Welcome 2019! I hope everyone enjoyed their holidays with family and friends.

I would like to reminder everyone about making your TFSA contribution for 2019. This year, the annual contribution amount is $6,000...YEAH...they have finally bumped up the limit. So now, the cumulative contribution room since 2009 is $63,500. For those of you who need to reference the information about TFSA accounts from CRA, then please use the following link:

TFSA Contribution Information

As I have said since this program started, it is very important to make sure that you contribute and take advantage of this tax sheltered vehicle and estate planning tool. If you have a spouse, you may now shelter a whopping $127,000 from income tax between the two of you.

What makes the TFSA so strategic in your financial planning arsenal? While a contribution that is made to the TFSA is not tax deductible, it is completely tax sheltered. Unlike a RIF, when funds are withdrawn from the TFSA, NO TAX is paid. This makes the TFSA an important vehicle for providing tax free cash flow down the road. In addition, the TFSA is an important estate planning tool. The TFSA is a "trust", hence you may assign a beneficiary. This is important to understand because it is an easy way to by-pass probate and move the assets directly to a loved one. Please make sure that you have a look at your TFSA statement to ensure that you have assigned a beneficiary to the account. If you assign your estate as beneficiary, then these assets will NOT by-pass probate. So, please make sure that you check your account and if you have any questions, please make sure you ask me!

TFSA Contribution Room Information: As I advised last year, there is only one spot where you can get accurate information for your contribution room as this is not available on your income tax summary. You must retrieve the information from CRA. Here are the links for you:

My Account;

MyCRA; or

Tax Information Phone Services (TIPS)

What type of investments belong inside a TFSA? As I have said in the past, please put investments that would actually create a tax liability for you if they were not held in a tax sheltered account...that means equity!

And finally, I have looked at other programs that other institutions are offering and I am pleased to say that RBC Dominion Securities has the best TFSA on the street with 16 free trades, a comprehensive offering, contributions and withdrawals are permitted in cash or in-kind. I have outlined below some very important features that need to be considered:

• Tax Planning; keeping the money you make - The TFSA allows you to earn capital gains, dividends or interest income on funds held in account and to withdraw those funds tax-free (please note, there can be tax implications if the account is in an over-contribution position).
• No attribution with the TFSA - You can give money to your spouse or adult children who can then deposit into their TFSA accounts. The income and growth in the account will not be subject to the attribution rules. For example, a high-income earner with a spouse and four adult children can in total fund $36,000 towards the family's TFSA's annually
• Estate planning - If you plan to leave money to your spouse and then children, you can start to pass the funds on now, tax-free, by giving them funds to deposit into TFSA accounts in their names. You may also be able to pass on your own TFSA to your spouse on your death without attracting tax or probate fees, depending on the circumstances and the beneficiary designations you choose. Make sure that you designate your spouse as "Successor Annuitant" on the TFSA
• Retirement planning - The TFSA can help you avoid OAS claw back because TFSA withdrawals are not included in your income for tax purposes and will not affect any income-tested benefits you may receive. Unneeded RIF payments can also be used to fund your TFSA or be gifted to benefit other family members. If you have maxed out your RRSP, the TFSA can provide an additional source of retirement income on a tax-free basis.

So folks, there are lots of ideas, but get going sooner rather than later. Remember, you are sheltering money!

If you have any questions, please give us a call...we are here to help!

Regards,

Barb