Why Work with an Investment Advisor?

By iA Private Wealth, February 28, 2024 It’s tax season, and no matter how many times you’ve gone through the ritual of preparing your income tax return, our refresher will help get you organized and on track for what will hopefully be a smooth and painless experience. Reference materials It may help to have last year’s return handy as a guide to figuring out which slips and forms you may require for this year’s return, and which lines must be completed on those forms. Of course, circumstances can change but knowing what you needed last time is a good starting point for gathering info. Similarly, last year’s CRA Notice of Assessment could help. Each notice contains valuable info, such as your RRSP deduction limit for the next tax year, the amount of unused net capital losses that can be applied to reduce future taxable capital gains, and the correction of mistakes you might have made on your return. Finally, note any tax installments you paid over the year as well as any relevant correspondence you received from the CRA. Here’s a checklist to help gather your tax slips, forms and other required info that’ll be used when completing your income tax return. Federal tax slips T3: Investment income (allocations, distributions) received during the tax year T4: Employment income (also includes CPP/EI premiums paid, income tax deducted, pension adjustment amount, charitable donations made through payroll, etc.) T4A: Pension, retirement, annuity and other income received T4A(OAS): Old Age Security pension benefits T4A(P): Canada Pension Plan benefits T4E: Employment Insurance benefits T4RIF: Income received from a RRIF T4RSP: Income received from an RRSP T5: Investment income (e.g., interest earned from bank accounts and GICs; corporate-class mutual fund distributions) T2202: Tuition and related fees (or a TL11 form if you studied outside of Canada) T5013: Statement of Partnership Income Receipts/documentation RRSP receipts for contributions made in previous calendar year, up to first 60 days of current year Investment-related expenses, including loans used for investing purposes Child care and/or adoption expenses Child support, alimony/spousal support payments Medical expenses Moving expenses Charitable donations, political contributions Professional or union dues not on your T4 slip Digital news subscription fees Business income and related expenses Rental income and related expenses Investment counsel fees and carrying charges Documents pertaining to the sale of real estate  Work-from-home expenses Regarding the deduction for home office expenses that was introduced during COVID-19, be sure to follow the new rules.  According to the CRA, eligible employees who worked from home in 2024 must continue to use the detailed method to claim home office expenses.Remember that the temporary flat rate method, valid during the 2020 to 2022 tax years, no longer applies. Visit the Government of Canada website to learn more about eligible expenses and other important information concerning work-from-home expenses. Capital gains inclusion rate The 2024 Federal Budget proposed to raise the capital gains inclusion rate for corporations and trusts to 66.67% from 50%. For individual taxpayers, it proposed the same increase on the portion of capital gains realized in the year that exceed $250,000 (for capital gains realized on or after June 25, 2024). There has been much uncertainty regarding this proposed increase, leaving many Canadians unsure of what to do. While some have proceeded with their transactions assuming the rate increase would apply for tax year 2024, others have waited for more definitive direction from the federal government. On January 31, 2025, it was announced that the timing of the capital gains inclusion rate increase will be deferred from June 25, 2024 to January 1, 2026. This may be welcome news, but it’s still recommended to consult with your Investment Advisor and tax professional to determine how best to proceed given your unique circumstances. Our checklist is a basic compilation of common slips, receipts and other documents you may need while completing your income tax return, but it isn’t exhaustive. Not all items will apply to you, and you might need additional information to file your return. We recommend consulting a qualified professional to help ensure you complete your return accurately and fully, claiming all deductions and credits for which you’re eligible.

As the new year begins, it's a perfect time to reassess your personal finances. This annual review can help you understand your financial health, set new goals, and make necessary adjustments to ensure you're on track to meet your wealth planning objectives. Here’s a guide to help you get started and understand how an investment advisor can be instrumental in this process. Review Your Financial Situation Start by taking a comprehensive look at your current situation, including: Income and expenses: List all sources of income and track your monthly expenses. Categorize your spending to identify areas where you can cut back. Debt: Make a list of all your debts, including credit cards, student loans, and mortgages. Note the interest rates and minimum payments for each. Savings and investments: Review your savings accounts, retirement funds, and any other investments. Assess their performance and determine if they align with your goals. Net worth: Calculate your net worth by subtracting your total liabilities from your total assets. This gives you a snapshot of your financial health. Set Financial Goals Once you have a clear picture of your finances, set measurable, achievable, relevant, and time-bound goals. These might include: Short-term goals: Building an emergency fund, paying off high-interest debt, or saving for a vacation. Medium-term goals: Saving for a down payment on a house, funding education, or purchasing a car. Long-term goals: Retirement planning, investing for future wealth, or estate planning. Create a Budget A budget is a crucial tool for managing your finances. It helps you allocate your income towards expenses, savings, and debt repayment. Use the 50/30/20 rule as a guideline: 50% for needs: Essentials like housing, utilities, groceries, and transportation. 30% for needs: Non-essential expenses like dining out, entertainment, and hobbies. 20% for savings and debt repayment: Building your emergency fund, retirement savings, and paying off debt. Monitor and Adjust Regularly monitor your budget and financial progress. Life changes, such as a new job, marriage, or the birth of a child, can impact your finances. Be prepared to adjust your budget and goals as needed. How an Investment Advisor Can Help An advisor can provide valuable guidance and support in managing your finances by way of: Professional advice Investment advisors have the experience and training to help you make informed decisions. They can provide insights into investment opportunities, tax strategies, and retirement planning. Their knowledge can help you navigate complex financial situations and avoid common pitfalls. Personalized Plan An advisor can create a plan tailored to your unique goals and circumstances. This plan will outline specific steps to achieve your objectives, such as saving for retirement, buying a home, or funding your children’s education. Accountability and Discipline Working with an advisor can help you stay accountable to your financial goals. They can provide regular check-ins and updates, ensuring you remain on track. This accountability can be especially helpful in maintaining discipline with your spending and saving habits. Stress Reduction Managing finances can be stressful, especially when dealing with debt or planning for the future. An advisor can alleviate some of this stress by providing clarity and direction. They can help you prioritize your goals and develop a clear action plan. Long-Term Relationship Building a long-term relationship with an advisor can be beneficial as your financial needs evolve. They can adjust your wealth plan as your life circumstances change, ensuring your strategy remains aligned with your goals.   Starting the new year with a reassessment of your personal finances is a proactive step towards achieving financial stability and success. By reviewing your financial situation, setting goals, creating a budget, and monitoring your progress, you can take control of your financial future. Enlisting the help of an iA Private Wealth advisor can provide skillful guidance, personalized planning, and the support needed to stay on track. Make this year the year you take charge of your finances and work towards a secure and prosperous future.

