Koroll & Company Blog

When it is time for you to retire, there are a number of retirement tools you can draw from when you reach retirement age – Employer-Sponsored Pension Plans, Registered Retirement Savings Plans, Registered Retirement Income Funds and the Canada Pension Plan – but, whether you receive these and the amount you receive, is based on contributions made to these accounts.

Registered Retirement Savings Plans (RRSPs) and Registered Pension Plans (RPPs) are retirement savings tools that help you plan for your financial future.

Knowing the similarities and differences between the two is critical to understanding their tax treatment.

The new year is only a couple months away and with it comes changes that could have a large impact on businesses and individuals across the country. One of the biggest changes is the change to the Canada Pension Plan (CPP) and contributions. 

Once the tax year comes to a close, there are very few steps that can be taken to further reduce income and tax liability. There are, however, some last minute tax-planning strategies that can be very beneficial. The first, which we speak of often, is contributions made to an RRSP (registered retirement savings plan). The other is Pension Income Splitting.

Pension Incomes Splitting is a tax planning tool that was implemented for taxpayers over the age of 65 (and in some cases 60). When implemented correctly, as part of your tax planning strategy, Pension Income Splitting can reduce your tax liability and increase your eligibility for government benefits.

While it may not be the first thing that comes to mind when we ask ourselves what we want to do with our discretionary income, contributing to saving plans is critical to an enjoyable retirement.

The deadline for 2017 Registered Retirement Savings Plan (RRSP) contribution is March 1, 2018, which means many of us are dealing with the annual decision of whether we should put our savings into an RRSP or a Tax-Free Savings Account (TFSA).

We often discuss the benefits of Tax-free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs), as both tax planning and retirement saving tools.

Most Canadians approaching retirement know that they will be able to receive retirement income from the Canada Pension Plan (CPP) and Old Age Security (OAS) programs. Many, however, are unaware that there is a third federal program — the Guaranteed Income Supplement (GIS) — which provides an additional monthly income amount to eligible individuals who already receive Old Age Security.

The problem is, automatic enrollment in GIS is something that is planned for future implementation, but is not yet in place, which means that anyone who wishes to receive the GIS must apply for it. As such a number of Canadians are not taking advantage of it.

The good news? Where individuals receive the Guaranteed Income Supplement, whether the full benefit or partial amounts, all such amounts received are non-taxable.

The traditional idea of retirement – working full-time until age 65 and then leaving the workforce completely to live on government-sponsored and private sources of retirement income – has undergone a lot of changes over the past couple of decades, and Canada’s government-sponsored retirement income system has evolved in response.

Generally, the changes to the Canada Pension Plan (CPP) and Old Age Security (OAS) programs have increased the flexibility of those programs and, in particular, have given individuals a greater range of choices with respect to, especially, the timing of their receipt of CPP and OAS.

The downside of that increased flexibility has been to make the system — and therefore the choices available to Canadians — more complex. One aspect of that complexity is the (relatively) new CPP post-retirement benefit, or PRB.