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Are you aware that up to 50% of your registered assets could be taxed upon death?

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Wealth Themes provides timely articles on a variety of wealth planning topics. This month we focus on the impact of emotional intelligence and behavioural finance on our investment decisions. We also include an article to assist in having healthy discussions about family wealth with your adult children and, with the new school year fast approaching, information on the increased RESP withdrawal limits.

While most Canadians are aware of the April 30 personal income tax filing deadline, there are other important tax deadlines that must be observed over the course of the year – especially if you want to take advantage of certain tax deductions and credits. This calendar summarizes several important dates on the tax calendar and offers some tips to help you with your overall wealth planning. Where a deadline falls on a weekend or a holiday recognized by the Canada Revenue Agency (“CRA”), the deadline is generally extended to the next business day.

Financial Planning Year-End Checklist

2022 Tax Documents Overview and Schedule

Tax Efficient Investing

This report provides an overview on the taxation of eligible dividends, in light of recent changes.

When it comes to investment income, all is not equal after tax. Knowing how tax rules affect your investments is essential in order to maximize your after-tax return. This publication explains the taxation of investment income held in a taxable account as it pertains to an individual resident in Canada.

2023 Tax Tips for Investors

Towards the end of the year, many investors review their investment portfolios to determine the anticipated tax impact of any capital gains and losses realized during the year. For investors who have realized significant capital gains, this article examines various strategies to help reduce the impact of a potential tax liability of these gains, regardless of whether they were the result of a voluntary or involuntary sale.

One of the most important tax breaks offered to Canadians is the “Principal Residence Exemption” which can reduce or eliminate any capital gain otherwise occurring for income tax purposes on the disposition (or deemed disposition, such as upon death) of your home. In general, a resident of Canada who owns only one housing unit, which is situated on land of one-half hectare or less, and which has been used since its acquisition strictly as their residence, will qualify for the principal residence exemption. Although simple in concept, in situations other than the one described above the tax rules governing the exemption can quickly become complicated, particularly when more than one residence is owned by a family unit.

Understanding Capital Losses

RRSPs - Making Your Money Work as Hard as You Do

For 2022, small business owners can use the Capital Gains Deduction to shelter up to $913,630 of capital gains on the sale of shares of a qualifying small business corporation. Due to the potential tax savings from accessing this deduction, it represents one of the most compelling tax planning opportunities for Canadian small business owners. As the rules are complex, only a general discussion is provided here. As with all tax planning, professional advice is critical to understanding the specific implications in your situation.

Reduce Your Taxes With a Prescribed Rate Loan

In recent years, many corporations have undergone corporate reorganizations to rationalize their business activities. These reorganizations are complex due to the corporate, securities and tax law requirements. This article reviews the income tax consequences for Canadian shareholders of a foreign corporation that distributes shares as part of a reorganization.

Although Canadian snowbirds reside in the U.S. for only a part of the year, there is the potential of being considered a U.S. resident and, in turn, having to pay U.S. income tax on the same basis as a permanent U.S. resident. This article outlines how the U.S. government determines whether you are a resident for income tax purposes; namely, it covers the criteria for meeting the Substantial Presence Test, Closer Connection Exception and the Canada U.S. Income Tax Treaty Tie-Breaker Rules.

The pension income-splitting rules provide an effective, yet simple, strategy to lower family taxes. Being able to split pension income provides an opportunity for couples to reduce their overall family tax bill by taking advantage of a spouse’s or common law partner’s lower marginal tax rate where retirement incomes are disproportionate.

Since Canada represents only a small portion of the world’s capitalization, it may make sense to include some foreign investments in your portfolio. However, it is important to understand Canadian and other foreign tax implications of owning investments outside of Canada.

In late 2021, the Federal government announced that the simplified tax deduction for 2020 allowing employees to claim a flat rate for expenses incurred as a result of working from home due to COVID-19, (without the need to track detailed expenses), will be extended for 2021 and 2022.

In the 2022 Federal budget, the Canadian government proposed the introduction of the tax-free First Home Savings Account (“FHSA”). This new registered plan enables prospective first-time home buyers to contribute up to $40,000 toward saving for their first home on a tax-free basis. Similar to a Registered Retirement Savings Plan (“RRSP”), contributions to an FHSA are tax-deductible, and withdrawals to purchase a first home – including from investment income – are non-taxable, like a Tax-Free Savings Account (“TFSA”).

Retirement Planning

Investing in a Registered Retirement Savings Plan (“RRSP”) is one of the soundest ways to ensure you enjoy a financially secure retirement. In order to maximize the benefits of an RRSP, it’s important to have a basic understanding of the rules that govern them.

