Global Insight Monthly

January 2019 edition is now available!

 

RBC Wealth Management has released the January edition of the “Global Insight Monthly” which can be accessed at THIS LINK. This month, pay close attention to Chief Strategist Jim Allworth’s piece on his current thoughts regarding the “correction vs bear market” question. As well, read the piece published by analysts Joseph Wu and Tim Corney regarding value emerging in the Canadian marketplace. I agree with both articles in their broad conclusions.

 

I wanted to spend the bulk of this missive, however, on some Start-of-2019 to-dos.

 

Common savings strategies

• RRSPs: contribution room is now a maximum of $26,230 for 2018, or 18% of your 2017 earned income. Next year it will be $26,500. The deadline for contributions is March 1^st to be eligible for deduction on your 2018 tax return.
• TFSAs: the contribution room was increased to $6,000 this year. This brings the total room available since 2009 up to $63,500 per person.
• RESPs: you can contribute a further $2,500 per child for the maximum annual Canadian Educations Savings Grant of $500 per child (up to a maximum $7,200 lifetime grant per child). Missed years can also be caught up one year at a time going backwards.
• Individual Pension Plans: these are an alternate savings strategy to RRSPs available to some executives and business owners. New employment earnings to contribute the maximum for 2019 is up to $151,278.
• Registered Disability Savings Plans (RDSPs): these have unlimited lifetime contributions up to $200,000. If net income in 2017 was above $95,259, the annual Canadian Disability Savings Grant is $1,000 for a $1,000 contribution (it is $3,500 per $1,500 contribution if net income was less).

 

Tax saving strategies

• Family income splitting loans are a potential way to split income with spouses, adult family members, or with minor children through a Family Trust. If you have a prescribed rate loan in place, it is critical that interest is paid on the loan by January 30^th.
• If you received a retiring allowance in 2018, you have until March 1, 2019, to transfer the eligible portion to your RRSP without affecting your RRSP contribution room. This transfer will allow you to defer taxation on the eligible retiring allowance received until it’s withdrawn from your RRSP in the future. Keep in mind that your eligible retiring allowance can’t be transferred to a spousal RRSP.
• If you are eligible for Old Age Security payments, structuring your income to keep your net taxable income below $77,580 will keep you from any clawbacks. OAS is fully clawed back by net income of $125,696. Getting needed money from non-registered funds, TFSAs, non-taxable corporate funds (e.g., your shareholder loan account), etc. are potential sources of funds.

 

Business owner specific tax items

• If your corporation declared a bonus in 2018, remember to pay that bonus within 179 days after the corporation’s year-end. Canadian tax rules allow a corporation to deduct a bonus declared to an employee on the corporation’s previous year’s tax return, as long as the bonus is paid within 179 days after the corporation’s year-end.
• If you have employees in your business or you employ a nanny or babysitter, you must file the appropriate T4 forms to the CRA by February 28, 2019. A copy of the T4 slip must also be delivered or mailed to your employee(s) by this date. If you, as an employer, fail to file the appropriate T4 forms to the CRA by this deadline, you may be subject to penalties.
• You may have disposed of “qualified small business corporation” shares in 2018 and realised capital gains that cannot be fully exempt under the $848,252 (2018 threshold) lifetime capital gains exemption. If this is the case, you may be able to defer all or some portion of the taxable capital gains if you reinvest the proceeds in a new eligible small business corporation any time in the year of disposition or within 120 days after the end of that year.
• Generally, corporate taxes are due two months after the corporation’s year-end. If your corporation’s year-end is December 31, 2018, you’ll need to pay the remainder of the tax your company owes by February 28, 2019. The corporate taxes can be due three months after the corporation’s year-end (e.g. March 31, 2019, for those with a December 31, 2018 year-end) in certain circumstances.

 

If you would like more detailed information on any of the strategies above, please let me know.

 

Finally, we pride ourselves on working closely with your other advisors such as your accountant and lawyer. Every year we provide dozens of accountants with tax packages and customised tax reporting (transaction summaries, realised gain/loss and income reports, current account statements, etc.). If your tax professionals are not receiving information from us and would like to, or if they would like to discuss any of the specifics of your tax planning for the coming year, please know that we consider this part of our service to you.

 

All the best for the coming tax year,

 

Sam

_________________
Samuel S. McLaughlin, FCSI | Vice President | Portfolio Manager & Wealth Advisor | McLaughlin Capital Management | RBC Dominion Securities Inc. | p:. 204.982.3967 | m:. 204.510.9479 | w:. mclaughlincm.com | LinkedIn

 

My Team

Erin Wiebe, FCSI, Associate Portfolio Manager | strategy & portfolio management; client service | p:. 204.982.2684 | e:. erin.wiebe@rbc.com

Natasa Ilic, Wealth Associate | wealth planning; administrative; scheduling | p:. 204.982.3961 | e:. natasa.ilic@rbc.com

Linda McLaughlin, Associate | account administration; trading; office management | p:. 204.982.2656 | e:. linda.mclaughlin@rbc.com

Jan Melnychuk, Associate | account administration; trust & estate administration | p:. 204.982.6882 | e:. jan.melnychuk@rbc.com

Remi Laurencelle, Student | marketing; special projects | p:. 204.982.2647 | e:. remi.laurencelle@rbc.com

 

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