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Retirement Planning

senior-couple-filling-out-oas-application

As Canadians approach 65, it’s really important that they fully understand all of the retirement income that may be available to them. Many Canadians have a company pension and/or RRSPs, and many more also qualify for the Canada Pension Plan. However, not all Canadians know much about Old Age Security (OAS): whether they qualify for it, and if so, how much they’re likely to receive. Many are also unaware that they may have to apply for OAS online or on paper: receiving it is not always automatic. We take a look at why OAS might be important to you, the situations where you could have to apply for OAS, and how to submit an old age security application form.

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With close to two-thirds of Canadians having no company pension plan, it’s more important than ever for Canadians to grow their own retirement savings, so that they have additional income to supplement their CPP and OAS when they retire. Registered retirement savings plans (RRSPs) provide an effective way for Canadians to do just that. An RRSP is a government-registered, tax-deferred plan that allows you to save your money faster. Any increases in your savings — including interest, dividends, yields and capital gains — will grow tax-free.

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Taxing home equity in Canada stems from the tax laws on capital gains. Capital gains are profits from selling an asset, such as a property or financial investments. Do you have to pay taxes on home equity? The confusing answer is yes… and no. You do have to pay taxes on home equity when you sell a property that is not your primary residence (where you live most of the time) and it has increased in value since the time you bought it. The amount of taxes on home equity payouts of this type will depend on your other income that year and your tax bracket.

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Unfortunately, most people only begin to ask what is a CPP survivor benefit at what is a very stressful time in their life, rather than preparing themselves beforehand. To put it simply, survivor benefit for CPP in Canada is a monthly payment that the government makes to the survivors of a CPP contributor after that person’s death. There are different types of CPP survivors’ benefits:

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Most Canadians don’t receive the maximum CPP payment: in fact, the average monthly CPP payment in 2021 was just under $620. In this article, we’ll answer some of the most frequently asked CPP questions, including: what are CPP deductions, exactly, and how do they work; what is CPP tax; is CPP taxable income: what are EI and CPP maximum contributions; and what are self-employed CPP contributions?

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While RRSPs are undoubtedly a popular retirement savings vehicle for many Canadians (around two-thirds of us have one) many people are confused about how they work. As many as 30% of Canadians don’t understand RRSP tax rules, and 27% don’t know the difference between an RRSP and a tax-free savings account. So, what is an RRSP, how does an RRSP work, what happens when you withdraw from an RRSP, and what should you know about RRSP withholding tax (also known as RRSP withdrawal tax)?

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CPP is a monthly, taxable benefit that all Canadians are entitled to regardless of how many years they have worked. To qualify for CPP payments, you must be at least 60 years old and have made one “valid contribution”. “Valid contributions” can be contributions to CPP from work that you were paid for in Canada, or they can be the result of receiving CPP contribution credits from a former spouse or a former common-law partner.

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Senior Asian couple filling out a Guaranteed Income Supplement (GIS)

What is GIS in Canada for? It is designed to help Canadian retirees who have a low income. Retirees who qualify for GIS in Canada receive their first payment the first month after their 65th birthday. The OAS and Guaranteed Income Supplement in Canada are closely connected: you won’t receive any GIS in Canada if you don’t also receive OAS.

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Senior man working on a laptop for RRIF withdrawal

Inheritance tax in Canada does not exist as such, nor is there Canadian inheritance tax on property, however some taxes usually have to be paid when someone passes away. So, is inheritance taxable in Canada? It can be, but it is not the heirs who will pay it. Let’s take a closer look at Canadian inheritance tax law.

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