# CPP changes 2016?



## Jungle (Feb 17, 2010)

I read this in the Toronto SUN today. (paper given to me for free)

"The changes will mean that anyone who chooses to retire early and begin collecting benefits at 60 will have about $4,000 a year less than if they had retired at 65, the report by the BMO Retirement Institute found. If you stay on the job until 70 payments could be $4,600 a year more, based on maximum CPP payments."

Can anyone explain what exactly has changed from the old rules to these new rules?


----------



## Karen (Jul 24, 2010)

The answer is further along in the article you linked to, Jungle. I quote from the Toronto Sun article:

_Under the new rules, that will take full effect by 2016, anyone choosing to retire before the age of 65 will have their CPP pensions reduced by 0.6% for each month up to that age. Those who stay in the work force will have 0.7% extra for each month thereafter.

The current rules are 0.5% less for early retirement and 0.5% more for working longer._

And here's a link to a CBC news article explaining the changes:

http://www.cbc.ca/consumer/story/2010/10/27/con-retirement-age.html


----------



## humble_pie (Jun 7, 2009)

it looks like the carrot rather than the stick.

some - mostly clued-in young professionals in their 40s & 50s who are worried about big tax increases - are advocating a raise of retirement, old age pensions & related benefits to age 70-75. They say that when current CPP was initiated in the 1960s under liberal prime minister lester pearson, life expectations were noticeably shorter than today.

they say now that folks are routinely living into their 80s the pension age should be raised. And they say that of all the options facing canada today, this is the most humane. Other options being mostly of the ice floe variety.


----------



## andrewf (Mar 1, 2010)

Or, the boomers could tax their kids into the stone age. Old people vote...


----------



## humble_pie (Jun 7, 2009)

so far the french voters are not taxing their kids into the stone age.

sarkozy will succeed in upping the age for french benefits, imo. But increasing the carrot in canada is a good strategy because it allows options.


----------



## steve41 (Apr 18, 2009)

Just a reminder for those retirees contemplating taking their CPP starting at age 60.

The new early/late CPP rules make it even more advantageous to delay taking CPP.

Example.... a 59 year-old retiree with full CPP entitlement wants to take early (age 60) CPP. Question.... what would his retirement lifestyle look like if he delayed taking CPP until age 70?

Answer.... he would enjoy an extra $2400 (after tax/after inflation) per year each and every year if he delays taking CPP until age 70. That's an 8% after tax advantage, or $200 each and every month from his current age out to his die-broke age (95)

Based on a starting $500K RRSP, a 4% rate of growth and 2% inflation, living in BC.

Caveat.... this doesn't mean that the only measure that counts is the extra $2400 you get to spend on beer every year. Estate considerations may influence the decision to take early CPP. Taking early CPP will allow you to shelter more of your capital early on, thus enhancing your net worth.

However, if you have no estate concerns, taking late (age 70) CPP can make good sense.

CPP at age 60
CPP at age 70


----------



## HaroldCrump (Jun 10, 2009)

Of course it makes sense and the numbers prove it.
The federal govt. know this and must have run all kinds of numbers before they made these changes.
That's the whole point.
They _want_ people to delay taking CPP until (a) they can no longer enjoy the money because of old age and poor health or (b) kick the bucket and never get the money.
That way, the tontine scheme can go on and on forever.


----------



## Jon_Snow (May 20, 2009)

They can fiddle with the rules all they want... I'm retiring in my mid 40's and they can't stop me.


----------



## steve41 (Apr 18, 2009)

OK. And from now until you turn 40, you will be dumping $ into the CPP pot, you then die (from boredom or a massive drug overdose) at age 59, and never get to touch that CPP you have been funding. You lose, we win!


----------



## sags (May 15, 2010)

I wish we could have the option of taking the commuted value of the CPP.

We already have a couple of DB pensions, but no pile of cash.

A combination of both would be nice..........


----------



## sags (May 15, 2010)

Judging from the comments on the CBC article, not many people are buying into the plan of staying longer.

