you can see even though Jim invested only approximately a quarter of the amount Bob invested, his investment grew $26,601 more, due to the effects of compound growth.

For any questions please contact me

MARCO CONSOLI

Consultant

TORONTO, ON

email: [email protected]

Web page: http://www.investorsgroup.com/consult/marco.consoli/

RRSP Planning FAQ:

Question: Can I roll my Canadian RRSP plan into my US Roth plan & receive benefit of new tax law allowing IRA rollover?
I am Canadian Citizen & US resident alien living in US and want to take advantage of new 2010 tax law that allows traditional IRA rollover into a Roth, BUT want to use my RRSP Canadian retirement funds to roll into Roth. Can this be done and, if so, how?

Answer: There is no provision in US law to rollover foreign retirement accounts. You can keep the RRSP, or cash it out.

Question: Explain the difference between Canada Pension Plan (CPP) and a Registered Reitrement Savings Plan (RRSP).?

Answer: Canada Pension is a mandatory pension plan that all workers pay into. Their employers also pay a similar amount, currently a maximum of about $2000 per year per employee. Upon retirement, each person receives a pension based on the length and amount of their contributions. The pension is taxable

An RRSP, on the other hand, is your own money which is invested in whatever way YOU choose. There are a broad range of choices in plans, and one can be found for just about any investment viewpoint or desire. Money invested in an RRSP receives an immediate 100% tax deduction, and any investment earnings the plan makes are also sheltered from tax until withdrawal.

At any point, but usually on retirement, the money in the RRSP can be withdrawn in whole or in part. The money is taxable at that point.

A good retirement plan includes both CPP and RRSP funds. CPP alone will be too low to maintain any sort of lifestyle through retirement.

Question: Can over the counter stocks be invested into an RRSP self administered plan?

Answer: Exchange traded stocks can be held in a self-directed RRSP. I don’t even think an OTC is RRSP eligible anyways.

Question: Help in deciding the right RRSP plan in Canada?
I am 26 years old and planning to start RRSP. I have never had one till date. Now, I think its time for me to plan future. But, I am unsure which investor to go to. There are number of RRSP plans offered by different financial groups. I would like to know how to choose the right financial Institute, how to calculate the right amount of money I should invest for RRSP, on what basis should I decide my RRSP and any suggestion of which financial institution is good.

Answer: The maximum amount of money you can invest in an RRSP for the current year is written down in the reply to your tax return for 2008. The Canadian Tax department sends a reply like that to everyone who files a tax return.

And before you choose the financial institution for your RRSP account, you need to decide if you want to invest your money in stocks, bonds, mutual funds, and/or certificates of deposit. Some institutions are better than others in terms of fees and the investment choices they offer.

If you are not sure what type of investment you want for your RRSP. Then choose an institution with the most investment choices and the smallest service charges or fees. And then talk to a financial adviser at that institution to help you decide what type of investment is best for you.

Question: What is the difference between an RRSP and a registered pension plan?

Answer: RPP’s consist of RRSP, MPPP, IPP, & Corporate (Employer Sponsored) DC or DB plans.

RRSPs are not considered corporate/employer sponsored pension plans. As such, are a bit more lax in its regulation. For example, no funding requirements in an RRSP. By comparison, a DB Plan creates a funding liability for the Employer. But they all have the same requirements such has mandatory conversion to a RRIF/LRIF by Age 71. The funding limits vary from RRSP to IPP to DC/DB plans.

An employer could have a Group(ed) RRSP, but its really considered a collection of individual RRSPs. MPPPs, IPPs, DC/DB plans have a much stronger level of creditor protection than RRSPs.

Question: How long can I carry over my RRSP contributions without claiming them?
I’m in Ontario, Canada. I’ve been on sick leave for about 5 years, which means that I have no taxable income, but I’ve still been putting money into my RRSPs. I’m planning to claim the deductions when I start earning taxable income again, but I wondered if there’s a limit to how long I can carry the contributions over without claiming them.

Answer: You have to claim them before you reach age 71. But practically speaking you need to have qualified to contribute in each year that you have contributions. That is you can only have contributions that are $2000 above your accumulated entitlement.

This, and not the number of years would appear to limit the amount you can stash away in RRSP. You might be best to switch to the tax free savings account.

Question: Rrsp and my pay cheque?
Today was my one year anniversary with the company I work for. I received a letter saying it is required that I join an rrsp plan (with the company I assume) and they take 2% out of my pay to put into my rrsp. I don’t want it. Is this even legal? I have never heard that a company can do that and that it was required after a certain time.

Answer: I would say a good majority of large Canadian companies that have setup a corporate pension plan are setup on a Contributory basis. This is not a bad thing!!

An RPP or Group RRSP is good because the taxes withheld on your pay cheque take the G-RRSP into account, so you don’t have to wait for a tax refund in the spring of the following year.

In addition, the company may match your contribution, or even exceed it. Finally, you may find the MERs on the underlying funds lower than an Individual RRSP. 2% is not a lot, and you really should be saving a lot more for retirement anyways.

Question: Can I transfer my pension plan from my former employer into my existing RRSP?

Answer: You can transfer your former employers pension plan into a Locked-in RRSP. There is a difference between an RRSP and L-RRSP.

Although, you should consider whether its worthwhile to actually do. For example, if you are older, and you have a Defined Benefit Plan with your former employer, it may be worthwhile to keep it there as you at least know you have a certain level of income for life guaranteed with 2/3rd survivor benefits to your Spouse.

Income taxes are among the biggest expenses you have to pay during your life. Canadian citizens may very well pay as much as almost half of their annual income back to the government every year. Luckily, there are many tools you can use for managing your finances in a way that you’ll end up with significant savings and cut your taxes dramatically.

A large part of tax savings strategies deal with spreading your earnings through your inner family network and thus getting the benefits of lower tax brackets. In this group of tools you’ll find some very interesting possibilities such as:

• Family Loans & Accounts Structuring
• Own & Spousal RRSP Contributions
• Claiming Home Office & Deducting Home Expenses
• RESP Contributions
• Medical Contributions
• Employing family members
• Donations to Charity

From 2009, there’s also a new tool in effect called Tax-Free Savings Account (TFSA). It is similar to an RRSP account, but with some significant differences. For example, withdrawals are non-taxable and they don’t affect other government benefits. On the other side, deposits are non-deductible either. There’s a maximum cap of $5000 for the savings every year, which translates to significant savings over the span of multiple years.

Life insurance products also offer significant advantages and can be useful tools for lowering your taxes and paving the way for maximizing wealth.

There are a number of benefits of using it over other forms of investments, for example traditional RRSP accounts and other assets such as stocks.