By iA Private Wealth, July 8, 2024 As the old saying goes, the only certainties in life are death and taxes. Given this reality, it’s beneficial to have an up-to-date estate plan that reflects your wishes for potential care needs and distributing your assets to loved ones, while also minimizing your estate’s tax liability to help facilitate an effective transfer of wealth. While creating a comprehensive estate plan is important, it’s equally important to communicate your plan to family members – as well as your specific expectations of them. Why? Here are three common reasons: Gain clarity. If you don’t share key details of your estate plan with family, they won’t know your wishes or how they’ll be impacted. It’s better to gather your loved ones now to explain elements of your estate plan and why you made certain decisions (e.g., your choice of estate executor). Failing to discuss your plan could cause confusion or uncertainty down the road, at a time when family is already grieving. As well, by communicating your wishes and values, and allowing loved ones to ask questions, everyone will be equally informed about your plan and desired legacy. This alignment may help avoid family conflict, disagreements or perhaps even legal action later. Get organized. People have different levels of complexity in their life, but it’s safe to say almost everyone has a number of accounts, passwords, assorted bills and documents, etc. that would be challenging to identify or track down without a formal estate plan that provides the required direction. You don’t want your family to scramble when their emotions are already frayed, searching for information and paperwork needed to make critical decisions. Since your financial institutions, advisor, lawyer, accountant, etc. will likely require certain info – including your will and powers of attorney – it’s valuable to prepare trusted family members to protect your privacy and share specific info on an as-needed basis. Some people may ask their estate planning lawyer to securely store their “master list” of vital information. Undertake wealth planning. Not only does your estate plan cover important aspects of your financial affairs, but it also affects your heirs and their financial life. An open discussion allows you to explain how you’ve decided to allocate your assets. This could be the first detailed exposure your family has regarding the extent of your wealth. Empowered by having an idea of what their inheritance might be, they can begin thinking about incorporating it into their existing wealth plan (or it could encourage them to get started with wealth planning). If you own a business, communicating your estate plan also lets loved ones know whether you intend for the business to be sold or for family members to take over. If you’re part of a blended family, have dependent children or ones with special needs, an estate plan can address these complexities upfront. Talking about your plans now should help your heirs be more financially prepared so they can handle their inheritance responsibly. Obviously, communicating estate plans can be uncomfortable given the sensitive subject matter, but doing so may offer meaningful financial and personal benefits to you and your family. It’s good to talk about your estate now instead of waiting for a time of crisis when people tend not to think clearly or logically. If you’d like some professional support, your advisor, lawyer or accountant have the relevant experience to help you hold a constructive, honest conversation that may offer you peace of mind and position your heirs well for the future.