Considering the Government eliminated the mandatory retirement age only a couple of years ago, I wonder how long before collecting the CPP early isn't an option anymore.

Also considering the CPP is supposedly fully funded for the next 75 years just as it is presently structured, what is the issue?

Perhaps the Government has cast their greedy eyes on that big pile of cash sitting there? What is the number.........160 Billion in the fund. 

That would eliminate the deficit and then some.

Working longer isn't really a remedy for retiring. It defeats the whole purpose.


----------



## andrewf (Mar 1, 2010)

Like with most things, people listen to US newsmedia and assume that whatever is going on in the US applies to Canada. US Social Security is bankrupt and unsustainable, and huge cuts in benefits are coming.

The CPP was reformed in the '90s and contribution rates increased so that the program would be self-funding for the next 75 years given a ~4% real rate of return. To me, a bigger risk would be medical advances that add 10 or 20 years to average benefit period. If lifespans don't change much, I'm not very concerned about CPP. And because we're doing 75 year actuarial analysis, we should see problems coming before a crisis.

The Federal government can't touch the CPP reserve fund without the agreement of the provinces...


----------



## sprocket1200 (Aug 21, 2009)

i think people will choose to take it early. they can't wait to get their hands on 'their' easy money. besides, how else are they going to pay for those 35 yr mortgages they took out at age 35?? oh yeah, keep working suckers...


----------



## jmalias (Aug 10, 2010)

sags said:


> Judging from the comments on the CBC article, not many people are buying into the plan of staying longer.
> 
> Considering the Government eliminated the mandatory retirement age only a couple of years ago, I wonder how long before collecting the CPP early isn't an option anymore.
> 
> ...


The fund is really mirrors, smoke is all gone, govt needs to figure out how to stop paying people a little at a time. Before 2016, 70 will be the new 65, 0.6% per month will be a projected 1% as the majority ages.


----------



## carverman (Nov 8, 2010)

Jungle said:


> I read this in the Toronto SUN today. (paper given to me for free)
> 
> "The changes will mean that anyone who chooses to retire early and begin collecting benefits at 60 will have about $4,000 a year less than if they had retired at 65, the report by the BMO Retirement Institute found. If you stay on the job until 70 payments could be $4,600 a year more, based on maximum CPP payments."
> 
> Can anyone explain what exactly has changed from the old rules to these new rules?


I started drawing a reduced pension at 60 instead of 65..in case I didn't
make it. I'll be 65 early next year. Even though the payout is reduced
by a certain percentage a month if you draw at 60 instead of the customary
65..you have drawn X dollars that you paid into over 60 months that you
wouldn't have otherwise received. Factor that into the equation and you
may have infact drawn out what you may have paid into the CPP fund
while working over the 60 months. If they are suggesting 70 as a good
age to draw your CPP, then they are allready worried about the CPP fund
which I heard isn't going to be sustainable based on the number of people
retiring (baby boomers) and the fact that the current investment situation
isn't bringing the returns in that was expected. 

So maybe their thinking is ..if more people wait until 70 to draw from it..
more people may not be around to draw from it..and you do know that
upon death, your estate only receives $2500 from the gov't thanking you
for all the money you saved them by not taking the CPP out early.

carverman


----------



## GeniusBoy27 (Jun 11, 2010)

I think everyone's different in what their requirements and needs would be. In short, I'm not planning my retirment life with any needs/requirements for the CPP. Having said that, I also plan to work as late as I can, since I love what I do ... but we'll see is that's true in 27 years.


----------



## sags (May 15, 2010)

Looks like the CPP is doing quite well, even over the past 5 and 10 year performances.

Interesting that they are moving more into real estate and other long term investments, including the 407 toll road in Ontario. 

Smart money managers...........those guys.

