Differences between an RRSP and a TFSA

Since its inception, the goal of an RRSP has been to help Canadians accrue after-tax income to finance their retirement. While a TFSA can also be used to save for long-term needs, the two savings vehicles have important differences:

  1. Tax deductibility – RRSP contributions are tax deductible and reduce your income for tax purposes. In contrast, TFSA contributions are not tax deductible.
  2. Contribution limits – You may be able to contribute more to an RRSP—up to 18 percent of your previous year’s earned income or to an annual RRSP dollar limit ($23,820 for 2013) adjusted for certain amounts (e.g., pension adjustment, past service pension adjustment, and pension adjustment reversal). In 2013, the annual TFSA dollar limit is $5,500. In future years, the annual TFSA dollar limit will be indexed to the inflation rate in $500 increments. This means that the annual TFSA dollar limit could increase in some years but not every year depending on the inflation rate. However, your unused contribution room in either program may be carried forward to subsequent years. RRSP withdrawals (excluding the Home Buyers’ and the Lifelong Learning Plans) are added to your taxable income and are subject to tax at your marginal tax rate at the time of withdrawal. TFSA withdrawals, on the other hand, are not counted as income and are tax-free. You can take out as much as you like at any time for any reason.2 Unlike an RRSP, your TFSA withdrawal will be added to your contribution room in the following calendar year(s).
  3. Withdrawals – RRSP withdrawals could reduce amounts you receive from federal income-tested benefits and tax credits such as the OAS, the GIS, and the Canada Child Tax Benefit. TFSA withdrawals do not impact these government benefits.
  4. Spousal contributions – Attribution rules apply to spousal RRSPs (i.e. total contributions made to your personal and spousal RRSP must not exceed your personal contribution limit), but they do not apply to TFSAs. Although you cannot directly contribute to your spouse’s TFSA as you can with a spousal RSP, you can give your spouse money to contribute to his or her own TFSA without affecting your personal TFSA contribution room.
  5. Maturity date – An RRSP must be collapsed by December 31st of the year in which you turn 71. A TFSA has no plan maturity.

The answer to whether it may be better for you to contribute to an RRSP or to a TFSA, will depend on a number of factors, including whether you will need to access your money on a short-term basis or your expected tax rate at the time of contribution and at the time of withdrawal (i.e. during retirement). For example, if your income level and corresponding tax rate are unlikely to change between now and retirement, a TFSA may be a sensible choice due to its flexibility and because you won’t lose any tax-savings benefits should you need to access your cash along the way. If you’re in a higher-tax bracket now but expect to be in a lower tax bracket in retirement, it may be a good idea to contribute to an RRSP first as the contributions could produce favourable tax benefits now while deferring taxation on your investments to the future. Any extra savings could then be allocated to a TFSA. If you’re just beginning your career, you may not be earning much at present. However, if you foresee your income rising down the road, you could start off with a TFSA now and then contribute to a RRSP later on when you’re in a higher tax bracket—this strategy would allow you to reap an RRSP tax deduction in the year you make the contribution and would create additional TFSA contribution room (in the following year).

Important Estate Planning for Tips You & Your Executor

Choose Your Executor Wisely – Candidate should be capable, responsible, local and impartial.  Importantly the Executor you choose needs to outlive you, otherwise their Executor becomes Your Executor.  A Named Executor Can Renounce their Position, be sure your Executor is willing to serve, which means talk to them in advance.

No Will? – Intestate – Not leaving a will, means leaving a big mess! – Otherwise the Courts decide who gets your hard earned Estate.

What is Probate? The process of the Provincial Court approving the presented Will as authentic and valid.  When an executor of a will applies to probate (in other words prove) the will in British Columbia, he/she must pay probate fees before the court will grant probate.  Similarly, a person applying to court to be appointed an administrator of an estate (where there is no will or no executor willing and able to act) is required to pay probate fees before the court will grant letters of administration.

Calculating Probate Fees – In the province of British Columbia - The amount of probate fees is based on the value of the estate assets. There is an initial filing fee of $208. After the application for probate is filed, but before the court registry will release the grant of probate, the executor is required to pay $6 for every $1,000 or part of $1,000 by which the value of the estate exceeds $25,000 up to $50,000, plus $14 for every $1000 or part of $1000 by which the value of the estate exceeds $50,000. Accordingly, for most estates probate fees are a tax approaching 1.4 percent of the value of the estate.