A formalized savings plan that uses a registered plan, such as a Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA) or a Registered Retirement Income Fund (RRIF), is one of the soundest ways to realize your retirement goals. Here are some strategies you can use to maximize the benefits of your RRSP, TFSA and RRIF.

Maximizing Retirement Income

When the time for retirement arrives, payments from the Canada Pension Plan or Quebec Pension Plan (CPP/QPP), Registered Retirement Income Fund (RRIF), and Old Age Security (OAS) are the main sources of retirement income for many Canadians. It is important to consider these income streams and discuss the planning opportunities with your financial professional as you approach your retirement years. This publication provides an overview of these programs and some factors affecting the decision-making process.

Consider Self-Employment In Retirement

Arranging residential care for an aging friend or relative is often an uncertain process, especially when you are responsible for choosing a nursing home or retirement residence. The following questions may be useful to consider when visiting and evaluating a residence and can be used to assess and compare each option. Use a copy of this checklist at each of the residences you are visiting.

When someone becomes a caregiver, they can often be confused and overwhelmed by trying to find services to assist them in caring for their loved one. Many people do not know what services are available or where to begin to find these services. The good news is there are several options to assist you.

Things to consider: Remarrying during your retirement years can impact your family and financial situation in ways you may not have anticipated.

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.

The benefits of making a charitable donation are countless – from helping those in need to the personal satisfaction of giving back to the causes that are important to us. Charitable giving also makes good sense from a tax perspective. With proper planning, you can reduce your total income tax liability and maximize the value of your donation.

Philanthropy is an important financial planning consideration for many Canadians, and an integral part of their wealth management plan. A Charitable Gift Fund (“donor advised fund”), established through the BMO Charitable Giving Program, allows you to create a flexible and customized philanthropic solution that will have a lasting impact on causes that matter to you and your family.

Estate Planning

Estate planning is an essential component of a successful wealth management program. A good estate plan will provide you with the peace of mind that comes from knowing your family will be taken care of, and your financial affairs will be in order and administered according to your wishes. An important key element of any estate plan is a Will.

This is designed to help your family, executor (referred to as a “liquidator” in Quebec), or Power of Attorney for Property (referred to as a “mandatory” in Quebec) locate all of your important documents and other information needed to administer your estate or act as your Power of Attorney for Property

Estate Planning for Digital Assets

Estate Preservation and Distribution

In Time of Loss

Estate Immediate Checklist

Transferring Your Wealth to Future Generations

Protecting your lifestyle

Many Canadians enjoy spending time in the U.S., and at some point may consider the purchase of a U.S. vacation property. As a result, it is important for Canadians to fully understand U.S. reporting and tax issues related to their ownership of U.S. real property, in addition to any Canadian tax implications.

Cottage Planning

If you own a vacation property, this provides information on the tax consequences of selling a second home and highlights important estate planning considerations, if your plan is to keep your vacation property in the family for the next generation.

Let professionals help you with your duties as executor

Perils of Appointing a Non-Resident Estate Trustee

Joint Ownership Pros and Cons

A Guide for Granting Powers of Attorney

Incapacity Planning in a Mobile World

RESP's – Withdrawal Checklist

This article provides information on how, and when, to withdraw funds from an RESP, as well as information on qualifying educational institutions and programs. In situations where the RESP beneficiary decides not to pursue post-secondary studies or leaves before completing a qualifying program, the subscriber of the plan must decide what to do with the money that has accumulated in the RESP.

Shareholders' Agreement

Understanding Personal Holding Companies

Nearly two in five business owners are wondering who will take over their business and how they will transition it to a successor. However, the majority of them do not have a formal plan to exit their business or preserve the continuity of the business upon retirement. As small business owners shift gears and look to retirement, decisions about when and how to retire will have a significant impact on their personal financial situations and the future of their businesses.

In the absence of planning, when an individual passes away owning shares of a private company, they could be exposed to double or triple taxation. Professional expertise is required to effectively execute and realize the available tax savings. For more information, speak with your BMO financial professional.

Rates Scenario, covering currencies and markets outside of the U.S. and Canada.

The 2023 Federal Budget Review was prepared by our in-house BMO Private Wealth tax professionals: John Waters, Vice-President, Director of Tax Consulting Services and Dante Rossi, Director, Tax Planning.

Strategic commentary and an overview of financial markets.

The Global Equity Weekly provides timely analysis of major economic trends, and how they impact stocks and financial markets more broadly. The latest economic data, interest rate moves and earnings trends all drive the performance of your portfolio. In addition to analysis from the Economics team, this report offers a set of charts and tables to track market performance.

The Goods, BMO's monthly commodity price publication.

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