As you know, the cost of your prescriptions is made up of two components – the dispensing fee and the cost for the medication. There is a large variation in the cost of having your prescription filled.
One way to save some money is to select a pharmacy with lower filling fees. A recent study by Emergis was done on the average cost of dispensing fees in Ontario between July and December 2008. The results are as follows:
Pharmacy Average Dispensing Fee Submitted
Average for All Pharmacies $9.70
Costco $4.11
Pharmex (mail order) $6.69
Walmart $8.60
Zellers $9.07
Loblaws $9.22
Dominion / Miracle Mart $9.31
IDA $9.77
Pharma Plus $9.79
Shoppers Drug Mart $11.01
Wednesday, June 17, 2009
Health and Dental Options for Self Employed
The recent outbreak of H1N1 (Swine Flu) has received a lot of news coverage, and many of us have decided to take precautions to remain in good health.
In times like these, self-employed people may be especially concerned. Without the sort of comprehensive health and dental coverage that many employees receive from their employers, small business owners are right to worry about what would happen should they, or their families, ever require expensive medication or treatment that isn't covered by their provincial plans.
Private health insurance isn't nearly as expensive as you might imagine. Depending on your age, health, the level of coverage and the insurance company, you may be able to obtain both drug and dental insurance for yourself, your spouse, as well as a child, for as little $165 a month (based on two non-smoking 40-year-old adults, with a 15-year-old child).
The best part is that you may be able to write off the entire amount as a business expense. In 1998, the federal government made these premiums tax deductible for self-employed individuals!
If you'd like to discuss the various health and dental plans available in the Canadian marketplace, I hope you won't hesitate to contact me at the number above. I'd be happy to shop around and find a plan that's right for you.
In times like these, self-employed people may be especially concerned. Without the sort of comprehensive health and dental coverage that many employees receive from their employers, small business owners are right to worry about what would happen should they, or their families, ever require expensive medication or treatment that isn't covered by their provincial plans.
Private health insurance isn't nearly as expensive as you might imagine. Depending on your age, health, the level of coverage and the insurance company, you may be able to obtain both drug and dental insurance for yourself, your spouse, as well as a child, for as little $165 a month (based on two non-smoking 40-year-old adults, with a 15-year-old child).
The best part is that you may be able to write off the entire amount as a business expense. In 1998, the federal government made these premiums tax deductible for self-employed individuals!
If you'd like to discuss the various health and dental plans available in the Canadian marketplace, I hope you won't hesitate to contact me at the number above. I'd be happy to shop around and find a plan that's right for you.
Monday, May 4, 2009
Out of RRSP contribution room?
The Registered Retirement Savings Plan (RRSP) is probably the single best tax shelter available to Canadians. You can deduct your contributions from your income, and you are able to shelter your earnings from taxation for as long as they remain inside the plan.
But what do you do if you've filled it up and have no more contribution room? It's a problem. But what a nice problem to have!
While it's difficult to think of another savings vehicle quite as attractive as the RRSP, the good news is that there are other tax-advantaged savings options available to those who have already maxed-out.
Universal Life Insurance
Universal life insurance is perhaps best described as a life insurance plan built around a tax-sheltered, savings account. Every month, the base insurance premium is "billed" to this savings account. Any amount that remains in the account after this minimum charge has been paid can be invested however you choose, and the earnings accumulate tax-free for as long as they remain inside the policy.
Mortgage Debt
Now that your RRSPs have been topped up, consider the benefits of making an additional mortgage payment. Most lenders will allow you to make prepayments to a maximum of 20% or 25% of the original loan, and the savings can be significant. For example, a $10,000 prepayment on a $150,000 mortgage at 5% with 20 years remaining would save you $15,399 in interest. There aren't many other investments that can generate an immediate 150% after-tax return!
