Mark (00:00:08) – Well, welcome back to another Tower Talk. We’re so glad you made time to join us. Thank you very much for your time. We’re going to try and use it well. I want to begin by just saying we are going to have a live episode. And the goal, of course, will be that we will have all the right answers for you when you have the questions for us on March 20th, it’s going to be Wednesday, March 20th, 6 p.m. eastern. Uh 8 p.m. eastern time, 6 p.m. Mountain time. That’s, uh. So wherever you are, we hope you’ll make it time to join. So we’re going to max it at one hour. And if you want to send us questions ahead of time, great. That’ll give us a chance to be a little more prepared. But otherwise. We may not have the right answers, but we’re going to give it a try. We’ll have fun with it. Look forward to seeing you then. Tarek, we’re talking about taxes.

Tarek (00:00:55) – Awesome.

Tarek (00:00:56) – Thanks, Mark. Yes, we’re talking about taxes. Taxes, the debt that everyone has to pay.

Mark (00:01:00) – But let’s also say this.

Mark (00:01:01) – Just because we are good citizens. Yes, paying taxes isn’t the worst thing, is it? It is not. We live.

Mark (00:01:07) – Everybody live in.

Mark (00:01:08) – A very good country. And it is the way we, you know, are able to have really, really amazing roads. Okay. Some of us don’t have, but really we’ve got great roads, we’ve got great services in the country, we’ve got decent schooling. I know not everybody loves the schooling system, but at least we do have one. There are countries that don’t have got a health care system that does work. I know we’ve all got grumps about the health care system, but man. I think it’s a great country we live in and it’s worth paying taxes. Okay, back to you, Turk.

Tarek (00:01:38) – You got it. We’re going to talk about how to mitigate taxes and try to minimize taxes as best as possible.

Tarek (00:01:44) – Now, the first thing I want to talk about is registered accounts. So in Canada we have a number of registered accounts that allow you to reduce your tax burden and be more efficient with your taxes. The bulk of them or the main ones are Rrsps, our ESPs and Fsas. It’s a really good starting point for anyone looking to reduce their taxes or minimize their taxes. So Rrsps um, definitely primarily for retirement. Our ESPs for education and Fsas can be for retirement or sort of medium term planning, and they have different purposes and uses for each that we can get into the specifics of for your specific situation. If you want to get in touch with us.

Mark (00:02:23) – Um, and these are ways of mitigating taxes or at least reducing your current taxes. The idea of these accounts is to reduce your current taxes so that you take the money back out of them later on when your income is lower. And so you’re reducing the amount of tax overall. Rrsps or registered retirement savings plans RRSP, um, the amount for this year is capped at 30,780, but that’s a function of your percentage of your income.

Mark (00:02:52) – So if your income is whatever the number is, it’s 18%. I think that you’re allowed to to.

Mark (00:02:59) – It’s about.

Tarek (00:02:59) – 170 grand. You have to be earning to max out the, the limit.

Mark (00:03:04) – Right.

Mark (00:03:05) – Uh, the next one is RSP. This is $2,500 a year. Um, it is cumulative. So if you’ve missed a few years for your kids and you want to sort of do some catch up, you can, uh, the government, uh, matches your contribution by 20% up to the $2,500. Can you go beyond the 2500 Tehrik?

Tarek (00:03:25) – You can. You can’t go out beyond the 2500. I think the max you can contribute over the life of the RSP is 50,000. Um, so yeah, you can go beyond that, but $2,500 gets you 20% on that money, which is $500 from the government.

Mark (00:03:39) – No, which is great money. It’s faster the first. The first year might be your best year. No return 20%. Yeah. The TFSA, which is one of our favorite tools because the money you put in there is not tax deductible.

Mark (00:03:52) – It is after tax dollars, but the money that you earn while your money is in there is tax free. When you take all the money out later on, you won’t pay taxes on it. And that’s why he likes that tool. Especially the limit on that is $95,000. And that’s lifetime up to now, right?

Tarek (00:04:09) – That’s correct. So if you were as of the time of the tax free being implemented, I think it was 2009. If you were 18, the max you can contribute now is 95,000. Yeah, it went up $7,000 from 2024.

Mark (00:04:22) – Okay, so if you’re wanting to contribute to the RSP and RSP, you need to make those contributions by February 29th so that it counts for the previous year. Your taxes that are.

Mark (00:04:35) – Already RSP.

Tarek (00:04:36) – RSP isn’t isn’t based on the February.

Mark (00:04:39) – 29th. My mistake. Okay. 28 excellent.

Mark (00:04:42) – So that one would be a December 31st drop dead date.