• No risks involved: the minimum-guarantee percentage will keep the policy profitable under all circumstances. Life insurance therefore makes sense as one of your primary long-term investment tools.
• No probate fees: since it is a liquid asset, it’s one of the best ways to pass on wealth to the next generation in your family. In the event of your death, they don’t have to pay any additional probate fees and there’s no tax liability. In provinces like Ontario, these can total up to very large amounts – you’ll be able to prevent these unnecessary expenses.
• You don’t pay any taxes on the proceeds. Depending on your insurance package, your savings grow sheltered from taxes and you can also use accumulation funds to offset your future premiums with pre-tax dollars rather than after tax dollars.
• Cash values inside policies can be accessed at any time within certain limits through a policy loan or partial surrender. Often, these financial tools can create the equivalent of a tax-free income stream. However, be sure to understand that straight cash withdrawals are subject to taxation. Consult your advisers first in any case.
• Donations and charitable giving in the form of life insurance policies are tax-deductible. These are little known options which can involve transfer of ownership to the charity, naming the organization as the policy beneficiary or replacing the donated assets with a new insurance policy that will not affect the inheritance you wish to leave. These options all allow you to give future gifts of significant amounts at modest costs in the present.

These tools are well known by most people speculating on tax cuts and often get advised first. When using them, you’ll need to know the projected amount of income taxes you’d pay before to see which options are the most effective in your individual case. For this, you can use online tools like Canadian income tax calculator.

As closure, it is important to understand that taxes are a complicated matter and they deserve professional attention. Be sure to consult your options with independent advisers first and make only informed decisions.

Lorne S. Marr, President of Lorne S. Marr Insurance Services Ltd. has been a practicing financial planner since 1993 having graduated from the University of Windsor with an MBA. Feel free to visit his business website LSM Life Insurance Canada.

Canadian Taxes FAQ:

Question: Canada Taxes?
Does a Canada resident have to pay tax on his income earned outside Canada, even if its tax exempt in the country where it has been earned.

Answer: Yes, a cdn resident is taxable on his/her income earned inside and outside Canada. Unless the tax treaty with that foreign country specifically provides a tax relief, the tax exempt income in the foreign country may also be taxable in Canada based on the Cdn Income Tax Act.

Question: How much would I pay in taxes in Quebec, Canada?
I currently live in the US and am considering a move to Montreal. I operate a home business, and all of my income is coming from US sources, but I have been told that Canada taxes all worldwide income. Then it seems that the US would give me some sort of tax credit for what I paid to Canada. I expect to make $25,000 before deductions. Does Canada have a similar system as far as self-employment taxes? Do they have a self-employment tax? What abouts would I have to pay for tax, including federal and provincial?

Answer: If you move to Canada and operate a home business, that is CANADIAN-source income, regardless of where your client resides. Only if you are a US citizen would you continue to file and pay US taxes, and receive a Foreign Tax Credit on your CANADIAN return. Yes, if you are a sole-proprietorship, you must pay CPP premiums yourself. This is equivalent to SE tax.

Question: If I go to work and live in Canada, what taxes would I have to pay?
Because here in the USA, I hear you don’t have to pay certain taxes for a few years if you’re not a citizen of the USA. Just wondering if Canada does anything like that.

Answer: There is no tax exemptions for non-residents or non-citizens in Canada. All migrant workers are obligated to pay taxes both before their payroll and after you received your payroll money.

If you do not pay the taxes the government can refuse entry back to Canada at anytime up to 5-10 years from the incident depend on how big the problem (but min.5 years). In addition they have the power to freeze your assets in Canada and if it is a large amount, they can take the money from US as well.

Anyway, yes you have to pay tax on everything you own and earn in Canada regardless of who you are. BUT if you are a:
-refugee working in Canada
-protected person under the Canadian international witness protection program
-some other form of federally regulated tax relief such as single parents, senior citizens, child tax benefits, etc
Then you do get a break from the tax.

Question: Does Canada have taxes? Any laws someone should know if considering moving to Canada?
Does anyone know any specific laws in Canada? Such as school tax, income tax, property tax, sales tax, etc? Are there any laws I should be aware of? Any information helps!

Answer: Yes, all of the above. School taxes are part of the property taxes home owners pay, at least here in Ontario.

Income taxes are based on your residency, and also if we have a tax treaty with the country you are coming from. Canadian residents are taxed on their worldwide income. Non-residents are also subject to withholding amounts, which differ depending on the tax treaty.

I’m assuming you’re planning on living here permanently, so you’d likely end up being taxed as a Canadian resident.

Question: How do you pay taxes when you sell stocks in Canada?
I want to sell some MSN stocks, I have these stocks with US finance company. I will send the stocks using this finance company services and my question is how I need to pay the taxes in Canada?

Answer: Regardless of where they are held, if you are a Resident of Canada, you will need to report the gain or loss of this sale on your T1 tax return, Schedule 3.

Question: I invested in a business in Canada but I live in the united states how would I pay my taxes?
Do I have to pay taxes in both country’s or just business tax in Canada and income tax in the united states. How would my taxes be?

Answer: “Invested in a business” is pretty vague. You definitely pay US taxes on everything. If you bought stock, you would pay Canadian taxes on dividends and interest, but not capital gain. If this is a partnership or sole proprietorship, you would file a return in both countries.

Question: Where to file taxes, Canada or the US?
I’m a canadian who has been working in the US since july of 2003 on a TN visa. I’m a registered nurse. I haven’t filed taxes in canada since I’ve left, and now I’m wondering if I should have? I’ve filed in the US though. I’ve never been employed by a canadian employer, having come to the US to work after I graduated from nursing school.

Answer: Under the US/Canadian tax treaty, generally, wages earned by a Canadian in the US are taxed by the US, not by Canada. There are some exceptions. I would check with the IRS.

Question: Does a teen working in Canada with a part-time job that made around $1000 last year need to file taxes?
I didn’t file it for the last working year, and I’m afraid something will happen, so I’m just making sure.

Answer: If you make any money at all, you need to file taxes. I once filed taxes for 42 dollars (I’m a student and quit my job). If you have any income at all, you need to claim it. You might get a little tax refund! It’s never too late to file it now. Just do it and they probably won’t care that it’s late. It only matters if you owe the government money, then you would get charged interest on the amount that was owed.

As one goes through life’s stages your goals and requirements will change. What is right for you at age 25 is probably not the same as when you are 55. A financial plan will assist you in reaching those goals, and at a minimum will bring peace of mind. As the American baseball player/philosopher Yogi Berra said – “If you don’t know where you are going you will end up somewhere else.”

The stages and goals in a person’s life generally unfold as follows:

Stage 1: Starting your career – this stage is normally characterized by one central fact – namely you are broke. For some this never changes but with a plan and some discipline it does not need to be so.

Goals:

Pay off your student loans

Purchase a car

Buy consumer goods – furniture, ipods, etc.

Build a good credit rating

Stage 2: Career / Family – you may settle down, get married, start a family. Now it’s time to become serious about financial matters particularly if you have a partner or children who are dependent on you.

Goals:

Purchase a home

Proper insurance coverage

Make a will/Power of Attorney

Start saving some money

Stage 3: Middle Age – middle age is defined as when the phone rings on a Saturday night and you hope it’s not for you. This stage normally involves paying down mortgages and starting to think seriously about retirement.