If you'd like to discuss these or any other tax shelter opportunities in greater detail, please do not hesitate to contact me at 416-806-5478 or by email at heather@freed.ca
But what do you do if you've filled it up and have no more contribution room? It's a problem. But what a nice problem to have!
While it's difficult to think of another savings vehicle quite as attractive as the RRSP, the good news is that there are other tax-advantaged savings options available to those who have already maxed-out.
Universal Life Insurance
Universal life insurance is perhaps best described as a life insurance plan built around a tax-sheltered, savings account. Every month, the base insurance premium is "billed" to this savings account. Any amount that remains in the account after this minimum charge has been paid can be invested however you choose, and the earnings accumulate tax-free for as long as they remain inside the policy.
Mortgage Debt
Now that your RRSPs have been topped up, consider the benefits of making an additional mortgage payment. Most lenders will allow you to make prepayments to a maximum of 20% or 25% of the original loan, and the savings can be significant. For example, a $10,000 prepayment on a $150,000 mortgage at 5% with 20 years remaining would save you $15,399 in interest. There aren't many other investments that can generate an immediate 150% after-tax return!
If you'd like to discuss these or any other tax shelter opportunities in greater detail, please do not hesitate to contact me at 416-806-5478 or by email at heather@freed.ca
Severance package options
Hopefully we'll never need to manage through such an unpleasant contingency, but there is always a chance that you or someone you love might face a layoff in the future, particularly during this time of economic uncertainty.
You might already be acquainted or all too familiar with the vexations that come with being dismissed suddenly. When this happens, or at any other time you receive news that affects your financial plan, please contact me immediately. Not only is it your responsibility to let me know when there are "material changes" to your plan, it is usually imperative that we manage your cash flow, investments, benefit plans and the tax implications that usually accompany employee severance packages.
Although receiving a large or modest severance package can help soften the blow of losing your employment, the sudden influx of cash can have serious tax consequences if not managed properly. In some cases, it might even be beneficial to negotiate with your employer and arrange to receive severance payments after January 1.
Your life and health insurance benefits also need to be addressed rather quickly — often your group insurance can be converted into an individual policy without the need to provide medical evidence, but there might be only a short period of time to do so. Unless you are in excellent health, this could be your only chance to obtain sufficient insurance coverage at a standard rate.
You might already be acquainted or all too familiar with the vexations that come with being dismissed suddenly. When this happens, or at any other time you receive news that affects your financial plan, please contact me immediately. Not only is it your responsibility to let me know when there are "material changes" to your plan, it is usually imperative that we manage your cash flow, investments, benefit plans and the tax implications that usually accompany employee severance packages.
Although receiving a large or modest severance package can help soften the blow of losing your employment, the sudden influx of cash can have serious tax consequences if not managed properly. In some cases, it might even be beneficial to negotiate with your employer and arrange to receive severance payments after January 1.
Your life and health insurance benefits also need to be addressed rather quickly — often your group insurance can be converted into an individual policy without the need to provide medical evidence, but there might be only a short period of time to do so. Unless you are in excellent health, this could be your only chance to obtain sufficient insurance coverage at a standard rate.
Thursday, March 19, 2009
2008 RRIF minimums and 25% re-contributions
Do you know anyone who is taking money out of their RRSP or RRIF? If so please forward the following to them. If they want to re-contribute, they must do so before April 14, 2009
2008 RRIF minimums and 25% re-contributions
On November 27, 2008, the Federal government proposed legislative changes to the calculation of the 2008 required minimum withdrawal for RRIF, LIF and other locked-in RRIF plans (collectively known as a “RRIF”). The change allows the annuitant to re-contribute up to 25% of the 2008 minimum amount back to their RRIF (or to an RRSP if the annuitant is 71 years of age or younger at the end of the year in which the contribution is made) provided the RRIF annuitant received the full minimum amount in 2008.
Bill C-10 received Royal Assent on March 12, 2009 and the legislation implementing the Budget measures is now law.
