Mid-Summer Reviews: When to Collect OAS and CPP

Did you know that 61% of Canadians are afraid of running out of money during retirement? According to a new CPP Investments survey, that fear is widespread. Yet surprisingly few people understand even the basics of public pension planning. For example, Canadians are not obliged to begin OAS or CPP at age 65. By delaying, they can significantly boost after-tax income and improve retirement security.

Evelyn Jacks, President of Knowledge Bureau, is delighted to announce the headliners who will grace the prestigious stage at the Distinguished Advisor Conference (DAC), November 12 to 14 at the spectacular Banff Springs Hotel.  This includes the outstanding MCs - two New Advisor of the Year Award winners – and a powerhouse of tax, investment, insurance, retirement and estate luminaries over the two day event.

What matters is what you keep.  There is no doubt your clients are interested in knowing how to inflation-proof and recession-proof their wealth and navigate successfully through emerging risks from the CRA.  To accomplish the former, advisors must have broader knowledge in tax on upcoming tax changes and how astute investment planning in a very new economic environment can help clients maximize after-tax income and reduce capital erosion.  This year, real estate tax changes are in focus. 

There are very specific rules for opening, withdrawing from and closing a  First Home Savings Accounts (FHSA), the newest registered savings plan in Canada.  It’s very advantageous to qualifying savers, as it provides a tax deduction, tax free growth of savings and a tax free withdrawal when a qualifying home is acquired.  But it’s best to seek the help of a qualified tax services specialist and RWM™ on the financial services side, to complete the transactions.  Those advisors must know about a couple of new forms just released for qualifying withdrawals and transfers. 

At $7,218, the average balance due to CRA at the end of June was unprecedented. Does this surprise you?  It’s the poll question we asked our Knowledge Bureau Report readers last month and, no surprise, 75% of our respondents said yes it did.  Since then, the number has risen even higher to $7,322 as of July 24.  The amount of money owed on 7,006,135 tax returns filed by Canadians is over $51 billion – exactly  $51,301,022,379. What’s changed?  It can depend on many factors. 

CRA and Finance Canada would like to be more effective in thwarting aggressive tax planning schemes.  Despite previous mandatory disclosure rules, the “timely, comprehensive and relevant” information CRA wants hasn’t been forthcoming.  Guidance to new mandatory disclosure rules, which received Royal Assent June 22, 2023, were published July 25 and the penalties for failure to file the required 9-page RC312 are huge, for both taxpayers and their advisors. Of particular concern are new “notifiable transaction” rules. Tax and financial advisors may have difficulty understanding their respective responsibilities. Here’s an overview with the key points:  

At a time when money is in motion, the buying and selling of assets can result in complex tax treatment.  It’s important for tax advisors to work together with clients who are in these processes and bring in the right stakeholder group of legal and financial advisors to close on these transactions.  The tax consequences should always form part of informed negotiations.  In this excerpt from Evergreen Explanatory Notes, we present a primer on terminal losses.