Strategies to Avoid Probate

Joint or Co-Ownership – Can trigger a taxable disposition/capital gains, if you are joint owner with someone other then a spouse (like your kids)  .  While still alive, you are exposed for their misfortunes.  If they divorce the ex can lay claim to half of your asset. If they go bankrupt, the jointly owned asset could be subject to the bankruptcy.  I feel this is poor estate planning and can do more to you and your beneficiaries then good.

Segregated Funds, the Estate Friendly Investment - Segregated Funds are much easier for your Executor, the value is not submitted for probate, thus avoiding probate fees, avoids delays, and remains private and out of public record.  Segregated Funds (Investment funds offered by a Canadian Life Insurance companies), are an excellent tool to avoid probate fees & delays  Available in Money Market Funds, Bond Funds, Dividend Funds, etc… (like other Investment Funds).  They can be held in a variety of accounts: RRSPs, RRIFs, TFSAs, and Non-Registered accounts.  Chartered banks haven’t told you about them because they can’t offer them!  Lawyers often don’t even know about them, and are unlikely to recommend them as they can greatly simplify Estate Planning, and can preclude the need for complex trust structures.

A Probated Will becomes Public Record – Anyone can pay a fee to obtain a probated copy of your Will.   This may create problems, from disgruntled family members wanting a larger piece, too scam artists looking for the those who just received more money then they know what to do with.

Critical illness insurance is a type of protection that provides you with a lump sum payment if you are diagnosed with a covered critical illness and survive a waiting period (which is usually 30 days). With the advancement of technology more people are fortunately surviving these conditions but are often unable to get back to their pre-condition potential.

What’s the difference between disability and critical illness insurance?

Unlike disability insurance (that pays out a percentage of income as a monthly benefit), critical illness insurance actually pays out the entire tax free lump sum immediately, giving you flexibility to use the money as best needed. That’s where the critical illness benefit comes in—you are free to spend the money as you wish—such as to help cover lost income, to pay for private nursing or out-of-country treatment, for medical equipment or even to pay off your mortgage. It can help you where you need it most so you can focus all your energy on recovering.

NOTE: I have seen the benefits of this coverage first hand when my partner Tom suffered a heart attack in 2007 and fortunately had this coverage in place (although he didn’t take us to Hawaii like he said he would!!)

Could A Critical Illness Really Happen To Me?

(not the funnest facts but definitely an eye opener):

80% of heart attack victims survive
2 in 5 Canadians will develop some form of heart disease during their life time
Half of heart attack victims are under 65
153,000 new Cancer case in Canada in 2006
1 in 3 develop cancer in their life time
There are 40,000-50,000 strokes each year in Canada
One third of stroke victims are under 65
300,000 Canadians are living with the effects of stroke
Approx. 75% of all Canadians that suffer a stroke will survive but will be left with some form of disability
Sources: Heart & Stroke Foundation (2006), Canadian Cancer Society, Canadian Cancer Statistics (2006), Veterans Affairs Canada (2006)

As an independent insurance broker with Manion.ca,  we have contracts with all the top insurance carriers allowing us to shop the market to find the right critical illness insurance product for you at the best price.

Need more information?

For more information on Critical illness insurance in Maple Ridge & Pitt Meadows BC please 

First and foremost is the BC Provincial Government’s Guide of Seniors


More specific to the Maple Ridge-Pitt Meadows area is the Seniors’ Network Guide



Two great documents available online every senior should read.  One about the dangers of private placement investments from investright.org.  The other from Canadian Securities Administrators about frauds and scams

As always, I am welling to address any questions


Posted: September 13, 2013 in articles

A missing piece of a financial plan is all it could take to lose years and years of Registered Retirement Savings Plan(RRSP) growth, not to mention the comfortable retirement you’ve dreamt about.

It happened to Richard and Julia. Richard, 43 and Julia, 39 have two young children, a house, a mortgage and dreams for retirement. They have been saving since they were married and jointly managed to accumulate $150,000 in RRSPs. They have life insurance in place that would ensure their family is taken care of should anything happen to either one of them.

Then Julia is diagnosed with breast cancer. She takes immediate leave from work to focus on treatment and recovery. Her treatment is aggressive and will require that she be off work for at least 6 – 8 months. Richard now becomes the primary caregiver and his own income suffers as well. Julia’s doctors have recommended a non-insured treatment to help her recovery, but the money is just not there. Their RRSPs are their only answer.

The Next question is, will they have enough?

No, they will not have enough.

Richard and Julia have calculated and they think they will need $95,000. With their marginal tax rate of 46%, even if they withdraw their full $150,000 in RRSPs, they will only net $81,000 after tax, leaving them with no savings and a shortfall of nearly $14,000.