This means that policyholders have until April 14, 2009 to re-contribute up to 25% of their 2008 RRIF minimum.
How to submit re-contributions
Contact your financial planner or institution and let them know that you would like to take advantage of this offer.
Tax receipts
• A 2008 RRIF re-contribution “receipt” (or RRSP receipt if applicable) will be issued to the annuitant
• To ensure that a 2008 RRIF re-contribution “receipt” (or RRSP receipt if applicable) is issued,
clients must indicate on the letter of direction/financial service form that they are making a recontribution.
More information on the legislative changes can be found on the CRA’s website:
http://www.cra-arc.gc.ca/whtsnw/tms/rrf-fq-eng.html
2008 RRIF minimums and 25% re-contributions
On November 27, 2008, the Federal government proposed legislative changes to the calculation of the 2008 required minimum withdrawal for RRIF, LIF and other locked-in RRIF plans (collectively known as a “RRIF”). The change allows the annuitant to re-contribute up to 25% of the 2008 minimum amount back to their RRIF (or to an RRSP if the annuitant is 71 years of age or younger at the end of the year in which the contribution is made) provided the RRIF annuitant received the full minimum amount in 2008.
Bill C-10 received Royal Assent on March 12, 2009 and the legislation implementing the Budget measures is now law.
This means that policyholders have until April 14, 2009 to re-contribute up to 25% of their 2008 RRIF minimum.
How to submit re-contributions
Contact your financial planner or institution and let them know that you would like to take advantage of this offer.
Tax receipts
• A 2008 RRIF re-contribution “receipt” (or RRSP receipt if applicable) will be issued to the annuitant
• To ensure that a 2008 RRIF re-contribution “receipt” (or RRSP receipt if applicable) is issued,
clients must indicate on the letter of direction/financial service form that they are making a recontribution.
More information on the legislative changes can be found on the CRA’s website:
http://www.cra-arc.gc.ca/whtsnw/tms/rrf-fq-eng.html
Monday, March 9, 2009
Be Tax Efficient
Medical Expenses
Most people are unfamiliar with the many medical expenses that can be claimed beyond dental bills, prescription drugs and living aids, such as prescription glasses and wheel chairs. You are able to include any medical expenses not paid for by a provincial or private plan. In fact, even if you have private coverage, the premiums you pay are eligible medical expenses.
Canada Pension Plan (CPP)
If you are retiring early, it’s generally better to begin taking your CPP as soon as you are eligible (i.e. age 60) versus waiting until age 65. The extra five years between age 60 and 65 when you haven’t made CPP contributions may mean that you won’t receive the full amount even if you do wait. Because you will receive benefits, even though reduced, for an extra 60 months, you could be in your 80’s before you start to reap the benefits of waiting.
Focus on Family
Some tax credits can be claimed by either spouse. Medical expenses and charitable donations are two examples. Generally, it is almost always better for the spouse with the lower net income (provided he/she is in a taxable position) to claim medical expenses because the credit reduces by a percentage of net income. The credit for charitable donations is a two-tiered federal credit of 15 per cent (2008) on the first $200 and 29 per cent on the balance (plus provincial credits). Spouses are allowed to claim the other’s donations and to carry forward donations for up to five years. By carrying forward donations and then having them all claimed by one spouse, the first $200 threshold with the lower credit is only applied once.
Optimize Holdings Inside and Outside Your RRSP for Tax Efficiency
Consider tax efficiency as one factor when deciding which investments to put inside your RRSP and which to keep outside. Consider putting funds inside your RRSP that generate interest, or have a history of large taxable distributions. Keep funds outside your RRSP that you expect will pay relatively fewer taxable distributions or that generate more dividend and capital gains returns.
Salaries to Family Members
One effective income-splitting technique for individuals with a business is to pay family members a salary or wages for any services they provided in the year. The services must have genuinely been provided and the salary or wages must be reasonable. A family member could also be a director for a corporation and receive reasonable director’s fees. This also generates RRSP contribution room for your family members.
