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Q1 Review - Market Commentary 2015

The 2015 Federal Budget was released last month by Finance Minister Joe Oliver and it tabled a number of proposed updates that will impact the financial, tax and estate plans of Canadians. While there has been a lot of media coverage, we have prepared a summary of the budget proposals that we feel are most relevant to you.


Tax Free Savings Account (TFSA) Limit Increase

The TFSA was introduced to Canadians in 2009 as a means of accumulating savings on a tax-free basis.


  • •  Contributions to a TFSA are not tax-deductible; however, all income and gains are tax-exempt, even upon withdrawal. The contribution limit, first introduced at $5,000, was subject to inflation adjustments in $500 increments, and as of 2013 it was raised to $5,500.
  • •  The budget proposed to increase the annual TFSA limit to $10,000 but will do away with subsequent increases indexed to inflation.
  • •  Clients who have been eligible to contribute to a TFSA since its inception will have accumulated a contribution limit of $41,000.
  • •  Changes are effective January 1, 2015, so if you haven’t yet topped-up your account – now’s the time!

RRIF Minimum Withdrawals

A Registered Retirement Savings Plan (RRSP) must be converted to a Registered Retirement Income Fund (RRIF) by the end of the calendar year in which you turn 71 and a minimum amount must be withdrawn annually.


  • •  Proposed reduction of the RRIF minimum withdrawal factors that apply to ages 71-94, so you can preserve more of your RRIF assets as you age, while continuing to benefit from the tax-deferred growth.
  • •  The government estimates the change will mean that a 90-year old will have 50% more capital than they would under the current rates.
  • •  The changes take effect as of 2015, and those that have already withdrawn more than the new proposed minimums will be allowed to re-contribute the excess amount.

Small Business Tax Rates

The small business deduction results in a reduced federal corporate tax rate for active business income of up to $500,000 earned in a Canadian-controlled private corporation.


  • •  To reduce taxes further, the 2015 Budget proposes a 2% decrease from the current rate of 11%, incrementally introduced over the next few years to land at 9% as of 2019. The dividend tax credit will also be changed accordingly.
  • •  The preferential rate allows small businesses to retain more earnings to reinvest into their business and potentially create more jobs.

Despite the overall positive note of these changes, it is important to review and discuss your financial plan on a regular basis to ensure the strategies employed are right for your own circumstances and goals. Whether your objectives focus on tax-efficiency, long-term growth, or flexibility, there is an appropriate savings vehicle to help you build a balanced financial portfolio.


All the best,

Anthony Ciccone, B.Comm,CHFC                         Sabrina Beaudoin, B.Sc, CFP




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