Pension Income Splitting

Let me preface this by stating that I think Canada should adopt a combined family income model for taxation. In this model spouses could combine their income and then income split on the basis of that. As part of my retirement plan, I hopefully, will be able to use Pension Income Splitting (from T1032, joint election of split pension income).

Pension income splitting has been around for over 10 years. So far no government has tried to curtail the use of this tax avoidance tool. Who can use this powerful tool? Only couples with pension income, or pension-like income vehicles, and typically these couples will have one spouse that has a higher rate of income.

How does Pension income splitting work?

The arithmetic involved is quite simple: I can give up to 1/2 of my entire pension income to my wife and have it taxed at her rate of taxation. While this might raise my wife’s tax bracket, it will lower mine as well. My current estimates show that I might save up to $600 a year by pension income splitting.

The program is quite simple, all I need do is fill in the form T1032 when I submit my taxes. I can then opt out the next year, by not submitting that form in my taxes. Splitting your CPP income with your spouse is much more complicated (but can be done as well).

Pension Splitting

Pension Income Splitting is Bad For Canada?

The C.D. Howe institute has published a report that claims that income splitting will, “… infect your soul, curve your spine, and keep the country from winning the war…” (to paraphrase George Carlin). I am not sure exactly why there is a big hate-on for this program, as you can do similar things if you create a Spousal RRSP (but you have to do that far in advance of your retirement).

The major reason I can take advantage of this program is that my spouse has a small pension. If we both had the same income level, pension income splitting would make no sense.

I am hoping the Liberal government (or future governments) do not put the kibosh on this program, as they did on Combined Family Income.


Unlocking Phones, Raiding Parents’ RRSP, Household Debt and #Moneytalk

Today is the first day of Unlocking Phones in Canada. The CRTC’s rules about how Cell phone providers must give the phone to you unlocked comes into play today. You can also get your phone unlocked for free, if you have a contract with the firm. Isn’t this a great day? Wonder when we start getting cheaper rates and unlimited wireless internet? Guess that one is going to take a little longer?

Old Cell Phone

Unlocking Phones like this will never happen

The minister of National Revenue reinstated the Disability Advisory Committee. This might be a good thing, but hard to tell. I believe this is a reaction to the media coverage of Disabled Folks losing their DTC. What is this committee going to do?

“The Committee will advise the CRA on how we can better inform people with disabilities and various stakeholders about tax measures and important administrative changes. The Committee will also review the CRA’s administrative practices and make recommendations on how we can enhance the quality of our services for people with disabilities.”

So my guess about them reacting to folks losing their DTC in the media is on-target.

The Real Estate world seems to be wetting their pants over possible drops in sales, so now they have come up with a new ferkokten idea, allowing buyers to borrow from their Parent’s RRSPs? I love my kids, but that is possibly the most meshuge idea ever. Put money away for my retirement, but decide I’d rather keep working so my kids can have a house? I keep reading that phrase and it doesn’t make any sense. Whoever thought that up is the definition of Chutzpah.

The amount of hype the Real Estate industry is creating is getting to the levels of the Cigarette Companies in the late 1960’s. A family in every house, a car in every garage and a chicken in every pot as the National Dream may well be over.

Did I say bubble? With Bitcoin smashing through $1000 maybe it is time to think about investing in it? What you nuts? Here is an interesting statistic for you, Bitcoin mining consumes more electricity than 20+ European countries. People are wasting that much electricity for this? Wow.

Do those Boomers have money for their kids to borrow? Stats Canada put out a study that suggests:

“The level of household debt relative to income in Canada remains high by historical standards and continues to rise, driven by growth in mortgages and home equity lines of credit.”

This is bad news for all the bubbles out there. Eventually the Debt bubble will go pop, with either higher rates of interest or creditors tightening rules for lending. Listen closely folks the next financial bang might be very loud. Remember the good old days when Mortgages were 10% and we thought that was low? Should call my friend Mr. Hoyes to see how many bankruptcies he’d expect if interest rates went to that level?

My Recent Writings

With the maniacal shopping of Black Friday and Cyber Monday, I figured I’d go to the one day out of it that speaks to me and that is Giving Tuesday. Everyone has their go to charities, and with Giving Tuesday, My List I give you my list of the charities I am giving to this year. I didn’t mention my Church on the list, but that is the other charity I donate to.

