7 Lesser Know Facts About RRSPs
Investing, Personal Finance Ronika Khanna Investing, Personal Finance Ronika Khanna

7 Lesser Know Facts About RRSPs

It is the time of year when everyone adult Canadian should be thinking about investing into their registered retirement savings plan (RRSP) prior to the deadline of March 1st. Many of you might think that you are young and have time or conversely that you are older and it’s too late. The truth is that it is never too early or late to start a RRSP. You simply need to set a goal and start doing it.

The great benefit of investing in RRSPs, which is the single best tax optimization strategy available to all Canadians, is that it reduces the amount of income taxes that you will have to pay. The tax savings is based on your marginal tax rate. Since everyone’s income is allocated to different tax brackets as your income increases, the marginal tax rate represents the highest tax bracket which applies to the top portion of your income.

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Adopt These 9 Money Habits to Increase Your Net Worth
Personal Finance, Investing Ronika Khanna Personal Finance, Investing Ronika Khanna

Adopt These 9 Money Habits to Increase Your Net Worth

The approach of a new year tends to inspire the best intentions. We indulge over the holidays while resolving to be better, healthier, more financially disciplined etc as soon as the year is over. Unfortunately, resolutions tend to fade away as the year progresses and other stresses start to whittle down our willpower.

One way to make our resolutions a bit stickier is to celebrate small wins. If you eat slightly less junk food or exercise a bit more, you can count it as an accomplishment. The positive reinforcement helps to make us feel better, inspire confidence and slowly build habits that makes reaching our goals a bit easier. This is particularly true with financial discipline. It is important to recognize that, like any habit, it is a process that takes time. The good news is that there are tangible metrics to measure your success i.e. your increasing net worth.

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How to Reflect Investment Income and Capital Gains/Losses on your Personal Tax Return
Personal Finance, Investing Ronika Khanna Personal Finance, Investing Ronika Khanna

How to Reflect Investment Income and Capital Gains/Losses on your Personal Tax Return

Residents of Canada are required to reflect all sources of worldwide income on their personal tax returns. For most individuals, who have investments with Canadian based banks and brokerages, this is fairly straightforward as you will receive the relevant tax slips, usually by March 31st of the year following the end of the calendar year i.e. for the 2019 tax year, you should receive all investment related tax forms and slips by March 31st, 2020. It is important that all recipients of investment income should ensure that these slips are indeed received and reported. Failure to report income can result in penalties by Revenue Canada and Revenue Quebec, which is never great particularly when it can be easily avoided. It should be noted that since tax documentation is being submitted by the issuer to CRA and RQ electronically, they often have a record of the various types of investment income for each taxpayer.

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Investment Strategies for Your Incorporated Small Business
Small Business, Investing, Cash Flow Ronika Khanna Small Business, Investing, Cash Flow Ronika Khanna

Investment Strategies for Your Incorporated Small Business

One of the benefits of having an incorporated small business is that after paying yourself a salary or dividend any excess funds can be invested directly through the corporation. Since small businesses often cannot predict how their business will perform from year to year, the ability to retain funds in the corporation allows for a cushion to smooth out fluctuations in earnings which can then be paid out in lower performing years. By keeping the funds in the corporation, the business is able to defer tax since usually the small business tax rate is lower than the personal tax rate. Some points to consider:

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