By iA Private Wealth, May 8, 2024 If you’re like most entrepreneurs, your family business isn’t just a job – it’s your passion. That’s why you’ve invested so much time and effort into growing your business. Now that retirement is on the horizon (or no longer an abstract, way-in-the-future thought), you’re turning your attention to next steps. More specifically, it’s time for a succession plan. Succession planning is complex and the transition process could take years. Let’s look at some key considerations so you can begin strategizing now and construct a plan that’s right for you, your family and your company. All in the family For a minute, we’ll put aside the business aspect of succession planning and focus on the family aspect. Mixing work and loved ones can be tricky, especially when it comes to naming a successor to the family enterprise. Among the next generation, who gets the inside track to lead your business? Is it, by default, the oldest child? The one who exhibits the best leadership skills? The one who’s most interested in your business or is in a certain role that lends itself to taking over? There’s no automatic “right answer” since all family and business situations are different. What’s universal, however, is the need to give everyone their say and then, once you’ve arrived at a decision, communicate it clearly and logically. You might not achieve consensus – and some feelings could get hurt – but you’ll earn respect for transparency. While family harmony is desirable, of course, you’re also wearing a business owner’s hat and must ensure the continued strength and viability of your company. Going outside the family Don’t assume a family member will take over the business. Maybe none of the next generation works in your business, is interested in leading it, or is qualified to take over. Another option is for a current employee to lead the company. Once you’ve identified a good candidate, be sure to let them know – in as much detail as possible – what the leadership role entails. Again, explain this decision to your family and encourage questions. Every step of the way, open communication can align everyone’s interests and expectations, and helps minimize conflict. Regardless of whether the leader-to-be is a family member or other employee, build a comprehensive, goals-based development plan to position them for success. Document the key responsibilities you face (both regularly and ad hoc), and train the future leader to handle those duties. Be open minded and seek input on where they see potential for improvement in organizational processes, business culture, company structure and avenues for growth. Everyone has different perspectives, and fresh insights could take the business to the next level. Navigating finances The financial side of succession planning can get complicated if you have more than one child, each with varying degrees of involvement in the company. If the family business spans generations and also involves extended family (e.g., cousins, nieces, nephews), the complexity increases. The owner(s) must determine the best – and most fair – way to transition the business and allocate assets. When selling to a third party, will family members remain involved in the business? If so, in what capacity? Whether the business is sold to family members or a third party, your selling price should reflect fair market value. For many owners, their business represents their largest investment and biggest source of retirement income. Don’t shortchange yourself by discounting the sale price – even if selling to your own children. Given the challenges of succession planning, it’s typically wise to consult regularly with your advisor and related professionals, such as a lawyer, business exit strategist, and tax and estate specialist.

By iA Private Wealth, May 1, 2024 Any way you look at it, divorce is challenging. Aside from the emotional strain of ending a marriage – especially if you have kids – your finances could be affected significantly. Let’s look at four common steps that can help safeguard your wealth. Get a good grasp of your financial situation. Many people have an idea of their overall finances, but when divorcing you should examine bank and investment accounts, credit cards, mortgage statements, loans, lines of credit, etc. to know where you stand financially. Of particular importance is scrutinizing joint accounts ahead of divvying assets. Consider an agreement with your soon-to-be ex (who, for simplicity’s sake, we’ll refer to as “ex”) to continue paying joint expenses, but to avoid new borrowing charges pertaining only to one of you. If either has co-signed a loan or line of credit, request the financial institution remove the co-signer and rework this debt so the appropriate party is solely responsible. If you don’t have your own savings or chequing account, arrange for it. Also obtain a credit report to find out your current score. Link to your individual account any direct deposits beyond what you need to meet your share of expenses in the joint account. Regarding credit cards and loans, neither divorcing partner should deal with creditors or be liable for debt they didn’t incur. If you and your ex can pay off joint account balances, agree to close those accounts. Everyone’s heard stories of vindictive exes racking up large bills, so monitor your accounts to keep your assets protected. Update policies and beneficiaries. Divorce may change your insurance needs. For instance, if you become critically ill or disabled and need assistance paying bills, you may require more coverage as an individual compared to having a spouse’s income to cover expenses. Similarly, assess your life insurance needs as an independent policyholder and ensure you’ve got adequate coverage. Permanent life policies often have cash value, so if one exists, include the cash value when dividing joint assets. It’s also crucial to review beneficiaries named on financial accounts and registered plans like RRSPs, TFSAs, RRIFs and workplace pensions, and amend accordingly. If you’ve named your ex as beneficiary in your will or as holding certain powers of attorney, you’ll probably want to change that. An estate professional can help you implement planning changes brought about by divorce. If you’re on your ex’s workplace benefits plan (or vice versa), a divorce might lead to rethinking benefits to ensure adequate coverage persists. Deal with the family home. This one may have emotional repercussions as well. Discuss whether one of you wants to remain in your home and has the financial ability to do so. Both partners could be making mortgage payments, so the absence of one income may make the existing mortgage unmanageable, requiring renegotiated financing for the ex who’s staying put. You may choose to sell the family home and split the proceeds, or the remaining homeowner can buy out the other’s share for the amount of equity they’ve invested into it. If young children are involved, keeping them in the family home could help reduce the disruption in their lives that a divorce inevitably causes. Work closely with your investment advisor. Getting professional advice is especially valuable in divorce. An advisor can help identify your assets and liabilities, and calculate your personal net worth. They can also adjust your budget and wealth plan based on new life circumstances, including recalculating the money earmarked for retirement and revising your goals to put you in the best possible position for financial success. If you need to save and/or invest more (or in a different manner) to achieve your long-term objectives, an investment advisor can work with you to make it happen. Your income may also be impacted by child or spousal support, whether you’re paying or receiving. It’s practical and comforting to assemble a team (e.g., investment advisor, tax consultant, estate planner, divorce lawyer, accountant) that can help you get through a divorce with financial independence and a sense of clarity moving forward.