All the more reason to build any future supplementary pension plans within the CPP. When you have 168 Billion to play with, you can buy a lot of solid assets.

http://www.moneyville.ca/article/888697--cpp-returns-jump-as-markets-recover


----------



## Guest (Nov 26, 2010)

Hey GeniusBoy ... I plan to work for a while too, and what I like about the change for 2012 is the ability to start collecting while working (no more 2 month clause). That's an extra $10K+ or so income and an extra $2K in my pocket for no longer contributing (should I choose not to continue contributing which I will choose). Sure it's taxable but still, a nice raise ~$12K for doing nothing except waiting around till 65


----------



## OthetJibtib (Nov 25, 2010)

*CPP changes 2016*

MY OPPINION-who hates this changes must have been playing the game with bad tactics. the game was great before and even better now, even though changes happened i still get 500 000 from artifacts every hour.that was my ensurance. and items in devils dealer have become much cheaper, so i have even more money to spend than before


----------



## warp (Sep 4, 2010)

Personally, I hate work, and I hate taxes.

Thats why I retired when I was under 30. I have lived off my investments for a long time, although I must admit I wasn't too smart at it at first.

I have been doing whatever I want for years and years. This includes sleeping in, playing golf, leisurely lunches, chasing women ( in the past), , and staying out late.

I worked hard early, , and I always believed in saving, and spending less than what I earned...what one would be called cheap for, until recently , when it came back into vouge.
I didnt drink and I didnt smoke, or have any other wastefull and stupid habits.

I live frugally , but well, and have everything I need. 

I am now close to 60 in a few years and will prob be taking the little CPP I will get early. Better to get my hands on it soon as possible before some govt moron decides to change the rules.

One thing for self employed people to remember is that once you start collecting CPP, ( at 60).....you no longer have to pay in!!
That can easily save you appr $4200.00 a year, on income over appr $43,000
5 years = $ 21,000 you keep instead of paying CPP till you are 65

Thats about 10 years at $200 youd have to get "extra" to come out even...NOT counting whatever income you could generate with that $4200 a year you get to keep.
( Of course youd pay more income taxes, as you would no longer have the CPP to deduct from income......in our tax system one action ALWAYS causes other unwanted results, so you have to be careful)

Another quick tip:
At age 60 convert $ 10K from your RRSP into a RRIF.......withdraw $2 K a year from the RRIF, take the "pension income tax deduction" thats currently $2 K a year.......and presto...ZERO tax on the $2 K a year.......( federal taxes, that is...youd still pay a small amount of provincial tax..but its still worth it!!)


----------



## zylon (Oct 27, 2010)

> Another quick tip:
> At age 60 convert $ 10K from your RRSP into a RRIF.......withdraw $2 K a year from the RRIF, take the "pension income tax deduction" thats currently $2 K a year.......and presto...ZERO tax on the $2 K a year.......( federal taxes, that is...youd still pay a small amount of provincial tax..but its still worth it!!)


This is very interesting ... I was under the impression this was only doable at age 65. Have the rules been changed recently?

Is there an income threshold over which pension income would not qualify for the tax deduction?

TIA


----------



## kcowan (Jul 1, 2010)

zylon said:


> This is very interesting ... I was under the impression this was only doable at age 65. Have the rules been changed recently?
> 
> Is there an income threshold over which pension income would not qualify for the tax deduction?
> 
> TIA


It is the age deduction that kicks in at 65. Pension deduction happens for anyone drawing a pension at any age. RRIF drawdowns cannot be split amoung spouses until 65.


----------



## warp (Sep 4, 2010)

zylon said:


> This is very interesting ... I was under the impression this was only doable at age 65. Have the rules been changed recently?
> 
> Is there an income threshold over which pension income would not qualify for the tax deduction?
> 
> TIA



TIA:

The "pension income deduction" of $2000.00 can be used for withdrawls from your RRIF,( or a defined pension)...but NOT from withdrawls from your RRSP.
( how dumb is that???...ask the CRA!)

You can convert part of your RRSP into a RRIF at age 60.....that gives you 5 years of $2k a year = $10 K total.

Remember that RRIF's have a legal minimum withdrawl, based on your age...but this will not effect you as you are still under 65, so the mandatory withdrawls will be small on the $10 K, and well below the $2 K tax deduction.

