RISING WOMEN EXPERT ADVICE...
I have reached that golden time of over 50 and am looking
for some advice about taxes and how they relate to my financial planning for
retirement.
Financial planning and taxes go hand in hand. There are a various
different topics that need to be addressed. The first being when you want to
retire and the second being how much “after tax” money will you need to live
your ideal retirement. So to sum it all up, knowing your “Financial
Independence Number” is a great start.
Depending on where you have your money determines how it is taxed. Anything
that pays interest will be taxed at 100% of the money earned. Capital gains
are taxed at 50% of the gain and if held jointly (spouses/life partner) each
person then pays tax on half the gain, and dividends are the least taxing.
From an income perspective, you have several areas you will be receiving
funds from: CPP, company pension, your own retirement savings which can
include RRSPs (tax credit when taking out but 100% of funds are taxable at
the end of the day), open funds, TFSA (no taxation on either principal or
growth), trusts, insurance return of premiums, and other investments.
Then there is also the relatively new Pension Income splitting on your tax
return and the following should be considered. Eligible pension income is
generally the total of the amounts received by the pensioner in the year.
The amount of eligible income available to split can be from 1% up to a
maximum of 50%. This can be changed yearly to give the best tax benefit to
the taxpayer.
Old Age Security and Canada or Quebec Pension Plan payments do not qualify.
Generally, variable pension benefits paid from a money purchase provision of
a Registered Pension Plan are not considered life annuity payments. And they
do not qualify unless the pensioner is age 65 or older at the end of the
year, or the variable benefits are received as a result of the death of a
spouse or common-law partner.
With this in mind you may want to revisit how you are going to be taking
your company pension and optimize your income. The ideal direction for you
to take is to sit down with a tax specialist and financial planner and see
what is in your best interest and look at all the options so that you are
getting the greatest tax advantages possible from all areas of your
investments now and at retirement.
Need more clarity when it comes to your taxes? Contact Diane Colton
of Mobility Tax at 403.235.0095. Diane also offers informative business
seminars. Call for details & registration. |
