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June 20, 2016 | Blend Income Splitting with Retirement Strategies

Adrian Mastracci

Adrian Mastracci, Discretionary Portfolio Manager, B.E.E., MBA. My expertise in the investment and financial advisory profession began in 1972. I graduated with the Bachelor of Electrical Engineering from General Motors Institute in 1971. I then attended the University of British Columbia, graduating with the MBA in 1972. I have attained the “Discretionary Portfolio Manager” professional designation. I am committed to offering clients the highest standard of personal service by providing prompt, courteous and professional attention. My advice is objective, unbiased and without conflicts of interest. I’m part of a team that delivers comprehensive services and best value in managing client wealth.

My investing premise:
“Splitting family income is very beneficial. Take full advantage of all provisions that apply.”

Think of income splitting in the same breath as your retirement planning.
In my view, the two camps ought to fit like a glove to deliver the best value.

Families are keenly interested in paying the least income tax.
There are a few low-cost activities left on the platter.

It’s never too early to get familiar with the menu.
Let’s blend income splitting with your retirement strategies.

Goals of the exercise

Ideally, a family pays less income tax where two spouses achieve similar income levels.
Equalizing incomes allows each spouse use of the graduated tax scales from low to high.

Another beneficial goal is to equalize asset levels, as much as possible.
Retirees who reduce the “clawback” retain more of the OAS pension and, perhaps, the age credit.

Strategies and techniques

Utilize these income splitting tips before and after retirement:

The higher income spouse pays all the family expenses.
The lower income spouse saves his/her money and invests it.
The higher income spouse loans cash to the lower income spouse at 1% by September 30.

Split CPP/QPP pensions equally if both spouses are age 60, or over.
Spousal RRSP deposits made by the higher income spouse help equalize family assets.
Business owners can review the pay mix of family members, say dividends vs salary.

Split up to 50% of eligible pension income between spouses.
Utilize the pension income tax credit, perhaps by both spouses.
Arrange the finances so that capital gains are reported by both spouses.

Fund RESP and/or RDSP contributions for a child/grandchild.
Loan or gift cash to an adult child for a home purchase, TFSA or RRSP.
Gift or loan cash to your spouse/partner to fund a TFSA.

Focus on what is best for the family in the long run.
Then review the options that make the most sense.

Every family can find value in this assortment of income splitting techniques.
It will take some planning to implement the process with the retirement goals.

I welcome your contact.

Talk soon,

Adrian

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June 20th, 2016

Posted In: Adrian Mastracci Blog

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