Transcript Creating a Financial Plan

Starts 11:30
Advanced Tax Planning
Strategies
Presented by:
Kurt Rosentreter CA, CFP, CLU, TEP, FMA, CIMA, FCSI, CIM
Chartered Accountant
Senior Financial Advisor, Manulife Securities Incorporated
Certified Financial Planner, Manulife Securities Insurance Inc.
About Kurt Rosentreter
• Chartered Accountant
• Twenty years of experience in personal finance.
• Past co-founder of the national wealth management practice at one
of Canada’s big four accounting firms.
• National best selling personal finance author; six published books in
Canada.
• More than 500 published articles and interviews for The Globe and
Mail, National Post, CBC, Canada AM, Canadian Business and
Maclean’s.
• Personal Finance Course Instructor, Ontario Institute of Chartered
Accountants
• Senior Financial Advisor, Manulife Securities Incorporated* in
Toronto (*Member CIPF).
• Certified Financial Planner, Manulife Securities Insurance Inc.
Complete a Draw Ballot!
• Draw for four books at the end of this 30
minute presentation
• Draw ballots available at front of room
• Drop in basket at front of room
• Only completely filled out ballots will be
winners.
Agenda
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Tax planning defined
Tax planning and your family
Tax planning and your investments
Tax planning and your life insurance
Tax planning and your children’s savings
Tax planning and your real estate
Tax planning and your estate
Tax planning and your retirement
Next steps
What is tax planning?
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Tax planning vs. tax return preparation – not the same
What tax planning is not…
Should you prepare your own tax return?
How do you recognize an expert tax planner?
What does it cost to hire an expert tax planner?
When does tax planning occur?
What areas does tax planning involve?
• Income – what everyone is used to thinking about taxes
• But also includes:
– Real estate, investments, estate, insurance, family, career, debt and more.
• When is the last time you had some tax planning?
Areas of your Plan That Taxes Impact
Pre-retirement
Financial Plan
Career
Compensation &
Benefits Planning
Philanthropic
and Legacy
Planning
Personal
Investment
Program
Children
Financial Planning
Tax Return
Preparation &
Tax Planning
Goal
Setting
Estate Planning &
Estate Wind-up
Services
Real Estate
Strategies
Use of
Debt
Elder Care
Post
Retirement
Income Design
Personal
Insurance
Strategies
Legal Risk
Management
Tax Planning and your Family
• View all family members as part of your
tax planning team
• Different average tax brackets
• Different marginal tax brackets
• Factors to consider before tax planning
• Existing tax liabilities attached to assets
• Legal risks of family members
• Your need for the asset / money
Tax Planning & Your Family
• Examples of Tax Planning Among Family
Members:
• Bad Examples:
– Elderly mom making her house jointly owned with son
– Couple making a bank account joint
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RESPs
Spousal RRSPs
Employing family in a business
Pension income splitting
Spousal loans and reinvestment
Tax Planning & Your Family
• Beware Joint Ownership and Gifting for
tax breaks!!!
– Examples of disasters:
• Elderly mom & daughter sharing a bank account
• Grandmother putting money away for granddaughter
• Giving money to adult children to buy a first home
• Giving money to adult children to pay off a mortgage.
• Considerations: legal, tax, asset control,
your need.
Tax Planning & Your Investments
• Need to differentiate between taxable
savings and non-taxable savings (rrsps,
tfsa)
• Each type of accounts warrants tax smart
techniques:
 Different
strategies
 Different products
 Different fee approaches
Tax Planning & Your Investments
• Seven Dimensions of Tax Smart Investing
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Tax
Tax
Tax
Tax
Tax
Tax
Tax
smart
smart
smart
smart
smart
smart
smart
investing
investing
investing
investing
investing
investing
investing
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People involved
Products utilized
the type of account
the fee approach
international aspects
time period
account ownership
Tax Planning & Your Insurance
• Life insurance
• Grows tax deferred and pays out tax free on death
• Loans from policy can be tax free
• Corporate owned life insurance can be paid for
with lower taxed dollars
• Disability insurance
• Benefits are tax free if paid out of after-tax cash
flow
• Critical illness insurance
• Tax free benefits
Tax Planning & Children’s Savings
• Methods to Save Money for Minor
Children:
• RESP
• In trust account
• Formal Trust
• Key analysis factors:
• Control over the money, Tax treatment of income,
Fees, Investment products
• Notable: grandparents should not own
savings plans; can catch up missed years
Tax Planning & Real Estate
• Three main types of real estate:
– Personal residence
– Principal residence exemption
– Business out of the home
– Cottage
– Taxable capital gain on death or sale or deemed sale
– Use of principal residence exemption
– Renting out your cottage
– Rental property
– Tax treatment on death or sale or deemed sale
– Income splitting
– Incorporation
Tax Planning & Your Estate
• How do taxes work when I die?
