Frequently Asked Questions

How can I reduce the overall risk of my portfolio without sacrificing potential returns?

Diversification is a tried and true investment strategy that helps to reduce overall portfolio risk. An undiversified portfolio creates unnecessary risk which does not necessarily equate to higher returns. Diversification can be achieved through investing in a variety of asset classes as well as industries. For more information on how diversification works please follow the link.

What are some considerations for constructing a tax efficient portfolio?

Building a tax efficient investment portfolio will rely on an understanding of the differences in the way investments are taxed as well as differences between the administration of account types. For instance, capital gains are the most tax efficient type of investment income in Canada. Tax owed on capital gains income is less than the tax owed on interest and dividend income. It is often best to hold shares inside a non-registered account, and income paying investments in registered accounts such as an RRSP or TFSA. For more information on the taxation of specific investments, please follow the link.

Should I focus on paying down existing debt or investing the money I have saved?

Short-term loans generally carry higher interest rates, and therefore paying down these loans should be prioritized over investing. While there would be variances in circumstances from one case to the next that would affect this answer, a good rule of thumb is to consider the break-even rate. The break-even rate is the return your investment must earn before tax, if applicable, to match the savings that would be earned by reducing debt. If you do not believe that your investment can exceed the break-even rate, it is normally best to pay down your debt. To access the Pay Down Debt or Invest Calculator to help you determine the best course of action for you, please follow the link.

What is a family trust?

A trust is a binding agreement between a trustee and a beneficiary. A very common example of a family trust is a testamentary trust which is essentially used as a protective measure for your estate. For more information around how Family Trusts work, please review the attached reference guide.

How do I choose an Executor for my Estate?

The decision of whom to assign as the Executor for your estate is an important one.  There are many considerations in determining a good candidate including the level of trust, responsibility, and willingness to act that can be expected.  For more information around how to select a good Executor, please follow the link.

How often should I review my Wills and Estate Plan?

The requirement to review and make changes to a Will and/or Estate Plan shouldn’t necessarily be guided by time so much as changes in circumstance or life events.  Acquisition of new and sizable property, additions of family members (such as children or grandchildren), deaths of family members or changes in familial relationships, as well as changes in the health of a spouse and much more can prompt the need to review and reconsider the details of these documents.  For more information around the benefit of regularly reviewing your estate documents, please follow the link.

How can I confirm my current RRSP and TFSA contribution room?

There are several ways to confirm RRSP limits and TFSA contribution room.

You may call the Tax Information Phone Service (TIPS) at 1-800-267-6999; note this is an automated service for which you will be required to provide personal information as well as information from your last tax return. For more information around using TIPS and the personal information you should have handy before calling, please follow the link.

You may also wish to register online for My Account with the CRA.  My Account is a self serve platform from which you can view and make changes to your personal tax information, direct deposit information, track your RRSP limits and TFSA contribution room and much more.

For more information on My Account and how to register, please follow the link.

How do RRIF payments work?

An RRSP account must be converted to a RRIF account by the end of December in the year the account holder has turns 71.  Beginning in your 72nd year, you will be required to withdraw an annual minimum amount which increases every subsequent year. Although there is an annual minimum payment (AMP), there is no maximum amount that can be withdrawn from a RRIF, however, payments over the annual minimum are subject to a withholding tax paid directly to the government on your behalf.  Every dollar that is withdrawn from a RRIF is taxed as income in that tax year.  For more information around how minimums and withholding taxes are calculated, please follow the link.

What type of investment account can I open to set aside additional savings for my child (minor)?

Informal Trusts are a tax-efficient option to providing a savings plan for a beneficiary such as a minor child. The beneficiary of the Informal Trust is the owner of the funds deposited by the contributor. For more information on how Informal Trusts work, please follow the link.

Is there a maximum I can request to withdrawal from my RESP at any given time?

The amount of funds eligible for withdrawal from an RESP will depend on whether the payment consists of EAP or PSE, as well as whether the beneficiary (student) is enrolled in full time or part time studies. For more information around EAP and PSE payments, as well as rules governing eligible amounts for withdrawal, please follow the link.

I’m purchasing a new home, how do I participate in the HBP program?

Purchasing a new home can be a very exciting time and also a hectic one. First time home buyers may be eligible to use funds from their RRSP to participate in the Home Buyers Program (HBP). A maximum of $35,000.00 can be withdrawn from an eligible RRSP without the usual tax implications of an early RRSP withdrawal. For more information on the eligibility requirements for this program, as well as details on how to participate, please follow the link.

When is my HBP repayment due and how do I make payments?

HBP participants are required to start making repayments back to their RRSP effective the second year after the purchase of the home.  It is the participant’s responsibility to ensure they direct their accountant to identify the respective RRSP tax slips as HBP repayment and not a regular contribution. Repayments do not decrease contribution room.  For more information around HBP repayment rules please follow the link.