Goals:

Pay off the mortgage

Put some serious money into retirement savings

Educate the kids

Think about purchasing a cottage or vacation property

Stage 4: Pre-retirement Years – this stage is usually one of heavy savings.

Goals:

Grow your retirement savings

Reduce debt (the goal is zero debt upon retirement)

Plan your retirement life style

Stage 5: Retirement – a well-earned retirement; put your feet up and relax

Goals:

Travel

Make necessary changes to your will

Establish an estate plan

Manage your tax bill

Remember that all plans will change over time. Surprises occur, some good and some bad. Your financial plan should be flexible enough to adapt to changes, but simple enough so that you will follow through.

Financial Planning FAQ:

Question: How would you encourage women to become more involved in their financial planning?
Most Canadian women are disinterested and unprepared when it comes to planning their financial futures, according to a recent survey by TD Waterhouse. If that’s true, how would you suggest encouraging women to become more ‘invested’ in their personal finances?

Answer: I think that this is an over generalization and likely generated by a need for furthering the agenda of TD. My wife is very involved in our financial situation. In fact she is quite a bit more involved then I am for the simple fact that she is far better at it. I would recommend anyone do a little personnel research on the topic before jumping on the band wagon.

Question: Does the Canadian government give any financial assistance to new immigrants?
A family member is planning to migrate to Canada with his family.My question is about any benefits financial and otherwise that the Canadian govt.might be giving to immigrants when they land.Would appreciate any information on this and any suggestions about useful internet sites

Answer: Whoever sponsors immigrants is financially responsible for any and all costs incurred whether it is an individual immigrant or a company that sponsors the immigrant(s). The Canadian government does not have money to give to new immigrants. Until someone has permanent resident status or becomes a Canadian citizen, they do not qualify for any type of assistance. One of the conditions of immigrating to Canada is that you must prove that you are a benefit to Canada and that you are not coming here to drain our financial assets. Coming here with your family and expecting Canadians to fund your life is not reasonable, and would result in being denied a visa to enter.

Question: Are Dave Ramsey’s books/concepts Canadian friendly or does he base most of his advice on the US system?
I would like to purchase the books as a gift for a family member who needs a financial plan but I’m worried that the books are filled with budgeting/investing advice that is useless to him here in Canada.

Answer: The budgeting will work no matter the modern country you live in, Japan, Canada, Spain, US, etc.

Investing is written by an American but he is simple- stick with Mutual funds. Life insurance- purchase term life 8-10 times your income. Disability insurance – get some. Long term care insurance- buy it when you are 60. Health insurance- get some. College savings- use educational savings plan. Don’t use the plans that you have no control over where the money is invested. He does not name funds just tells you what to look for in a good fund. He explains why he doesn’t like single stock, bonds, precious metals, etc.

Question: Financial planning?
I am planning to move out for my first time and I would like to know about how much do I need to have saved in order to live without worrying?

Answer: Experts say that you need to figure out what you spend each month and then times that by 6. Because they say you need to have at least 6 months of bill money in the bank in case you lose you job.

Question: Why do people delay personal financial planning?
People need financial planning at every stage of their lives, whether it be debt reduction, buying a house or a car, marriage, divorce, and the biggest concern of most working people—retirement. Why don’t more people realize that the financial decisions they make today have a direct effect on the life they will be able to afford tomorrow?

Answer: Could be a number of reasons: no discipline, no education in finance, no goals for the future. Personal financing should start IN THE HOME at an early age, hopefully by parents who have a successful financial plan and outlook. Children learn what they live.

Question: What is good financial planning software that can be used in confuction with dave ramsey plan (microsoft money) or something that is very good?

Answer: I set up his budget form (modified to our specific bills) on Excel. Now he has software (about $25) available on his website or subscribe to My Total Money Makeover section of his website and you can do the budget there. Or Crown Financial (originally started by the late Larry Burkett who Dave gives a lot of credit to) has budgeting forms and online software. Both would be the best way to stay completely in line with Dave’s principles. Both of the on-line subscriptions have free trial periods.

If your not interested in those, Quicken is also a very good financial planning software.

Question: Where & how does one start financial planning for oneself?
Please suggest an approach / road map, steps to financial planning that is executable by a salaried individual. I would like to avoid any middlemen or agents.

Answer: Your public library. The first book I would recommend is called “The Automatic Millionaire”. It is nothing groundbreaking or new. I can’t believe this guy got rich off of writing these books. I would never buy one of his books. But I read them at the library. It is full of 100% common sense. Very important common sense. Follow it.

Don’t try anything that involves “tricks”, paying someone else to predict the future for you, or anything like that. (You can predict the future just as well as the professionals.) Personal finance is indeed 100% common sense.

Question: How to have good Financial Planning for single income?

Answer: First list all your expenses over a given time period like per month.

Next list your income.

Add both up–if your expenses are greater than your income you need to do one of two things. A: reduce your expenses or B: increase your income.

Once you have your needs covered, you give yourself something to spend that’s extra but not too much. Set up a regular savings plan with your bank. Even if it’s only a few dollars per month going into a savings account, it will add up. Try not too look at it and let it grow so you will have it in case of a major emergency like losing your job or something like that. Seeing a huge sale on collector dolls on the shopping channel is not a major emergency.

Once you learn to live within your means, everything else is downhill from there. You might buy a book on personal finance. They have lots of them at the local bookstore. Or you can just go to your local library and read them for free!

When it comes to major purchases such as a house or major expenses such as providing for your children’s education, major savings goals can seem overwhelming at first glance. That’s okay; if it was easy, everyone would own a nice home and have a Ph.D. It’s not easy, but it’s nowhere near impossible either.

Break It Down

First, break the goal down into smaller components and give yourself a reasonable timeline. Often, people will tell me that “saving that much is just impossible,” or “How do you expect me to come up with that much money by the time I want to do this?” Despite the real estate industry’s incessant warnings, there’s no rush to jump right into the real estate market. Not if you aren’t ready to handle the responsibilities of home ownership. This includes property taxes, maintenance and replacement costs (e.g., the leaky roof, bad windows and broken down furnace that you wanted to pretend would last forever).

At the risk of insulting my friends in the real estate and mortgage industry, I don’t believe in using high-ratio mortgages. It’s not just a matter of numbers but of the effect that mortgage debt has on emotions. When a person buys a home with a substantial down payment, eliminating the mortgage tends to become their top priority. On the other hand, when you buy a house with 5% or 10% down, it’s not your house; it’s the bank’s. You just don’t have enough skin in the game.

Of course, there are exceptions. If the home buyer is very savvy and has a solid short-term plan of action for reducing the debt substantially, there’s nothing wrong with that. For the vast majority, however, once the housewarming party is over and reality comes creeping back, having a high-ratio mortgage can be a crushing weight on the psyche. Heaven forbid a job is lost or an unexpected illness comes up.

