A Tax Plan for All Seasons

Q1 | February 2020

Word "Tax" with clock on the office workplace. Business concept.

Topic: Tax Planning

Brad Weber CPA, CA, CFP

February 16, 2020

Image used with permission: iStock/LIgorko


Print & Share

Print

A Tax Plan for All Seasons

Q1 | February 2020

As we move further into 2020, you’ll notice your annual T-slips have been arriving in the mail, RRSP contribution advertisements have been everywhere and the tax deadline is just emerging on the horizon, albeit later than normal this year due to the announced temporary delay. All signs that point to the arrival of tax season.

This time of year comes with a flurry of activities as many people think about their taxes. While anytime is the right time to start planning, it’s not ideal to be concentrating your activities around particular deadlines. At Nexus we believe a well developed financial plan that focuses on your goals considers a long-term time horizon. The tax planning portion of your plan should map out your strategies well in advance. Put simply, you should never be in a last minute rush to meet any tax deadlines as your plan will have anticipated your needs well in advance.

The RRSP Contribution Deadline

RRSP season is in February. It’s the time when many people decide how much they should contribute to generate a deduction to their previous year’s taxes. While the RRSP is a great tax strategy, the beginning of the year should be when you’re deciding on your RRSP contributions for the coming year. A financial plan will ensure your RRSP contribution strategy will be laid out beforehand, without a need for rushing to meet deadlines.

Spousal RRSPs and Using Contribution Room After 71

The year after you’ve turned 71, you can no longer contribute to your own RRSP. But if you still have outstanding RRSP contribution room that you want to use, all is not lost if your spouse is younger than you. You can still contribute to a Spousal RRSP if your spouse is 71 or younger on December 31 of that year, and that contribution will be deductible on your own tax return. While this can be an opportunity to ensure the RRSP room isn’t lost, you may likely have benefited from making that RRSP contribution earlier, and a financial plan would have helped in determining that.

Turning 71 this Year and Deciding How Much to Withdraw

If you are turning 71 this year, you’ll finally have to convert your RRSP into a RRIF and begin making withdrawals. But you might not know how much you should be taking out of your RRIF. Should it be just the minimum? Or should you choose something more? A financial plan analyzes your cash flow and determines what amount is best for you to withdraw. Even more, with a financial plan in place you would already know if waiting until 71 was the right time to start your RRIF or if there were benefits to you in starting your withdrawals earlier.

Keeping an eye on the taxes you pay is important; but you should make sure that is combined with the right financial plan. At Nexus we work with you to build your financial plan which ensures your decisions are proactive and not reactive.

More Like This...

See another CRM2 blog post that may be of interest to you.

No posts found.

More Like This...

See another Foundations & Endowments blog post that may be of interest to you.

That Giving Feeling

Topic:
Foundations & Endowments, Tax Planning
Excerpt:
Summer is now a distant memory. In fact, a radio announcer declared only 77 days until Christmas. Ugh. It is usually in the last quarter of the year

More Like This...

See another Human Interest blog post that may be of interest to you.

Is COVID Giving You Scurvy?

Topic:
Human Interest
Excerpt:
The early ocean-going explorers learned the hard way that a lack of vitamin C can give you scurvy. And, according to Wikipedia, “the knowledge that

More Like This...

See another Inside Nexus blog post that may be of interest to you.

New Year, New Beginnings

Topic:
Inside Nexus
Excerpt:
It is with mixed emotions that we announce the retirement of Jorjan Mead from her position of Administrative Assistant with Nexus.

More Like This...

See another Investments blog post that may be of interest to you.

The Tail that Wags the Dog

Topic:
Investments
Excerpt:
We thank our friends at Northwood Family Office for having brought to our attention a fantastic book called, The Psychology of Money, written by...

More Like This...

See another Pearls of Wisdom blog post that may be of interest to you.

“Work, Work, Work, Work, Work, Work”

Topic:
Pearls of Wisdom
Excerpt:
This has been a busy year. I’ve had lots happening on the home front (a wedding!) and lots going on at the office (too long to list!) Managing work

More Like This...

See another Tax Planning blog post that may be of interest to you.

The (U.S.) Taxman Cometh

Topic:
Tax Planning
Excerpt:
Like the medical patient who expects to endure a fair bit of poking, probing and prodding from the doctor, clients of financial providers have had to

More Like This...

See another Wealth Planning blog post that may be of interest to you.

Estate Planning: Questions from our Virtual Chat

Topic:
Wealth Planning
Excerpt:
Helping clients with their estate planning is something we do here at Nexus. However, we are often involved in identifying the best tools for the

On a Side Note…

See another CRM2 Nexus Notes Quarterly article that may be of interest to you.

No posts found.

On a Side Note…

See another Foundations & Endowments Nexus Notes Quarterly article that may be of interest to you.

No posts found.

On a Side Note…

See another Human Interest Nexus Notes Quarterly article that may be of interest to you.

It’s About Time

Topic:
Human Interest
Excerpt:
Over the last 25 years, we have written frequently about time. In fact, in 2010, our annual client presentation carried the same title as this article

On a Side Note…

See another Inside Nexus Nexus Notes Quarterly article that may be of interest to you.

Building the Business: Another Virtual Nexus Welcome!

Topic:
Inside Nexus
Excerpt:
We are delighted to welcome Tom Wilson as the newest member of the Nexus team.

On a Side Note…

See another Investments Nexus Notes Quarterly article that may be of interest to you.

It’s a Topsy-Turvy Year: Investing During COVID

Topic:
Investments
Excerpt:
This year has been plenty weird. For starters, it feels like January was about five years ago… if you can remember it at all. Putting aside the health

On a Side Note…

See another Pearls of Wisdom Nexus Notes Quarterly article that may be of interest to you.

A Table for None, Please; Working From Home on the Rise

Topic:
Pearls of Wisdom
Excerpt:
Reading is one of the principal occupations in our profession. As we digest a wide range of material, interesting ideas and surprising facts – some

On a Side Note…

See another Tax Planning Nexus Notes Quarterly article that may be of interest to you.

The (U.S.) Taxman Cometh

Topic:
Tax Planning
Excerpt:
Like the medical patient who expects to endure a fair bit of poking, probing and prodding from the doctor, clients of financial providers have had to

On a Side Note…

See another Wealth Planning Nexus Notes Quarterly article that may be of interest to you.

Estate Planning: Questions from our Virtual Chat

Topic:
Wealth Planning
Excerpt:
Helping clients with their estate planning is something we do here at Nexus. However, we are often involved in identifying the best tools for the