A critical illness can have a devastating effect on your finances. The most thorough retirement income projections typically do not make allowances for the additional costs of living involved when someone suffers from a critical illness such as cancer or heart attack. By depleting their RRSPs, the effect on Richard and Julia’s financial and retirement plans is devastating. In addition, the long-term loss of compounded returns could be enormous.

The right insurance coverage can protect your savings and the retirement lifestyle of your dreams. Critical Illness Insurance provides a tax-free lump sum cash benefit upon diagnosis of one of up to critical illnesses and life-altering conditions including heart attack and cancer. You can also protect your premiums. With a properly structured policy if you do not become ill, you could receive all of your premiums back. That’s right, you can have this valuable coverage plus receive all premiums paid into the policy if you do not incur a critical Illness.

Critical Illness insurance is an important part of your overall financial plan. You can either take the chance and hope that a life-altering illness will not deplete your savings or income, or protect yourself.

via Serendipity and Spice: 8 Plants to Repel Bugs, Insects, and Pests.

I don’t know about you but I HATE bugs!  They just freak me out!  It really doesn’t matter what kind of bug- roaches, silverfish, spiders, mosquitoes  fleas, beetles…. You name it and I HATE it!  Especially bed bugs!  I’ve never experienced bed bugs before but I was watching 20/20 awhile back and they were doing some kind of expose on bed bugs in hotels and I’ve been freaked out ever since!  The mere thought of them makes my skin crawl!!!!

Since we had such a mild winter (here in Georgia anyway) everyone is saying how horrible the bugs are going to be this summer because nothing died off during the winter.  So now I’m super freaked out and have been looking into natural remedies or repellents for those nasty creepy crawlers and stingy sneaky fliers.  Last year I just had a bottle of Raid handy… but this year I have the little man and I really don’t want to be spraying chemicals around him.


1. Mint
 It not only smells nice but it keeps away ants and mice!  Crush some to release the fragrance and it’ll run off any strays that come your way.
2. Bay Leaves
Add some to the mixture and you’ll get rid of gruesome roaches too!
3. Lemongrass
To keep away those flying pesky mosquitoes and bees!
4. Basil
Yummy and keeps those annoying flies at bay!!
5. Geraniums
They not only add a boost of colour but they keep out Japanese beetles!
6. Catnip!
Yes, that stuff that makes your cat act all crazy…. Supposedly wards off a long list of bugs including mosquitoes and flies.
7. Pyrethrum Chrysanthemums- AKA: Mums specifically the ones that look like Daisies!
These are the be all end all of pests!  According to wiki.answers these cute little flowers repel: Roaches, fleas, ticks, bedbugs, lice, silverfish, ants, and so much more!

via Serendipity and Spice: 8 Plants to Repel Bugs, Insects, and Pests.

What is critical illness insurance?

Answer: Critical illness insurance is a form of health insurance that provides a lump-sum payment should you become seriously ill.

What are the types of illnesses covered by critical illness insurance?

Answer: Although they differ from company to company, typical illnesses and diseases covered by critical illness insurance may include:

  1. cancer
  2. heart attack
  3. stroke
  4. blindness
  5. Alzheimer’s
  6. multiple sclerosis
  7. organ transplants
  8. kidney failure
  9. paralysis

Coverage can also vary according to the degree of severity of, or conditions associated with, an illness or disease. For example, if you are diagnosed with a type of cancer that is treatable and that results in minimal “down time”, you may not be eligible to make a claim. Coverage cannot be purchased for a pre-existing condition or illness. It is important to ask your insurance representative to provide you with a complete explanation of your coverage.

Do I need critical illness insurance?

Answer: Almost certainly, Yes! The risk of suffering a critical illness or disability is unbelievably high.  Calculate your risk here.  You should also consider your personal circumstances and the added financial strain that could be brought about by dealing with a serious illness or disease. Public and private health insurance plans typically do not provide coverage for day-to-day living expenses such as travel to and from treatments, home care and child care.

How much does it cost?

Answer: Generally, the younger and healthier you are, the lower the premium (cost). However, the cost varies depending on your age, medical condition, the amount of coverage, the number of illnesses covered by the policy, and the insurance company. When shopping for a critical illness plan, you should consider your income, financial obligations, dependants  and health care needs.

How can I make a claim?

Answer:You can make a claim if a physician, licensed to practice medicine in Canada and specializing in your particular illness, diagnoses you with a critical illness or disease covered by your policy. Generally, a lump-sum benefit payment will be made to you 30 days after the claim has been approved. There are no restrictions on how you use the money. Once your claim is paid, your critical illness insurance policy ceases.

What if I never make a claim?