If you need to save 20% down and you’re planning on looking at homes in the $250,000 range, you need a $50,000 down payment. Sounds huge, but it doesn’t have to be. If you give yourself a reasonable timeline, such as 5 years, that’s $833 per month. Still sounds huge, but consider two things:

Any income over and above normal pay (overtime hours, bonuses, tax refunds, etc.) should be deposited directly into the home-buying fund.

In Canada, you can withdraw up to $25,000 from an RRSP account to fund the purchase of your first home. For a couple buying their first home, that’s $50,000 combined – in the above example, that’s the entire amount needed to put down enough for a traditional mortgage (20% or more equity in the home). There are no tax penalties for making the RRSP withdrawal, but the amount withdrawn does have to be repaid into an RRSP account within 15 tax years. Since you should be making regular RRSP contributions anyway, this shouldn’t be too much of a burden.

(Note: Any contributions that will be used for the Home Buyers’ Plan must have been in the RRSP account for at least 90 days. Any less time than that and the contributions will not be considered deductible).

My suggestion is to set up an RRSP high interest savings account as well as a high-interest Tax Free Savings Account (TFSA). Then set up an automatic withdrawal plan from your bank account that will deposit at least 10% of your take-home pay into these accounts. (Make sure that the withdrawals happen the same day your salary is deposited to your bank account or you will be tempted to spend it).

If you’re wondering how you’ll manage to get by with a lower income, consider using CRA Form T-1213(04): Request to Reduce Tax Deductions At Source. If you already know how much you will pay into your RRSP monthly, as well as other deductions/credits you normally claim each year (e.g., tuition expenses, deductible interest), you can indicate the expenses/payments/contributions on the form.

The taxes deducted from your pay will decrease and the subsequent increase in take-home pay should be directed toward additional savings, reducing debt or covering fixed expenses. Do NOT use any increase in take-home pay for lifestyle expenses. This is not money for shopping or dining. And, of course, have an accountant review the form before submitting it.

But I digress. Contribute to the registered savings accounts first, claiming eligible tax deductions along the way. If those deductions generate tax refunds, stash those refunds into the accounts as well. Once the amount of money in the RRSP account has reached the withdrawal limit for the Home Buyers’ Plan, cut off the automatic withdrawal from your bank account and set up another withdrawal plan to deposit your contributions into a Tax-Free Savings Account.

Using an automatic savings program, people often find money in unexpected places to put toward their home purchase. I’ve seen 5-year timelines cut down to 3 years and 3-year timelines cut down to the following year. Just take the first step and have faith that you will make it.

For education savings, the same strategy applies, since RESPs offer government incentives to save for education costs. Break the anticipated future cost of education into monthly savings goals and start making the contributions automatically. And while your child is in high school, you should be scouring the internet for available scholarships and bursaries. Education expenses should never come as a surprise because you’ve had at least 17 years to prepare for them.

As always, the information provided in this post is general in nature. I have provided it with the understanding that it is not to be relied upon as professional advice in any capacity. Before making any changes, you should should consult with your own professional advisors for specific advice before taking action.

Many Blessings,

Andray Domise
Independent Financial Advisor
Change your life one dollar at a time, with REAL help for building wealth and reducing debt:
http://www.andraydomise.com

Financial Planning FAQ:

Question: What’s the best financial planning software?
I need to do a financial plan for my family including retirement savings, accounting for various estimates of inflation. My accountant says Quicken financial planner v2 was good, but it can’t be found anymore. He also says that the financial planning capabilities of Quicken aren’t adequate.

Answer: You can do modular planning using web sites from Vanguard, T Rowe Price or fidelity. They all have retirement planners that are decent. There is no nonprofessional (“inexpensive”) softwares that do it all. You do not need a big, integrated package. What you need is:

1. A budget, which can be found online or using an Excel spreadsheet you create.
2. A tax planner, which can be Turbotax or TaxCut.
3. Retirement planner, which can be as above.
4. Life insurance planning.
5. Estate planning: You need a will, financial power of attorney, health care power of attorney and living will.

Question: Salespeople in the financial planning industry?
What publications do you read about financial planning? I am thinking HBR, National Underwriting Magazine? Are they any others? Please let me know.

Answer: Read anything by Warren Buffet or Charles Givens. Also Money Magazine and Forbes are pretty good too.

Question: What are the financial planning requirements for a funeral?

Answer: Call a funeral home and see how much it will cost to hold a service (if that’s what you would like to do), buy a coffin, get a plot of land, stone, etc. Once you have a dollar figure, you can usually buy insurance for this or you can save the old-fashioned way. Put a specific amount aside each month. Or make sure the person plans this expense with their own money/estate.

Question: I need a financial planning company?
I just got married a few months ago and my husband and I wanted to find a financial planner. We are both 24 but we want to save up for our retirement, college for future children, investments, buying a home, etc…. We don’t have much money to start with because we just cleared all of our debt. Does anyone know what’s the best place for us to start?

Answer: Good job by clearing all debt. First make sure to maintain positive cash flow and if your employer offers a retirement plan then make sure to contribute into it. Aside from that get a local financial planner who can understand your needs, make sure to get some references.

Question: What is a Financial Planning Company? What are they doing?

Answer: A company that offers Financial planning services offers licensed financial advisors to assist customers who are looking to create a financial plan. Financial planning helps individuals prepare for their future goals, typically these goals would be planning for retirement, planning to pay for college, and planning for other major life events. A financial advisor will help you develop a financial plan to help ensure that you have the money you need saved to meet your long term financial goals.

Question: Looking for a good E-book for financial planning?
I’m coming off a bankruptcy this year and I vow to get my finances in order. Is there any good E-books out there for financial planning?

Answer: Yahoo Finance has pretty good articles, as does MarketWatch. Head to your local library and see if you can get a copy of “Rules About Money” and “Rich Dad, Poor Dad”.

Question: 7 elements of financial planning?
I have heard mentioned on financial radio shows “The 7 elements of financial planning”. Does anyone know what these are?

Answer: They are: Budgeting, Saving and Investing, Insurance, Debt, Tax, Estate and Retirement.

Question: Financial planning suggestions?
I manage my college expenses with 3 credit cards and pay my credit bills with them. This is cumbersome and I can’t remember if there’s enough cash to pay the bills at that point of time. I badly need to do some financial planning. Any idea/suggestions?

Answer: Managing multiple credit cards is tough, especially if you are still in college. It’s better if you cut it down to only one because it can help you save in the long run. Track all of your purchases and the amount of money you have in the bank either by hand, with a spreadsheet on your computer, or through an online tracking program.

A Guaranteed Investment Certificate, or GIC is a type of Canadian investment in which the rate of return is guaranteed over a fixed period of time. This particular type of financial product is a relatively low-risk investment, and thus yields smaller returns than that of stocks, bonds and mutual funds. GIC’s are typically offered by banks or trust companies. These safe and secure Canadian investment vehicles earn interest at a fixed rate, variable rate, or based on a market-based index. Many Canadians view Guaranteed Investment Certificates an excellent choice for a portfolio that requires a measure of safety.