Mark (00:04:44) – That’s right. Yeah. Yep.

Mark (00:04:47) – Uh, okay. So the RSP, you do have another week or so to make a contribution there.

Mark (00:04:53) – And that’ll be sort of helpful if you can. But the beauty of that is it will. If you’ve already capped out your contributions from last year, it will apply to the next year. So you can carry it forward very easily by doing it in February.

Tarek (00:05:07) – The next thing I want to talk about is employer matching. So if you’re an employee, you work for a company, you earn a wage. A number of employers offer matching programs where you contribute a percentage of your income to a retirement account, and they’ll match that percentage, dollar for dollar. It is wild how many employers do not opt into these programs because they are opt in programs. And that is the simplest way to maximize your retirement income is to opt in to that program. It’s money set aside for you. It’s on the table. So just opt in to those programs if you can Mark off to you. Good.

Mark (00:05:41) – Excellent. Thank you. Um, the next one that we.

Mark (00:05:43) – Wanted to mention is the idea of balancing out your, your savings accounts.

Mark (00:05:47) – So if you’ve got rrsps, be sure that you’re balancing the amount that goes into your RSP and into your spousal RSP, so that when you hit retirement, you and your spouse, you and your partner are having equal amounts and therefore you’re paying equal taxes, which means you’re both at the lowest possible tax rate rather than one at the high and one at a low. Uh, the next thing we want to be sure to do is, um, but those of you who work from home, which is, you know, a lovely way to live, I think, because you have your dog sitting on your lap. But here we go. There are expenses to having an office at home. There are certain qualifications that you need to have. Um, I think the government is requiring 50% of time or more for four consecutive weeks in a in a year. If you got that, then you qualify for deducting expenses. Doesn’t mean you have to have all 52 weeks at 50%, but you need to be able to show that you did it for four weeks.

Mark (00:06:40) – If you do, then you might be able to write off, um, your internet or a piece of your internet, a piece of your utilities, you know, some other costs. You’ll have that figured out. But be sure to talk to your accountant about it. The third thing is, uh, charitable giving. We want to be sure that where you’ve got a favorite charity, you’re including it in your giving because the government is willing to give you a tax break on it. So be sure that you’ve got that implant. But here’s the trick where you can give shares rather than dollars because the shares let’s say you want to give, uh, pick a number to $20,000 to a charity. If you give dollars, you’ll get a charitable receipt for $20,000. But if you have shares in your cost was, say, 12,000. You’re able to give the $20,000 in shares. You will not pay a capital gain on the $8,000 gain, but you’ll get a receipt for the full $20,000. So it saves you the capital gain and you get the tax receipt at the full value.

Mark (00:07:43) – So that’s a good way to do some some planning. I think that’s enough on that one. But we can help you with more if you want. Give us a call.

Mark (00:07:51) – Uh, tech.

Tarek (00:07:53) – Thank you. Now, the big thing and what we’ve kind of alluded to throughout this whole call is, is have a plan. You know, the old saying is, uh, have a plan or plan to fail. Uh, take it, take a moment, sit back or take a step back and have a plan about your taxes, about your future, about estate planning and succession. So what that looks like is getting a will. So if you feel like your situation is very simple, you can get a bucket from your local registry. Otherwise you know a solicitor for a basic will. We’ll do that for oftentimes less than $500. It’s the easiest way you can get yourself set up to transfer your money in the most efficient way, to reduce taxes and to reduce confusion for your beneficiaries. And oftentimes a trying time.

Tarek (00:08:35) – As an example, for some of the planning we can do for you. Um, registered accounts and the way they transfer between spouses and the way they transfer across generations is different. And there’s tax implications there that need to be thought about. You know, we’ve seen people who think of, oh, I have money in my RSP and I want to leave that amount to to this kid. And I have money in my cash account. I want to leave that amount to my spouse over here. And that’s not a that’s not a efficient way of transferring funds. Any money in an RSP, if you pass away and you transfer that to your child, it has to be taxed at, you know, whatever max tax rate is for you upon your passing. Whereas if you were to transfer that RSP to your spouse, it would have gone tax free, right? And so then you instead of giving the spouse the cash account, you give that to the kid. And so that’s a very simple scenario where you could save a ton of taxes just by having it set up correctly at the outset.

Tarek (00:09:32) – And it’s not it’s not terribly difficult to do, but that’s just why, you know, sit down with us, sit down with an accountant, and let’s get that set up correctly for you. Just have a plan, get a will, and take care of your financial situation so you can minimize your taxes and have a good succession for your family. I think that’s it, I think.

Mark (00:09:51) – I think we’re done. All right. Have a good have a good month. See you in March.