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BMO Nesbitt Burns
203-649 Scottsdale Dr.
Guelph, ON
N1G 4T7

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2019 Wealth Planning Facts & Figures

What is the RRSP Contribution Limit for 2020?

The limit for the 2019 tax year is $27,230.  For more information on RSP limits visit CRA's website

What is a RRIF?

A RRIF (Registered Retirement Income Fund) is an extension of an RRSP.  The main difference is that at age 71 you must start to withdraw funds from the RRIF into income.  For a description of the major features of a RRIF, see our publication Registered Retirement Income Funds

What is a TFSA?

The Tax-Free Savings Account (TFSA) is a savings plan that allows Canadians to invest and earn tax-free returns. Any income (interest, dividends, and capital gains) earned is tax-free.  While similar to RRSPs, there are some significant differences.  For more information, see our publication Tax Free Savings Account

Why do I pay withholding tax on registered plan withdrawals?

The Canada Revenue Agency (CRA) mandates that any amount over and above minimum required payments from a registered savings plan are subject to withholding tax at the following rates:

  • 10% (5% for Quebec) on amounts up to and including $5,000;
  • 20% (10% for Quebec) on amounts over $5,000 up to and including $15,000; and
  • 30% (15% for Quebec) on amounts over $15,000.

(Note the wording on the CRA Website "Combine all lump-sum payments that have been or are expected to be paid in the calendar year when determining the composite rate to use.", which indicates that multiple withdrawals will not reduce the amount of tax that needs to be withheld.

When should I start collecting my CPP?

With the introduction of new rules surrounding the CPP, in 2011, the decision as to when to start collecting your pension has become a little more tricky.  The answer will depend on multiple factors such as your cash flow requirements, your expected longevity, your tax rates, etc...  This article describes some of the factors that will influence your decision.  Contact us if you wish to take a look at specific scenarios and how they could affect your short and long term goals.

What is the difference between good and bad debt?

Debt is generally considered good when it helps you accumulate wealth or increase you income.  It is often also tax deductible.  Bad debt is typically associated with consumption beyond one's means.  This type of debt is usually in the form of credit cards, loans or unsecured lines of credit, that typically carry much higher interest rates.  For a more detailed description see Strategies to Manage Household Debt and Accumulate Wealth.