How do Guaranteed Investment Certificates Work?
With these products you will invest an amount of money (determined by you) for a period of time that is determined by the specific type of GIC that you choose. Typically these periods of time vary greatly and can tend to range anywhere from 1 day to 10 years. Investments with longer terms will earn more interest than short term ones. When your Guaranteed Investment Certificate reaches the end of its term (otherwise known as ‘maturity,’) you will be able to access not only your initial sum of cash, but the earned interest as well.

Some Canadian Guaranteed Investment Certificates require that the amount of money you invest initially remain ‘locked in’ for a minimum period of time (30 days for example). Other GIC’s will allow you to access your money before the maturity date. There are even Guaranteed Investment Certificates that allow you to add to your initial cash amount by making weekly, biweekly or monthly contributions.

Redeemable vs. Non-redeemable
Guaranteed Investment Certificates can be redeemable or non-redeemable. As aforementioned, there are some GIC’s which allow you to access your cash during the term. This is referred to as ‘redeemable.’ With redeemable assets, you will be able to withdraw your cash before maturity. Some redeemable GIC’s specify that you will earn less interest if you cash out prior to maturity. The non-redeemable counterparts do not allow withdrawals before the maturity date. Non-redeemable GIC’s may offer higher interest rates than redeemable ones.

Interest
This particular type of Canadian asset can be offered at either fixed or variable interest rates.

Fixed Rate GIC’s
With a fixed rate GIC, your money will earn interest at a set rate. That is, the interest earned will be consistent throughout the term of the investment. The benefit of fixed rate GIC’s is that you can predict exactly how much your total assets will be worth on the maturity date.

Variable Rate GIC’s
Variable rate Guaranteed Investment Certificates are either linked to the Canadian prime interest rate or to stock-market performance. With interest-rate linked GIC, you are guaranteed that your money will grow, but you will not know at which rate until maturity. With market-linked GIC’s, you can earn more interest if the stock market does well, but your initial investment will be protected either way.

Benefits of GIC’s
The most important benefit offered by this type of investment is safety and security. Your initial cash amount will be protected. With fixed-rate GIC’s you can also enjoy guaranteed growth and an easy way to project value at maturity. GIC’s are also known to offer excellent interest rates. Finally, GIC’s are typically pretty flexible investments. You can enjoy flexibility in length of term as well as how often you receive payments.

If you live in Canada and are interested in investing your money in a safe instrument, a Guaranteed Investment Certificate may be right for you. To find out more about what is available in your area, visit your local bank.

Whether you are looking for a mortgage refinance, fixed, variable, open or closed Mortgage loan, our financial Coaches can help you figure out which one is just right for you. We offer the most convenient GIC rates on the market

GIC FAQ:

Question: What is the difference between a CD and a GIC?
What is the difference between a CD and a GIC and which is better when interest rates are climbing/falling.

Answer: CD – Certificate of Deposit. Time deposit with a US Bank.

GIC – Guaranteed Investment Certificate. Time deposit with a Canadian Bank.

Best rate depends on which country you live in. If you are in the US and put the money in Canada, and the Canadian dollar drops, then your “real” rate drops due to a change in value in currency, when you convert your Canadian dollars back to US dollars.

Question: What’s the difference between RSP, GIC and mutual fund?
And what do you recommend for someone who’s trying to save up for a downpayment?

Answer: RRSP – These are savings that are allowed to be tax deductible (to a certain point). They are usually for retirement. The money withdrawn is taxed though.

GIC – These will allow your money to gain a guaranteed interest rate for the term. These are available anywhere from 1-10 years usually, and the rate depends on your bank.

Mutual Funds: These work on the principle that the greater amount of money invested the more money can be earned. This is a collection of your money and other investors money that is managed by a 3rd party to maximize profits. However, some banks will guarantee, some won’t. However you can select what you invest in be it high risk/reward, or low risk/reward.

Depending on your own personal finances, how much you can contribute, the investment options available, your income tax bracket , the answer to which you should choose could differ. It would be best to make an appointment with a financial adviser.

Question: Are people from Ont. who are on ODSP allowed to have GIC’s or stock up to a certain amount?
I have someone wishing to give me either a GIC or a few shares in some stock. They figure that way I have something for when I retire, to help me out since I don’t have anything else. The question is whether I am able to have them without my monthly cheque becoming all messed up? Or in what ways it can affect my cheque depending on the amount?

Answer: I’m not on ODSP but a buddy of mine was and let me tell you, he almost lost his benefits because of non-reporting income. Here’s a suggestion, ask a friend to inquire with ODSP about GICS and don’t mention your name, since ODSP is provincial funding I suggest if they are going to get you a GIC or RRSP maybe out of province would be a good idea, or perhaps instead of GIC’s because of the economy the way it is how about Federal Bonds, maybe in a child’s name?

Question: Is an insurance or GIC with a named benificiary included in the estate subject to a will?

Answer: You can structure your insurance different ways.

If you have a named beneficiary (a person) the money flows directly to the beneficiary tax free and bypasses a will.

Should the insurance be payable to an estate then it will be subject to the will. Some people use an insurance policy paid to an estate to cover the taxes arising from the taxation triggered by a death. (ie capital gains on investments)

For GICs if they’re held solely in the name of the deceased they flow to the estate and will. If its joint it flows to the other joint owner, bypassing the will.

Question: In Canada, does one have to pay taxes for interest earned in a gic investment with Royal Bank of Canada?
Also, if I have no work income, no medical expenses, do I even need to declare?

Answer: Yes you have to claim it as income, although interest is not treated like employment income.
If you truly have NO income you still want to apply for GST credit, Social Assistance and other programs, and you need to have the current years taxable income for those calculations.
In doing your income taxes the GST and child and family benefits are how you apply.

Question: I live in Ontario Canada. How safe is my money in a GIC at CIBC?
If anything ever happened that the bank went down would I lose my money too?

Answer: If the CIBC, the country’s biggest bank, goes under we have much more important issues to worry about.

However, your deposit is covered up to $100,000 per account by the Canadian Deposit Insurance Corporation. 100% safe.

Question: Is it safe to keep my mutual funds or should I sell at least half of them and get things such as GIC?
Would I be selling my mutual funds at a very low value (since the markets have really gone down lately) or will I save some of it’s value (since the markets might get worse)?

Answer: Investing is never safe. It’s always risky. Having said that, if you sell now then you lock in your loss. If you can hold out for 5 years you will historically have recovered your losses.

The markets go up and the markets go down. Historically, they tend to go up. If you need cash and have to sell, then sell. If you can’t stand the risk and have to sell, then sell. Otherwise hang on, collect your dividend payments, and ride it out (We’re all in the same boat here). You may want to contact your financial advisor before making a decision.

Question: Where to find best GIC Rates?
I know there’s public posted rates but I hear there are also discount brokerages? What’s the difference?

Answer: All GIC rates are very low these days. Among the banks, the best rate I have seen is at Canadian Western Bank: about 3.5% for a 5-year term. ING Direct might be about the same. Credit unions like VanCity also offer slightly better rates than banks.

