In August the Department of Finance published their changes to the taxation of life insurance as previewed in March 2013 Federal Budget. When final legislation is passed later this year, these changes will result in an updating to the “exempt test” which determines how much tax-deferred value can accumulate in a life insurance policy before it is subject to accrual taxation. The new rules take effect and will apply to policies issued January 1, 2016 and later.
Highlights of the new rules and their affect
For Cash Value Life Insurance:
Effective with policies issued after 2015 the new rules will reduce the ability to tax-shelter accumulating cash values;
The world of investment choices can be confusing. Do you sacrifice security for higher returns? Or do you take the safe path and take the guaranteed route, locking yourself into low returns? Fortunately for Canadian investors there is another option: Segregated funds.
What are Segregated Funds?
Segregated funds are similar to mutual funds but are only offered by life insurance companies. This allows for the special “insurance” features that can make segregated funds a safer investment and provide added advantages.
Like mutual funds, segregated funds have a wide range of investment choices: Read more
Many people recognize the need for Critical Illness insurance to protect them from the financial risk that could result if diagnosed with a life threatening illness. Although a difficult subject to think about, children should also be protected from this risk as well. If our children were to become ill the emotional and financial toll it could have on the family may equal that of the parent. Read more
While you are busy with your year-end tasks and planning your holiday merrymaking, you should also include a little tax planning. There are receipts to find and records to review – not just for the upcoming tax season but for the year ahead.
Take a moment to review the following list of important items and important deadlines: Read more
For many Canadians the majority of their wealth is held in personally owned real estate. For most this will be limited to their principal residence however, investment in recreational and real estate investment property also form a substantial part of estates. Due to the nature of real estate, it is important to do estate planning to realize optimum gain and minimize tax implications.
Key Considerations for Real Estate Investment
Real estate is not a qualifying investment for the purposes of the Lifetime Capital Gains Exemption
Leaving taxable property to a spouse through a spousal rollover in the will defers the tax until the spouse sells the property or dies
Apart from the principal residence, real estate often creates a need for liquidity due to capital gains, estate equalization, mortgage repayment or other considerations
Professional advice is often required to select the most advantageous ownership structure (i.e., personal, trust, holding company).
Will your family be affected by the costs of caring for an aging loved one?
Statistics Canada states over 350,000 Canadians 65 or older and 30% of those older than 85 will reside in long term care facilities. With increasing poor health and decreased return on investments, the fear of facing financial instability in your declining years is real.
How will this impact your family?
Caring for an aging parent or spouse takes its toll emotionally and financially. Adult children with families and job pressures of their own are often torn between their obligations to their parents, children and careers. This often results in three generations feeling the impact of this care. Read more
Emergency travel medical insurance is included in most group benefit plans. This travel benefit under the Extended Health Care plan covers employees and their eligible family members for medical emergencies while outside their home province for a duration of time as outlined in their group contract – usually from 60 to 180 days. For the majority of travel situations, this coverage is ample to cover off any unforeseen medical issues.
Emergency Services covered under the plan include:
All services and supplies while in hospital
Outpatient and physician services
Ground ambulance service to the nearest hospital
Transportation to the employee’s home province for medical treatment, as appropriate Read more
The Canadian income tax system is structured in such a way that taxpayers and their estates are often liable to pay significant taxes upon their death.
These taxes can represent a large proportion of the value of the deceased’s estate and can significantly reduce the amount of residual assets available for distribution to the estate’s beneficiaries.
Fortunately, the tax an estate will be subject to isn’t set in stone and with a properly structured will, a taxpayer can significantly reduce the taxes payable on their final income tax return (as well as the taxes payable by their estate subsequent to their death).
Leave assets to your spouse
A strategy used to reduce a taxpayer’s liability on a final tax return involves the drafting of a will that leaves assets to their spouse rather than other beneficiaries.
This information is designed to educate and inform you of financial strategies and products currently available. As each individual's circumstances differ, it is important to review the suitability of these concepts for your particular needs with a Qualified Financial Advisor.