Should Business Owners Take CPP Early (Post 2011 Rules)?

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On January 1, 2012 new Canada Pension Plan rules came into effect. The new rules will transition over the next five years. The most significant changes are as follows:

 

  • If you take an early CPP pension at age 60, rather than waiting to 65, your monthly payments will be cut by 36% (vs 30% in the past).
  • If you delay taking your CPP pension to age 70, your monthly payments will be 42% higher (vs 36% higher in the past).
  • If you are under 65 and continue to work while receiving your CPP pension, then you and your employer will have to make CPP contributions. However, these contributions will increase your future retirement benefits.
  • If you are aged 65 to 70 and continue to work while receiving your CPP pension, then you have the choice to contribute to CPP to increase your future retirement benefits.
  • Under the old rules you had to stop working to collect early CPP.  Now you can receive CPP pension without any work interruption.

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Having a business plan is the key

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It still amazes me when I see people scrambling the week before the holidays to buy last minute gifts for their friends and loved ones. I often wonder why these people wait until they have to fight the crowds at the end of December when they know how busy the stores are going to be. I have come up with a formula to explain this behaviour – 1/3 procrastination + 1/3 laziness + 1/3 poor planning. I could write a whole blog on how procrastination and laziness may lead to the fall of the North American economy in the next fifty years, but that would be more self cathartic than interesting, so I’ll focus the remainder of this blog on planning.

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Proprietorship or Corporation – What is the Best for Your (New) Business

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I am often asked by readers and clients, whether they should incorporate a new business or start as a proprietorship? A logical follow-up question for those that have already started their business as a proprietorship is: when should they convert their proprietorship into a corporation? I will address both these questions today.

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RESPs and TFSAs for Higher Education

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New parents are faced with a number of new expenses.  Diapers, day care, summer camp, organized sports – and then – there’s higher education for their little genius.  What’s it going to cost?  The cost of a 4 year undergraduate degree for a student living away from home today is in the range of $75,000.  Depending on which statistics you read, this could easily be in excess of $100,000 in 18 years.  Throw in some post-graduate studies or a professional degree and the costs just keep rising.  Continue reading →

CRA Audit – Will I Be Selected?

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I am often asked how the Canada Revenue Agency (“CRA”) selects its audit victims; oops, I meant to say taxpayers subject to audit. Through experience I know certain taxpayers, certain claims and certain industries seem to trigger audits. With that in mind, I will list below what I have seen and how I believe the CRA selects certain individuals and businesses for audit.

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Reducing the costs of hiring employees

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There are generally costs associated with hiring new employees – advertising costs, placement or recruitment agency fees, the time required to interview and evaluate candidates, etc. What some employers aren’t aware of is the fact that there are income tax credits (some refundable, others can only be used to reduce actual taxes owing) that can reduce the costs associated with hiring certain types of employees.

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Probate fee planning – income tax, estate & legal issues to consider

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Planning to reduce or eliminate probate taxes requires one to navigate a minefield of income tax rules, joint tenancy and right of survivorship issues and legal precedents. Questions of legal versus beneficial ownership of property and evidence of intention often come into play. The scary thing is, that this type of planning is often done by the uninformed.

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Objectives are the key to strategic tax planning

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I often meet people at various social events and inevitably through casual conversation I am asked what I do for a living.  I used to respond in a boring accountant-like manner, “I am a chartered accountant.”  The conversation generally came to a quick halt and my fellow conversationalist either turned to my wife to chat her up or quickly changed the subject.

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