Answer: If you die for a reason not covered by the critical illness policy, the premiums you paid may be refunded to your named beneficiary. Some plans will return the premium or a portion of the premiums paid during the life of the policy if the policy matures and no claim has been paid.

Is long-term care insurance the same as critical illness insurance?

Answer: No. Long-term care insurance provides for personal care on a long-term basis if you need supervision or assistance with daily living activities due to a chronic illness, disabling condition or cognitive impairment. Long-term care policies generally reimburse, up to a specified limit, the expenses incurred for various types of care, such as nursing home or home health care; or they pay a pre-determined benefit amount on a daily or monthly basis.

Is disability insurance the same as critical illness insurance?

Answer: No. Disability insurance, also known as “income replacement” insurance, provides a monthly income replacement benefit if you become disabled and can no longer perform the normal duties of your work. Generally, the benefit is limited to a percentage of your regular income and ceases once you earn an income or you no longer meet the definition of disability in the contract.  Unlike critical illness insurance which provides the full policy benefit in a lump sum payment on diagnosis of a critical illness, long-term disability policies may have a waiting period from the onset of disability. Unlike critical illness benefits, long-term disability benefits may be affected by other income you receive or by your full recovery from the illness.

Contact Me


If you and the guy who wants to steal your television sat down to shoot the breeze, what would you ask him?

The chance to pick a burglar’s brain could certainly give you some ideas for home security upgrades, but it’s not a very common opportunity. So, we created some fictional burglar monologues (based on real research). Listen up, because over two million burglaries occur each year in the United States (one every 15 seconds)! Here are a few things your neighborhood thief doesn’t want you to know.

If you’re already convinced that your home could use some extra security, here are seven effective ways to protect your house:

1. Ladders are awesome.

Every time I see a ladder hiding behind a shed or leaning against a house, my heart does a little jig. Do you know how easy it is to crawl through a second-story window with a ladder? Plus, you probably aren’t stressed about locking your second-story window when your front door is dead-bolted.

Takeaway: Keep all of your windows and doors locked tight when you’re out of the house, and hide the ladder in your garage or in a shed when it’s not in use!

2. Your trash reads like a catalog.

Where did your brand-new flat screen’s box go? That’s right – it went in the trash. So I can dig through your trash and find out exactly what’s in your house. It’s easy as pie to know which homes to hit up – especially around the holidays!

Takeaway: Never leave boxes of expensive items on the curb. If possible, take them directly to a trash center.

3. Newspaper piles are a dead giveaway.

Who lets newspapers pile up and their mailbox overflow? People on vacay, that’s who. A house that’s obviously empty is a house I’m going to think pretty seriously about robbing.

Takeaway: Before you leave for vacation, call the post office and ask to them to hold your mail during the dates that you’re away. You’ll be able to pick it up when you’re back in town. If you enjoy cracking open a newspaper in the morning and have The Times delivered every day, call the paper and have it halted while you’re gone.

4. Untrimmed bushes and dark areas are perfect hiding spots.

The more overgrown your bushes are, the more likely I’ll want to hide in them – especially if they’re near windows! No motion detectors to set off exterior lights? Even better! That way, I can case your home and you won’t notice me.

Takeaway: Make sure your bushes and trees are neatly trimmed so they don’t double as hiding spots! It may also be worth installing outdoor motion activated lightnear exterior doors and windows for some added security.

5. Nothing beats an alarm system with a view.

Whether it’s through a window or from a reflection, I really love being able to see your alarm system. That way, I can tell if it’s armed and know exactly what I’m getting myself into. You’d be surprised how many mirrors have helped me out!

Takeaway: If your alarm system is visible through a window, make sure you use blinds or shades to cover it up when you leave or go to sleep. If it’s noticeable in a mirror’s reflection, move that mirror!

6. Burglars use Facebook, too.

When you brag about your awesome trip to Cancun on Facebook, I may not like your status, but I definitely like the fact that I know your house is empty!

Takeaway: It’s tempting to post images of your amazing trip in real time, or update your status about how much fun you’re having in a foreign country, but it’s safer to wait until after you’ve returned home.

7. Dark houses attract bad people.

If a house’s lights are off for several days in a row, it’s a dead giveaway that people aren’t home. I like to give it a few days just in case, but if no lights come on, I get ready to roll!

Takeaway: To make your house seem lived in, install a timer in some rooms that will turn lights on and off during different times of the day. Burglars know that it’s common to leave lights on, so they will be more cautious if they see changing lights. If you need to buy a timer, we like this 7-day random vacation timer by GE (it’s less than $20).