Micro Blogging on Finance

Today is the big day! The caveat I read is that your unlocking phones must be done under contract with one of the Cell Phone providers, but what about me, I am not on a contract, I am month to month? We shall see I suppose.

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Giving Tuesday My List

I really don’t buy into the Black Friday, Cyber Monday and such tom-foolery, but Giving Tuesday is something I can get behind. There are many wonderful charities that need your help, and for those unsure here is a short list you could use. Make sure you give to them and not over arching “charities”, they take too much for Management Fees.

Giving Tuesday

Charities that Need Your Help:

You shouldn’t really need a specific day to give, Charity is an important part of any financial plan. It is also near the end of the year, money you give now counts towards this years taxes! Keep that in mind. You could give Charity as a Christmas gift too.



What is Your Price, BLACK FRIDAY, Phoenix and #MoneyTalk #FLM2017

A very odd Twitter exchange erupted this week between Robert Browne, Gail Vaz-Oxlade, Kerry K. and a few other folks about what is your price? What amount of money will cause you to walk away from your blogging morals and do it just for the money? It is interesting because that exact question was asked over dinner between myself, Mr. Browne, Mrs. Browne and Michael James, and the number seems to be $1 Million (to begin with).

What would we do for it? Someone stated:

“For a mil, I’d walk up and down Yonge Street wearing a sandwich sign for a payday loan place. Naked. In February.”

I stated I’d have to be paid $1.25M to watch this exhibition.

what is your price

What is Your Price ?

To quote one of my favorite heel wrestlers from the 90’s, “The Million Dollar Man” Ted Dibiase:

“Everybody’s got a price…”
Whoever says they would never, just hasn’t thought about how much money it would take.

It is Black Friday today, where mayhem and deals run rampant. I am not really sold on the concept of all these great deals, but I am sure there will be mayhem. I have nothing on my list to purchase, but I may do some on-line window shopping. Look at Anti-Virus software and maybe Quicken, both worth having.

The Phoenix Pay system was in the news again. The Auditor General’s report confirmed what anyone in the Civil Service knew, the system is a mess, and will take a lot of money and time to repair it (at least 2 years and another $540M). That is a pretty high price for taxpayers and there is no guarantees it will be fixed by then. It has not lived up to the promised money savings,  but the blame can be shared across the board.

My Recent Writings

A couple of articles by me over the past few weeks, still not back to more than 1 a week, but things may change in the new year.

I went to the financial confessional with Why Waiting 6 Months to Update Your Financial World is a Bad Thing (and it is). I felt sorry for myself and let things go, and paid a price for my self-pity.

My instincts are to work hard to save small amounts of money, for some reason, and Banking and Saving Fees outlines another important way I am saving $3 an ATM withdrawal. Maybe I should spend more time worrying about Macro Finance issues?

Micro Blogging on Finance

It seems the folks at Telus and Rogers are having problems complying with the December 1st deadline for selling and unlocking cell phones for free, and are now asking for an extension on this and the other parts of the CRTC’s policies? Let us hope the CRTC says, No!.

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Banking and Saving Fees

Back in the good old days, my office at Nortel had a banking machine on site. This was before banks started playing silly games with non-subscribers, charging them White ATM fee charges. Even then, I did open an account with CIBC, and back then they had a Zero Fee Account. That stopped working when the CIBC ATM changed to a Credit Union machine.

Stupid Bank Tricks

More Stupid Bank Tricks

My current employer has an RBC machine in the lobby, however, RBC doesn’t really have a zero fee banking account (unless I move all my banking there). No chance to resurrect my earlier brilliant idea there.

I did finally notice that across the street there is a Scotiabank branch, from my current office. After 2 years the light finally went on, I have a Tangerine Bank Account. As I have pointed out, Tangerine is owned by Scotiabank, and I can use their ATM machine with no fees.

This now means, I can use the Tangerine account which has zero fees (for now), and do transfers to it (for no fees) and withdraw money without fees, which seems to be ideal. You could also do this with Simplii and CIBC machines I assume.

Another stupid bank trick to add to my list of stupid bank tricks? Maybe, but if you have enough of them, you will have more money left in your bank account. Another way to live, is to simply take enough cash out every pay cheque that you need.

If you want to join Tangerine, use my code and I make some money too ( 47979477S1 ).


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