Personal Finance

Just started to manage my money, CRA watch out? Tips??

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  • Aug 26th, 2017 1:28 pm
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Jan 21, 2017
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Just started to manage my money, CRA watch out? Tips??

Hi guys, I'm just starting to manage my own finance. (tax, RRSP, tfsa etc)

Just wondering if anyone has any tips on CRA, tax?

Ie, I just found out last night I over contributed to my Tfsa and learned about the 1% tax lol

Called td the other day and they asked me to report my networth, anyone knows why and the implications?

Also, do you know how to consolidate my pension and RRSP? My last few work places all had pension and RRSP matching but it's all over the place. What is the best way to consolidate them?
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Deal Addict
Jan 2, 2015
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Toronto, ON
DPR2017 wrote: Hi guys, I'm just starting to manage my own finance. (tax, RRSP, tfsa etc)

Just wondering if anyone has any tips on CRA, tax?

Ie, I just found out last night I over contributed to my Tfsa and learned about the 1% tax lol
Call the CRA and get your last tax return.

Register for My Account. (You need the tax return for this.)

Now you can see your TFSA and RRSP limits. The TFSA limit is out of date. It was last updated in February or March and even then was accurate only until the end of 2016. You need to track your own TFSA limit yourself. A spreadsheet helps. If you are still over your 2017 TFSA limit you need to take excess funds out.
Called td the other day and they asked me to report my networth, anyone knows why and the implications?
There are no tax implications, unless you have a lot of assets outside the country. You are taxed on income (or revenue, is self-employed). You are not taxed on net worth.
Also, do you know how to consolidate my pension and RRSP? My last few work places all had pension and RRSP matching but it's all over the place. What is the best way to consolidate them?
We would need more information.

I am assuming you are working for a company with a pension plan right now, and have some old pensions and LIRAs floating around. (A LIRA is a locked-in RRSP, since you normally aren't allowed to access those pension funds until you retire.) If you have an old pension and you want to "consolidate" it, you need to get in touch with the pension provider and ask that it be converted into a LIRA. You can transfer the LIRA to any institution. If you have a defined contribution pension plan or group RRSP instead of a pension plan, you can move the LIRAs to the same institution.

Unlike a pension plan, you can control what is in the LIRA. You choose the investments, how much risk you're willing to take, etc. You can sell equities, bonds, etc within the LIRA and just have it in cash, then use this cash to buy other investments. You just can't take the money out.

You could put all those LIRAs at the same institution and put in the same investment spread between them. I don't know if you can literally merge all of them, but they'd be practically identical in everything but size.

When you retire, the LIRAs need to start paying by the time you turn 71. You can convert them into a RRIF (the default option), or an annuity, or (really dumb) just take the investments out. A RRIF is similar to the LIRA/RRSP, except the institution sells a minimum percentage of the investments every year and gives you cash. As years go on, it takes out a higher percentage of the remaining money. You cannot recontribute or ask to reduce the withdrawals, but you can take out more if you need to. An annuity is a "buy your own pension" plan, where you take out roughly the same amount of money every year. You can get an inflation-adjusted annuity, but it will cost more.

Note that whether you have money coming out of a RRIF or annuity, you are paying tax on this. You got a tax break putting money in, of course. It's better to take the money out as slowly as possible to avoid pushing yourself into a higher tax bracket and paying more tax.

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