This weekend, I attended the Black Physicians Association of Ontario (BPAO) annual symposium in Downtown Toronto. It was great to be back to this event in person and to continue to be a partner and work alongside great minds in medicine in our community. I’m always blown away by the great presentations at this event as I get to learn about new advancement in medical research. In this issue, I discuss whether you should contribute to an RRSP plan. I also share a video strategy on how to build tax-efficient wealth. Enjoy this issue and please remember to share this with everyone in your network:
1. Should You Contribute To Your RRSP Account?
It’s RRSP season and the deadline is in a few days on March 1! As you may already know, RRSP stands for “Registered Retirement Savings Plan” and it is a vehicle that allows you to defer taxes on your income. While it is the most widely used tax shelter in Canada, many still associate it with retirement even though it can be used for a variety of purposes, such as financing your first home or training or post-secondary education, or simply as a tool for tax deferral. With the crazy advertisement about the RRSP deadline all over the media, the question for you is…
Should you contribute to your RRSP?
If you’re considering whether RRSP is the right tool for you, I suggest you consult with a professional who can help you plan around your RRSP. When used correctly with customized planning, it is a great tool for tax-efficient wealth accumulation. For this reason, I believe you should own one and contribute to it. Don’t just contribute to an RRSP account because everyone is doing so. Contribute because it fits well with your personal financial plan. I believe that no matter your income level, there is room in everyone’s plan to include RRSP as a tax saving strategy. If you need help determining whether using RRSP is a great planning strategy for you, I suggest you book a FREE consultation with me so I can help you.
2. Are You Prepared For The New Underused Housing Tax?
If you own a residential rental property in Toronto, you may be aware of the new Toronto vacant property tax as you would have received a letter in the mail. This is an annual tax levied on vacant Toronto residences, payable beginning in 2023. What you may not be aware of if the newly introduced Federal Underused Housing Tax (UHT) which imposes a 1% annual tax on the value of residential real estate considered to be vacant or underused that is owned on December 31 of each year. While the government indicated that the tax would target property owned by non-Canadians, the scope of filing requirements extends to many Canadian corporations and individuals, including Canadian Controlled Private Corporations (CCPCs), trustees of a trust and partners of a partnership. The first filings and taxes are due by May 1, 2023. Penalties for failure to file the return (even where no tax is payable) start at $5,000 for individuals and $10,000 for corporations. In the coming weeks, I will share a short survey or checklist you can complete to help you determine if filing is applicable to you and if you have any tax liabilities owing on this. So, stay tuned.
3. How To Build A Tax-Efficient Financial Plan for Your Future
In this short video, I discuss how you can build a tax-efficient financial plan. It is an intentional financial plan designed to minimize or eliminate taxes. An efficient tax plan seeks to accomplish three things:
1. Save money tax-free or tax-efficiently
2. Grow money tax-free or tax-efficiently
3. Distribute money tax-free or tax-efficiently
I share some foundational elements you need to know, the key building blocks to wealth and a framework for doing so. Watch it here.
4. Why More Money Will Not Solve Your Money Problems
Not too long ago, in an email shared by Rob Minton, one of my mentors, he concluded that…
Money problems ALWAYS flow from thinking problems.
I thought this was an interesting conclusion as it directly relates to our money mindset. Rob goes on to share how we see this in real life by studying lottery winners. Within a short period of time, they go from money problems to having lots of money and then to having money problems again.
So, more money usually doesn’t solve money problems. To solve money problems you have to change how you think about money. This comes down to your money mindset, which is the subconscious feelings and thoughts we develop towards money from our life experiences. A money mindset is your unique and individual set of core beliefs about money and how money works in the world. It is your overriding attitude about money. It shapes what you believe you can and cannot do with money, how much money you believe you’re allowed, entitled, and able to earn, how much you can and should spend, the way you utilize debt, how much money you give away, and your ability to invest with confidence and success. When it comes to money mindset, there are two extremes:
- The Scarcity Mindset, which will keep you stressed, anxious, and can result in a lack of generosity; and
- The Abundance mindset, that can keep you calm, positive, optimistic and more generous with your money
Most of us will fall in between these two extremes. It is important to know where you stand and to begin to work to develop the right money mindset. You can use this FREE resource to take a 2-minute money mindset test to give you a sense of your current mindset when it comes to money. So far, 44% of those that have taken this test have an abundant money mindset. What about you? Take the test here.
5. Do You Own A Corporation With A December 31 Year-end?
As some of you may know, we provide a number of services for corporate clients and it’s that time of the year when corporations with a December year-end should start organizing their documents to compile their financial results, estimate taxes, plan their cash flow for the new year and a number of other things. While we obviously help corporations with the tax compliance work of filing their annual corporate tax returns, we do provide other additional value added services such as:
- Streamlining and automating majority of your bookkeeping processes
- Doing a cash flow and budget analysis for your corporation
- Estimating corporate tax liability and developing a plan for installment payment of your taxes
- Corporate tax planning including how to invest corporate dollars and how to properly use insurance within your business to mitigate risk and plan for retirement
- Corporate restructuring to ensure you’re organized in the most tax efficient way
- Remuneration planning to ensure you’re taking money out of your corporation in the most tax efficient manner
- How to use your corporation as a nest egg for your retirement in a tax efficient manner.
- And many more…
If you’re looking for solutions for your corporation consider working with me and my team at GMS Professional Corporation. Check out our standard service offering for corporations here. And when you’re ready to have a chat, book a time with me here.