• Make sure your Will had a tax review
• How much tax will your estate pay and
where will the money come from?
• Do you need life insurance for estate taxes?
• What are probate fees/costs and how to
avoid them?
• Is it better to trigger taxes now or wait
until you die?
Tax Planning & Retirement
• Manage the composition of your
retirement income mix (pensions, CPP,
OAS, RRSP, RRIF, part time work,
investment income)
• Manage clawbacks: age credit, OAS
– How? Incorporate investments or buy
deferred growth products
• Pension credit
• Pension income splitting
Tax Planning & Retirement
• Say no to reverse mortgages
• Don’t give away your money to kids to run
from taxes – dangerous
• Should you borrow money to invest in
retirement?
• Should you buy life insurance to shelter
against taxes in retirement?
Tax Planning & Retirement
• Spousal loans at prescribed rate
• Buying assets from lower income spouse
• Pay investment counsel fees, not
investment commissions
• Open TFSA accounts and hold interest
bearing investments inside
• RRIF withdrawals: timing in retirement,
timing in a year, spouse’s age if younger.
Conclusions
• Everyone needs an expert tax review
every 3 years at a minimum.
• An investment portfolio cannot be built
properly without thorough tax planning as
well.
• Tax rules change constantly – stay on top
of new opportunities to save tax.
Complete a Draw Ballot!
• Draw for four books at the end of this 30
minute presentation
• Draw ballots available at front of room
• Drop in basket at front of room
• Only completely filled out ballots will be
winners.
Thank You.
Kurt Rosentreter,
Senior Financial Advisor & Certified Financial Planner
CA, CFP, CLU, TEP,FMA, FCSI, CIMA, CIM
Manulife Securities Incorporated; Manulife Securities Insurance
Inc., Suite 1410-5001 Yonge Street
Phone 416-628-5770 Ext 238
[email protected]
www.kurtismycfo.com
Kurt’s books are available
in bookstores across Canada.
Disclaimers
Manulife Securities Incorporated is registered as an Investment Dealer, or its equivalent, with the
provincial securities commissions and as such our Advisors are entitled to sell mutual funds,
stocks, bonds and other securities as permitted under our registration. They may also be able to
provide other services or products to you through their own business. As a member of the
Investment Industry Regulatory Organization of Canada ("IIROC"), Manulife Securities
Incorporated is obligated to disclose to you that you may be dealing with companies other than
Manulife Securities Incorporated when purchasing services or products from your Associate
(remuneration to your Associate may also come from various sources depending on the services
or products purchased). For example, your Associate may offer any one or more of the following
through a separate business, which would not be the responsibility of Manulife Securities
Incorporated: * Income Tax Preparation; * Insurance: Life, Accident, Sickness, Disability,
General. Please be sure that you have a clear understanding of which company you are dealing
with for each of your services and products. Your Associate would be happy to provide any
clarification you require.
Insurance products and services are offered through Manulife Securities Insurance Inc. (a licensed life
insurance agency and affiliate of Manulife Securities) by Manulife Securities Advisors licensed as
life agents.
The opinions expressed are those of the author and may not necessarily reflect those of Manulife
Securities Incorporated and/or Manulife Securities Insurance Inc.
Using borrowed money to finance the purchase of securities involves greater risk than a purchase
using cash resources only. If you borrow money to purchase securities, your responsibility to
repay the loan and pay interest as required by its terms remains the same even if the value of the
securities purchased declines.