The story and example has been retold many times of a son who had taken the time to count up his parents net worth whom it seemed to be strung across town in a myriad of small bank accounts and as well in saving bonds. When the son explained to his father, the net worth of his wealth in total the father exclaimed – “We’re not rich. We never had money”. Father the son explained “Did you ever hear of the power of compound interest? You had the power of compound interest working for you.”

Canadians now have the RRSP (Registered Retirement Saving Plan) season on the way. Indeed few nations on earth allow their citizens such an investment spiff. Put away income at your time of highest earning. Allow it to grow and compound over time, tax free, sheltered of income and growth robbing taxes. The Canadian government is hoping and betting that first of all you will thus have a nest egg to live on and not be dependent on social programs which the government would have to provide to retirees.

This lightens the load for the Canadian government. It provides for a stable base for investment sources – for banks and other financial institutions to have a stable source of long term investment capital for mortgages and long term capital investment. The private investor does pay tax in the end – the government does collect it. However its is down the line when first of all the retiree will generally be taxed at a lower rate than their peak working years and the saving fund will have grown considerably with time and compound interest. Everybody wins so to speak and younger people at that point will benefit by having other people in their communities with money to spend for good and services – providing employment for the then younger generation.

What are the basic rules of Rasps for Canadians? First of all know your limits. Its crucial and the first step to know how much contribution room you have in dollars before sitting down to plan or buy RRSP financial instrument contributions.. This will actually be listed clearly on your last year’s personal tax assessment from Revenue Canada. If you are unsure, or want to verify the amount, there is always a phone number or even an email address to contact the government agency.

Next contribute as much as you feel that you can spare. Remember a dollar saved or contributed is worth more than dollar invested. First there are definite tax savings. Next the money is sheltered from taxable interest. Even if you earned money in the bank or in Canada savings bonds as interest a good portion would go to pay the taxman, at your highest marginal rates. Most people spend close to their limit. If you do not the funds you will not or cannot spend them. An RRSP is a long term savings plan – not a piggy bank. You can withdraw savings in most cases. However you will pay your current high tax rates on withdrawals as if was income. It’s best to leave some savings outside your Registered Retirement Saving Plan.

Contribute early – both early and earlier in the year than most. Contribute early in your life in possible. This way you have the great and wonderful power of compound interest working on your behalf with all its power.

What are the flip side and the negatives about RRSPs? Most people it seems never get around to contributing so this is often the least of most people worries. However two points should come to light. As with any investments you have the choice of risk rewards. If you choose risky investments then pay heed to the risk factor that you are playing with your retirement nest egg. If you are young and have time to recoup any lost capital that is fine. However if you are on the home stretch don’t try to make up for lost time or be greedy.

In the end the summary of Canadians investing for their retirement nest egg through the vehicle of a Registered Retirement Income RRSP plan ahead , save early , save often and contribute as much as you feel that you can.

Shaun Stevens Winnipeg Manitoba Canada St. Boniface Budget StBoniface Economy Hotel

RRSP FAQ:

Question: What is the maximum allowable RRSP contribution in Ontario Canada?
Can I put in as much as I want? Also, if I haven’t put much money into RRSP’s over the past years can I put in for past years?

Answer: The maximum is 18% ($20K max) of your T4 income from last year minus any pension adjustments from an employer sponsored pension plan (if you have one).

As for the past few years, the amount that you did not contribute carries forward. When you filed your income taxes last year, the Notice of Assessment that was eventually mailed to you would have your unused amount. Alternatively, you can call the CRA or check online.

Question: How does a RRSP catch up loan work?
I haven’t maximized my RRSP contributions in the last 6 years. I’m planning to get a loan to catch up. Will my refund be equivalent to the amounts that I would have received if I had made these contributions during those years. Will I get a lump sum or several smaller amounts over a specific period.

Answer: In my opinion, I think you should be careful before you take out a loan to catch up on RRSP contributions. There are several pieces of information you need to consider – at what interest rate is the loan? And what is your marginal tax rate? Go see an independent tax professional (like an accountant). Don’t go to the bank for advise! I’m not a tax expert, but I think the loan idea for the RRSP really works to your benefit if only you can pay it all back in the same tax year.

Question: What can you tell me about opening an RRSP?
I am 25 years old and I am thinking about opening up an RRSP. How does it work? I’ve only heard of it from a financial show I’ve been watching and they say if you invest about $200 in an RRSP a month, in 40 years you could have a huge chunk of cash to retire on.

Answer: The basic concept of an RRSP is that you place money into a segregated fund, receiving a tax deduction for doing so (it’s the same as earning the money tax free) where it accumulates interest of other gains tax free. When you withdraw the money 20, 30, 40 yrs later, you’ll pay tax, but you will often be in a lower tax bracket by then and will thus pay less tax. There are tons of RRSPs around, you can pick and choose. Starting at your age, you can indeed accumulate a large portfolio by the time you’re ready to retire, even with a minimal return. The sooner you start, the better you’ll be in retirement. To use your example of $200 per month, at even a 1% return, you’d have $118,000 40 yrs from now. With a 5% return, it would be $306,000.

Question: What criteria is important when choosing an institution for an RRSP?
Im looking to start an RRSP but so many places are offering different ones. I’m not sure how/who to choose and whether to have more than one RRSP at different institutions, or to have all my investments in just one. Any thoughts?

Answer: Well it depends what kind of RRSP are you looking for: mutual fund, direct investing (stocks).

For funds you’re looking for a combination of performance and management fees. Also pick the bank that will allow you to buy the funds you want if you’re looking solely at bank mutuals. TD has the efunds which have the lowest MER in Canada (0.5%) which are available solely through a TD efunds RRSP.

For direct investing, there is often a $50-$125 annual admin fee. My bank waived mine because I have my mortgage with them.

The CIPF protection is currently $100k per account. So I would be wary of placing more than this limit in one institution.

I have 3 RRSPs at three different institutions. All for different reasons:
#1 ) RRSP for my employers group RRSP plan
#2 ) RRSP direct investing at my bank
#3 ) RRSP directly with a fund company for access to their funds.

Question: Is a spousal rrsp safe from the ups and downs of the economy?

Answer: No RRSP is safe from all ups and downs in the economy if it is invested to earn a reasonable rate of return. That said, it would still be prudent family planning to build a spousal RRSP if your spouses do not have income to build their own. It helps to distribute retirement income.

But you still have to choose investments wisely to hopefully have something close to secure future. You can buy an insured RRSP, a segmented fund investment. The principal is insured at the end of a 10 year period it will not be worth less than at the beginning.

Question: Can anyone give me some ideas to diversify my RRSP to include holdings outside of Canada and the US?
I have about $10K to work with in a self-managed RRSP. I’m comfortable doing Fundamental Analysis of Oil & Gas companies or Mining companies. I’m also comfortable with basic Technical Analysis techniques. I hope to find something that returns 15% or better per year.

