The Tax Break That Wasn't

Picture this: It's a beautiful day for a walk, made all the brighter because you've finished filing your income taxes a few weeks ago. You'd been taking care of this seemingly straightforward task for years, so you figured you were again done with the duty for the current year.

Or so you thought … until you check your mailbox and discover an ominous brown packet from the Canadian Revenue Agency marked "Notice of Reassessment." (Cue foreboding music here.)  Your heart drops as you scan its four small-print pages of text, tables and numbers, and a "Balance Due" at the end: $8,000??? Suddenly your tax returns don't seem so straightforward anymore.

This is exactly what happened recently to our clients, "Tom and Julie." They had been preparing their own income tax returns for years, assuming their situation was too basic to warrant hiring a professional tax preparer. Fortunately, as The McClelland Financial Group clients, they were still able to turn to us after the fact, so we could help them assess their Notice of Reassessment.

What had gone wrong? Taking a closer look, we discovered a T3 and some foreign income that had gone unreported, as well as some incorrect income splitting. While the results weren't exactly "all's well that ends well," Tom and Julie did use the experience to strengthen their tax-preparation practices, permitting The McClelland Financial Group to begin serving as a helpful ally in this important area.

Bottom line: Some cost "savings" can cost you plenty in the long-run. Flying solo on your tax preparation (no matter how simple it may seem) has long struck us as one of those short cuts not worth taking – especially since we're here, ready and eager to help.

Michelle Moniz
Associate Financial Advisor

The McClelland Financial Group of Assante Capital Management Ltd.

Four reasons why women need to save
more than men do

Gender equality has made great strides and yet women still need to save more money for retirement than ever.  The attached article outlines the 4 reasons why women get a retirement raw deal and emphasizes why saving is all the more important.

CLICK HERE TO READ MORE...
Allison Schrager - Quartz Media

If I leave my employer and have the option of taking the deferred pension or taking the commuted value of the future pension and investing on my own, what should I do?

Answer:

This is a very personalized situation that should consider many factors when making the decision.  Some of the quantitative factors to consider:

• After-tax living expenses expected in retirement (i.e. $5,000 or $60,000/year)
• Gross income from all other retirement income sources (i.e. government benefits, RRSP/RRIF; non-registered investments/assets)
• Is there a survivor benefit on the pension?  If so, how much?
• Is the pension indexed?
• What are the reductions to the pension benefit if I take it early?
• Is there a guarantee period on the pension benefit?

Some qualitative factors to consider:

• Is it important to leave a large estate?
• Do I prefer monthly income versus flexibility of gaining access to lump sums?
• How comfortable am I with fluctuations in the market?

Because this decision will have a major impact on your retirement lifestyle, it should made with the help of a professional. 

Carlo Cansino, FMA, FCSI, CFP
Senior Financial Advisor

The McClelland Financial Group of Assante Capital Management Ltd.

Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and is registered with the Investment Industry Regulatory Organization of Canada. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

Commissions, trailing commissions, management fees and expenses, may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the Fund Facts and consult your Assante Advisor before investing.

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