ZLC Private Investment Management Inc., is pleased to welcome Jon McKinney, B.Comm., C.A., CIM as President and Portfolio Manager.
The most basic form of insurance and the simplest to understand is Renewable and Convertible Term Insurance. Coverage is provided for a specified term, the policy renews automatically at the end each term period until the policy expires, most commonly at age 85. This plan has the lowest initial cost at entry, but don’t be mesmerized by the low cost because on renewal you will pay a substantial increase. If, however, you become uninsurable before the end of the term period you will have no other option but to renew or convert it to a permanent plan if you want to keep the coverage.
What Snowbirds Need to Know About Residency Rules
After another harsh winter, many Canadians dream of joining the large number of Snowbirds who make their way to the dry warmth of California, Arizona and Florida each winter season. If you are contemplating, or already are, becoming a Snowbird and whiling away the winter months in warmer climes south of the border it is important to understand how the new U.S. Tax laws apply under these circumstances. The last thing you would want is to find that the Internal Revenue Service considers you a US resident making you liable for U.S. income tax or subject to U.S. penalties or both.
Lately, one question clients are asking me is whether they should contribute to a Tax Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP)? Personally, I really like the TFSA. however it doesn’t have to be an either or choice. Why not do both? If both, in what proportion should you divide your contributions? In order to make an informed decision, let’s quickly review the main features of each program as discussed in last month’s article. I will use bullets to illustrate the features as nothing gets people’s attention more than bullets.
TAX FREE SAVINGS ACCOUNT
- Any Canadian resident age 18 or over may open a TFSA. Contribution is not based on earned income. There is no maximum age for contribution.
- Maximum contribution is $5,000 for each year from 2009 to 2012 and must be made by December 31st of the year of contribution. For 2013, due to indexing the maximum contribution is $5,500.
- There is carry forward room for each year in which the maximum contribution was not made.
- The deposit is not tax deductible, but the funds accumulate with no income tax payable on growth.
- Withdrawals may be made at any time on an income tax free basis. Withdrawals create additional deposit room commencing in the year after withdrawal.