Answer: I don’t have specific stock recommendations, but have you looked at iUnits? They’re exchange traded funds that I believe give you exposure to the US market while not violating the foreign holdings rules of RRSP accounts. iUnits are managed by a division of the largest ETF provider in the US (Barclays) and are similar to their US counterparts, iShares. Of course, these aren’t likely to return 15% EVERY year, but they do offer less risk than individual stock holdings.

Question: Does anyone know a formula to calculate how much $ I should put into an RRSP to offset a huge annual CRA debt?
I always end up owing the government between $4000 – $5000 each year in Income Tax. This year I have some extra money and wonder how much I would have to put into an RRSP by the end of this year in order to not owe the government next year. Does anyone know how to calculate this by chance?

Answer: Step 1. How much can you invest and not impair your day to day life? Paying no tax on filing does you no good if you cannot make mortgage payments.

Step 2. Look at last year’s assessment to see how much room you have available.

Step 3. Look at last year’s tax return again and see your federal tax calculation. Look at your top two rates. See how much federal tax you would save if you reduced your income by the amount in the two income levels. Add the provincial factor. For instance if your provincial rate is 50 per cent of federal, the tax savings would be 150 percent of federal.

Or if you care to spend a bit of money, buy a piece of software and plug in the amounts both with RRSP deductions and without. I use Quicktax, you can run a sample tax form, with all this year’s data. It will first of all tell you what you’ll owe this year, and second, it has a handy RRSP tool that let’s you play with sample RRSP contributions to see how much you’d save. In fact, it has a simple suggestion that will tell you exactly what to do in your situation: how much to contribute to have zero owing.

It sounds as though you have two (or more jobs) and not getting enough deducted at source. Check they have the correct TD1 for your situation.

Question: Can I withdraw from my RRSP when my work permit expires?
I’m coming to Canada on a temporary work permit. I’ll be staying for at least 2-3 years during which I’d like to use an RRSP. If I should decide not to prolong my stay beyond that, can I terminate the RRSP when leaving the country without penalty?

Answer: If you leave the money in the RRSP, there should be no penalty. How the RRSP is treated in your country when you draw money from it in the future is another question.

If you take the money out of the RRSP at the end, it will count as income and be added to any money that you earned in Canada.

If the amount you wish to put in an RRSP is less than 5000 a year, you may be better off putting the money in a Tax Free Savings Account. At least you won’t be taxed on the money you take out of it at the end. The only negative thing is you won’t get the deduction for putting money into it.

Another way of thinking it: If you put money in now, you get the deduction. When you take it out later, you’ll get that deduction taken back.

RRSP’s also have a limit based on how much you made the previous year. Assuming you have never worked in Canada before, your RRSP limit would be zero for the first year you work here and you would run a tax liability if you contributed because you would be over contributing.

The Canada savings bond is offered by the government of Canada to investors from early October through April 1. These bonds were introduced in 1946 under the name “Victory Bonds” to serve as a viable and secure option for investors who wanted more security than mutual funds or stocks could offer. Before this time, however, Canada had trading instruments that were similar to Savings Bonds, such as the Canada Fourth Victory Loan of 1943 and the Canada-Dominion War Savings Certificate, issued in 1944.

What are the different types of CSBs?

1) The Canada Retirement Savings Plan (RSP): This is a no cost RRSP (registered retirement savings plan) implemented for carrying Canada Premium and Canada Savings Bonds.

2) The Canada Premium Bond: This provides a fixed rate of return in regular and compound interest.

3) The Canada Retirement Income Fund (RIF): This is no cost fund implemented for carrying the Canada Premium and Canada Savings Bond.

The Canada Savings Bond and the Canada Premium Bond are very similar; however the Savings Bond can be cashed at any time of the year, while the Premium is cashable only one time a year. Either bond can be purchased with a registered retirement savings or a retirement income fund. Premium bonds will always have a higher interest rate than those of Savings bonds sold at the same time. They can be purchased in compound interest form or simple interest form, and one kind can be exchanged for the other at any time.

Why are the Canada Savings Bonds popular?

One reason that Canada Savings Bonds are popular is the security they offer to investors. Since they are backed by the government, they make an excellent addition to the secure portion of any portfolio. In addition, Canada Savings Bonds have a guaranteed interest rate: they can increase along market lines, but never fall below a stated percentage for each investment period. They are an affordable option for almost everyone, with prices as low as $100.

Who is eligible to purchase these and where can these be bought?

The Canada Saving Bond, which is available only to Canada residents, can be purchased on-line, on the phone, in person at a bank or from an investment broker during its six-month enrollment period. It can even be acquired through a direct payroll deduction, making them accessible to just about everyone in the country. And, there is no brokerage fees involved in purchasing a Canada Savings Bond. With millions of Canadian investors purchasing bonds every year, the security of these bonds will continue to strengthen portfolios of investors around the country.

On http://www.bond-trading.org/ you will find articles on insured municipal bond investments and canada savings bonds.

Canada Savings Bonds FAQ:

Question: What happens when Canada savings bonds mature?
I have Canada Premium Savings Bonds that mature in November, what happens when they mature? Do they continue earning interest? Does a cheque get mailed out to me?

Answer: No they stop generating interest. You just take them into your local bank and cash them in for the principal and interest.

Question: Can the Canada Savings Bonds be seized in bankruptcy?
I am thinking of enrolling in my employer’s payroll savings bond programme. I anticipate making a proposal to creditors and/or declaring bankruptcy in a year. Is money I invest in the savings bonds protected at all? Does it make a difference whether I buy the bonds for myself, jointly, or for another person?

Answer: It can be seized. Buying it for another person means you lose control of the asset, and ultimately, the courts could view that your intent was to avoid creditors. A Trust could be an option.

Segregated Funds have creditor protection as long as you have a preferred beneficiary, and you purchase it long before you file for bankruptcy. The underlying investment in the Seg Fund investment can be guaranteed interest terms or it can be a Mutual Fund if you are looking for greater potential returns.

Now, in your case, you intend to file for bankruptcy at some point, that will pose some issues. You may want to consult with an Estate/Tax Lawyer, but from my understanding, if your intent was to avoid creditors because you knew you were filing at some point for bankruptcy, and the Courts/Creditors can prove that intent, then the creditor protection under the Insurance Act for Life Insurance or Segregated Funds would not protect you.

Question: Canada savings bonds how do you calculate what it is worth?
I got each of my kids a $100 savings bond in 1996. How much are they worth now? How do you calculate it?

Answer: They usually send you a note every year (when they are still in effect), plus there is usually that 1-800 number listed on the bond itself so you can call just about any time and ask. You could also ask at your bank.

Question: Why do Canada Savings Bonds tend to be safer than corporate bonds?

Answer: You would assume that a Government bond is safer than a company (corporate bond). In fact most Govt Bonds are assumed, or treated as risk free. Is the Canadian govt. likely to default on the interest payments?

Question: Can someone help me understand Canada Savings Bonds?
For example, what exactly is the “issue date” and the “maturity date”… and how long do I have to save for?