Most people are unfamiliar with the many medical expenses that can be claimed beyond dental bills, prescription drugs and living aids, such as prescription glasses and wheel chairs. You are able to include any medical expenses not paid for by a provincial or private plan. In fact, even if you have private coverage, the premiums you pay are eligible medical expenses.
Canada Pension Plan (CPP)
If you are retiring early, it’s generally better to begin taking your CPP as soon as you are eligible (i.e. age 60) versus waiting until age 65. The extra five years between age 60 and 65 when you haven’t made CPP contributions may mean that you won’t receive the full amount even if you do wait. Because you will receive benefits, even though reduced, for an extra 60 months, you could be in your 80’s before you start to reap the benefits of waiting.
Focus on Family
Some tax credits can be claimed by either spouse. Medical expenses and charitable donations are two examples. Generally, it is almost always better for the spouse with the lower net income (provided he/she is in a taxable position) to claim medical expenses because the credit reduces by a percentage of net income. The credit for charitable donations is a two-tiered federal credit of 15 per cent (2008) on the first $200 and 29 per cent on the balance (plus provincial credits). Spouses are allowed to claim the other’s donations and to carry forward donations for up to five years. By carrying forward donations and then having them all claimed by one spouse, the first $200 threshold with the lower credit is only applied once.
Optimize Holdings Inside and Outside Your RRSP for Tax Efficiency
Consider tax efficiency as one factor when deciding which investments to put inside your RRSP and which to keep outside. Consider putting funds inside your RRSP that generate interest, or have a history of large taxable distributions. Keep funds outside your RRSP that you expect will pay relatively fewer taxable distributions or that generate more dividend and capital gains returns.
Salaries to Family Members
One effective income-splitting technique for individuals with a business is to pay family members a salary or wages for any services they provided in the year. The services must have genuinely been provided and the salary or wages must be reasonable. A family member could also be a director for a corporation and receive reasonable director’s fees. This also generates RRSP contribution room for your family members.
Tax tips for business owners
1. Take advantage of income splitting by employing your spouse or children. Remember, though, that family members must actually do the work, and their salaries must be reasonable.
2. If you pay salaries to family members, those people may become eligible for Canada or Quebec Pension Plans (CPP/QPP) and RRSP contributions. Talk to your tax advisor for more details.
3. If you have a home office, you might be surprised at the variety of expenses you can deduct at tax time. They include the business portions of your rent, mortgage interest, property taxes, utilities, home insurance, repairs, maintenance and even landscaping. Have a separate phone line installed for your business to maintain accurate records for deductions.
4. If your business incurs non-capital losses and you’re not incorporated, you can save taxes by applying the losses against any other income source reported on your tax return for the year.
5. With some restrictions, you can deduct the costs of attending two professional conventions each year as long as they’re related to your business.
6. Employee benefit plans may be a business expense. Check with your accountant to see if you are eligible.
For further information on any of these points, give me a call at 416-806-5478
2. If you pay salaries to family members, those people may become eligible for Canada or Quebec Pension Plans (CPP/QPP) and RRSP contributions. Talk to your tax advisor for more details.
3. If you have a home office, you might be surprised at the variety of expenses you can deduct at tax time. They include the business portions of your rent, mortgage interest, property taxes, utilities, home insurance, repairs, maintenance and even landscaping. Have a separate phone line installed for your business to maintain accurate records for deductions.
4. If your business incurs non-capital losses and you’re not incorporated, you can save taxes by applying the losses against any other income source reported on your tax return for the year.
5. With some restrictions, you can deduct the costs of attending two professional conventions each year as long as they’re related to your business.
6. Employee benefit plans may be a business expense. Check with your accountant to see if you are eligible.
For further information on any of these points, give me a call at 416-806-5478
Subscribe to:
Posts (Atom)
Posts