Aside  —  Posted: May 1, 2013 in articles
Tags: , , , , , ,

10 Tips for Shopping at a Thrift

One of the best ways to live a frugal lifestyle is to make shopping at a thrift store part of your regular shopping regimen. Thrift stores feature items that have been used before. This can include anything from dishes to clothing to books to furniture to toys. These used items are often in reasonably good condition, and can be found at very low prices. Shopping at a thrift store can be a great way to save money, while acquiring items that you need.

Here are 10 tips that can help you better shop at a thrift store:

  1. Show up on stocking days: Many thrift stores have a particular day of the week that they put out new merchandise. Find out what that day is, and show up then to get first pick of the latest deals.
  2. Search for quality: This is especially true with clothing. You might be surprised at the name brand, high quality items some people are happy to part with. Keep your eyes open for items you know are of good quality.
  3. Make a list: You want to be prepared with a list. Even though impulse buying at the thrift store is probably not as bad as when you are paying full price on an impulse purchase, those little surprises can add up. Be sure that you know what you want, and make a plan for what to buy.
  4. Return until you find what you want: Don’t assume that the thrift store is a bust if you don’t find what you are looking for on your first excursion. Check back over time, looking for what you want. Chances are that, eventually, you will find what you are looking for.
  5. Watch for sales: Even thrift stores have sales. Some offer “fill a bag” promotions, “clearance” sales at the end of the season and other sales. This is a great way find even deeper discounts on thrift store merchandise. And, while thrift store shopping works well without coupons, you can also look for thrift store coupons for bigger savings.
  6. Shop during the week: Weekend shoppers are out in force from Friday evening until Sunday evening. Avoid the crowds and avoid competition for the best finds by visiting the thrift store during the week.
  7. Ask about store credit: Some thrift stores only accept donations, but others also accept consignment items and will give you store credit for what you bring in. Find out about the policies at your local second hand store of choice. If you can get store credit for what you bring in, that can be a great way to save a little more.
  8. Be careful about overdoing it: It can be very tempting to go a little crazy at the thrift store, buying several things at once. Stick to your plan, though. If you only need three dress shirts, don’t go nuts and buy 10 or 11. Remember that a frugal lifestyle is about moderation.
  9. Plan to take awhile: A trip to the thrift store is likely to take awhile, since you will probably have to dig around a little. Be prepared to take around an hour — or more. This means that perhaps you leave the kids at home for a serious trip to the thrift store.
  10. Don’t forget to donate!: Finally, you want the thrift store to keep going. If if you don’t get store credit, you should still donate some of your unneeded items as well. Keep the cycle going, and provide great deals for others, just as they are providing them for you.

via 10 Tips for Shopping at a Thrift Store.

Alter ego trust can help protect your assets.


A will is the traditional way to distribute your assets upon your death.


But it may not be the best estate planning tool for you. Depending on your circumstances, an alter ego trust or joint spousal or partner trust could be a better choice.


When assets pass under a will, probate fees must be paid. In B.C., where probate taxes are the second highest in Canada (1.4 per cent of estate values over $50,000 — about $14,000 per $1 million of estate value), these can be hefty.


Also, a child or spouse (including a common-law spouse) unhappy with their share of the estate can attack your will under the Wills Variation Act. They can ask the court to change the terms of the will. If the court concludes that your will doesn’t adequately provide for the proper maintenance and support of the disgruntled claimant, the court can vary your will and order whatever distribution it thinks is “adequate, just and equitable.”


This is where trusts can be useful. Assets in a trust don’t form part of your estate (the trust owns the assets) and therefore do not pass under your will. This means no probate fees are payable in relation to these assets, and the assets are not subject to claims under the Wills Variation Act.


But one of the problems in the past with setting up a trust that takes effect while you’re still alive is that it generally triggered a tax liability for any accrued capital gains on property transferred to the trust (other than your principal residence, which is exempt from capital gains tax).


Enter alter ego trusts and joint spousal or partner trusts. Since 2000, you have had the option of creating an alter ego or joint spousal trust without attracting any immediate tax consequences. You can transfer property to an alter ego trust or joint spousal or partner trust without triggering any capital gains tax.


You must be 65 or older to set up one of these trusts. With a joint spousal or partner trust, your property and assets are transferred into the trust, but you still have the use of your assets and continue to receive income on the trust assets. On your death, the assets pass to your spouse or partner according to the terms of the trust. An alter ego trust is similar but is for people who don’t have a spouse. After your death, the assets pass to the named trust beneficiaries.


Read the rest of the article at canada.com Alter ego trust can help protect your assets.