Answer: The bonds actually vary in how long you should save them for. (That “term” is the time between the date the gov’t issues them and their maturity date — when the gov’t pays you back the principal and interest.)

Question: What are features of a Canada Savings Bond that differentiate them from true bonds/debentures issued by the Government of Canada?

Answer: You are requesting a very specific answer to a highly technical subject. You would be better seeking this information from an investment advisor.

Canada Savings Bonds are low interest savings vehicles. They are available for set term limits with either annual or compound interest.

Question: Why do most corporation bonds pay a higher rate of interest than Canada Savings Bonds?

Answer: There are four reasons why Corporate Bonds pay a higher rate than Canada Savings Bonds.

1. Default Risk. The government guarantees that savings bonds will be paid — but if a company goes bankrupt, bondholders may not get paid.

2. Liquidity. Someone selling a corporate bond may not be able to find a buyer easily — while savings bonds can be turned into cash at any time.

3. Taxes. I’m not sure about Canada — but in the US, you don’t have to pay state or local taxes on government securities — but you do on corporate securities.

4. Interest rate risk. Savings bonds are usually short term — so do not lose much value if interest rates rise. Corporate bonds are usually longer term — and lose a lot more value if rates go up. Investors demand to be compensated for this price risk.

Question: How do I go about getting a canada savings bond?

Answer: Go to your bank or financial advisor or ask your payroll department at work.

The Registered Education savings Plan (RESP) account is an investment vehicle that is designed for college planning. Parents, grandparents and other family members often desire to financially contribute to a child’s future higher education costs. As Canadians desire to plan financially for their children’s high education costs, the RESP account is a popular investment tool to utilize for the purpose.

The RESP account offers individuals several tax benefits when they utilize the account for higher education purposes. The primary tax benefits include tax free growth and tax free withdrawal when the funds are utilized for qualified higher education expenses. There are several important regulations to become familiar with for the RESP account:

• Contribution Amounts- The maximum total contribution per child into the RESP account is $50,000. There is not currently an annual maximum contribution limit, although when they account was initially created, there were annual contribution restrictions to adhere to.
• Account Beneficiaries- The account must be registered with a beneficiary. This beneficiary must be a child with a registered social insurance number. Each child may have more than one account established, allowing multiple family members to create accounts to aid in the future higher education costs.
• Age Restrictions- The beneficiary listed can access the funds for higher education purposes at any age. But, the funds must either be utilized or the account must be dissolved before the beneficiary reaches the age of 25.

Contributions into the RESP account are not tax deductible. But, the tax free growth allows the funds to grow more quickly than they would if they were in a taxable investment account.

For individuals who are looking to establish a RESP account, there are a variety of financial institutions that they can establish this account with. Some of options for establishing a RESP account include banks, credit unions, mutual fund companies, investment houses and trust companies. Each type of financial institution will offer a variety of investments to use within their RESP accounts. So, when selecting a financial institution, be sure to evaluate which accounts are the best match for your financial goals and needs.

Most financial institutions will offer a variety of investments to select from within their RESP accounts, including securities, bonds, mutual funds and cash. So, account holders have the option to develop an investment diversification that matches their risk tolerance and their investment time frames.

Canadians need to save for many different purposes over their lifetimes. In addition to RESP accounts reducing taxes on savings can also help. That’s why the Government has introduced a new Tax-Free Savings Account (TFSA). It’s likely the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP).

The TFSA will allow Canadians to set money aside in eligible investment vehicles and watch those savings grow tax-free throughout their lifetimes. TFSA savings can be used to purchase a new car, renovate a house, start a small business or take a family vacation. With the TFSA Canadians from all income levels and all walks of life can benefit.

Download your Free Special Independent Review of the TFSA at: http://TaxFreeSavingsAccountInfo.com/

Registered Education Savings Plan FAQ:

Question: Why can’t they make Registered Education savings plans tax free?

Answer: RESPs ARE in a sense tax-free in that once you contribute to one for your child it grows tax-free. Growth and grant when removed from the plan to pay education-related expenses are taxed in the hands of the student. Typically, students have little or no income at the time and will pay little or no tax. What you as the contributor are NOT getting is a deduction against income on your tax return as you do on Registered Retirement Savings Plan (RSP).

Now, if your question is why is that? Well, simply put the government has calculated that it will cost a considerable amount of money in lost revenue if they do that. In addition, they are already offering a good incentive by providing the Canada Education Savings Grant otherwise known as free money from the government by contributing to RESPs.

Question: Which RESP fund company (bank) to choose in Canada?
We are to invest in the RESP (registered education savings plan) for our baby. We have been approached by a sales person of Heritage education funds, Canada. Anybody to comment on this company? Also, what were your choices in selecting the institution to work with in RESP and why?

Answer: I’d go with an institution in which you can select your own investment funds from brand name fund managers (ie: Fidelity, Templeton, McLead Budden) rather than Heritage Education Funds investing it for you.

Question: Should I worry about having enough money for university?
I’m a 16-year-old girl. I’ve had several jobs starting from when I was 8 years old, and I’ve saved all the money I’ve earned over the years. My parents have put all this money into Canada Savings Bonds, mutual funds, and GICs. Right now I have about $15 000 saved up. Whenever the total money in my bank account reaches $500, I invest it somewhere else because my bank account doesn’t have a high interest rate. My parents have also started contributing to an RESP (registered education savings plan) in my name and so far there’s about $10 000 in it. Should I worry about having enough money for university, and what should I do about it? I really don’t want to have to get a loan.

Answer: I think you are doing just fine. You sound extremely smart! If you started working when you were 8 years old, you must really want this. I definitely think that you will earn enough money. Since you are only 16, you still have some time left. I wish the best of luck to you! Another option you may want to consider is the military as your entrance into the world of medicine. They might pay for everything if you agree to serve for 5 years as a doctor.

Question: Is this a scam, Canada education plan?
Is it normal for someone to visit your home from canada registered savings plan? I just had a baby (1 month )and already have one (3 yrs), I didn’t get around to saving up yet for them. I recieved a phone call from someone saying they were from canada registered savings plan but she wants to come to MY home and give me a 20 min presentation and this can’t be done over the phone. I’ve tried looking online and can’t really find anything related to this.

Answer: Well, yes, this did happen to me and I did start an RESP for my daughters post secondary education.

Question: My father want his RESP money back, even though I’m not living with him anymore.
I changed the address with the RESP company, he called and changed it back. I wondered why I didn’t get the cheque, so I called them and the address had been changed back, and they resent me the check. Since the money is in my name and I pay taxes on it, I have been keeping the money, but he is becoming more and more persistent to get it, even though it is in my name, and I am not allowed to give it to him for tax reasons, and that it is part of the contract.
How can I get him to stop harassing me? I called the company, and they have clearly stated he can not get the money, yet all he does is yell and raise his voice. He is stubborn and will not listen.

Answer: No one can harass you or give you a hard time unless you let them. It was his decision to save the money for you, he signed the contract, so he must know that the money can not go back to him. Remind him of this. Can your mom reason with him?