By the way....do NOT trust anyone at the bank when they tell you this cannot be done... a lot of these people at the banks have NO clue about investing, let alone taxes.........A friend of mine was told this could not be done by a "financial advisor" at his bank.....so he was worried......but we convinced him its totally legal etc, and he went ahead with it.

Just call CRA and ask.....dont give them the whole jist...just ask if there is a $ 2K deduction at age 60 from a RRIF withdrawl...and if you can have a RRIF at age 60......simple.

By the way , i've already called them....as usual, at first the agent is always confused, as most of them dont understand taxes any better than you do...

good luck


----------



## warp (Sep 4, 2010)

Sorry....forgot to add...

Far as I know, there is no income threshold over which pension income would not qualify for the tax deduction.

Its a deduction avaliable to all...currently $2 K a year...on pension income that qualifies.

RRIF withdrawls and defined pensions qualify.

RRSP withdrawls, CCP, OAS, GIS etc, do not qualify.


----------



## whitby (Nov 17, 2010)

RRIF income received under the age of 65 is only eligible for the Pension Income Deduction if it is the result of the death of a spouse or common law partner.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/314/q4-eng.html


----------



## OhGreatGuru (May 24, 2009)

warp said:


> ...
> 
> Its a deduction avaliable to all...currently $2 K a year...on pension income that qualifies.
> 
> ...


NO, NO, NO. I am sure this has been discussed before. RRIF withdrawals are qualifying income for the pension income amount only after age 65. Read the fine print in Tax Tip under Line 129, and the chart for Line 314 in the Federal Work Sheet.


----------



## zylon (Oct 27, 2010)

*RRIF pension income tax deduction*

Thanks for the great discussion everyone.
I think I'd better ask my accountant before doing anything.

A couple things I did see while reading up on this topic:
1/ the decision cannot be reversed ... once a RRIF is opened, it can't be changed back to a RRSP.
2/ new RRSP contributions are not allowed once a RRIF is opened.

I'm 61 - so if the pension income tax deduction only works at age 65, I still have some time.


----------



## Karen (Jul 24, 2010)

zylon said:


> ...the decision cannot be reversed ... once a RRIF is opened, it can't be changed back to a RRSP....


That's true for the owner of the RRSP, but if that person dies and his/her spouse is the beneficiary, a RIF can be changed back to an RRSP when it is transferred to the spouses's name.


----------



## NorthernRaven (Aug 4, 2010)

It sounds like Warp's RRSP->RRIF idea doesn't work because of the under-65-except-via-spousal-death rules. A older person with a spouse age 60-65 might want to take note if they suddenly take an interest in watching _Double Indemnity_ or _Throw Momma From The Train_, however...  

It does look like the one qualifying income source for under-65s is "income from registered pension plan payments". I know with federal government pensions if you leave before retirement the most common option is a deferred annuity, and these kick in at age 60, and presumably those payments would qualify for the pension income amount. There are probably many other pension plans where payments might kick in before 65 in some circumstances.


----------



## ghostryder (Apr 5, 2009)

warp said:


> Another quick tip:
> At age 60 convert $ 10K from your RRSP into a RRIF.......withdraw $2 K a year from the RRIF, take the "pension income tax deduction" thats currently $2 K a year.......and presto...ZERO tax on the $2 K a year.......( federal taxes, that is...youd still pay a small amount of provincial tax..but its still worth it!!)





warp said:


> TIA:
> 
> The "pension income deduction" of $2000.00 can be used for withdrawls from your RRIF,( or a defined pension)...but NOT from withdrawls from your RRSP.
> ( how dumb is that???...ask the CRA!)
> ...



Too bad you are completely wrong. You cannot claim the Pension amount non-refundable tax credit with respect to RRIF's until you are 65. And that is not CRA's rules, that's the INCOME TAX ACT, written and passed by Parliament.


Sec. 118(3) Pension credit — For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount determined by the formula
A x B
where
A is the appropriate percentage for the year; and 
B is the lesser of $2,000 and the *eligible pension income *of the individual for the taxation year. 



“*eligible pension income*” of an individual for a taxation year means

(a) if the individual has attained the age of 65 years before the end of the taxation year, the pension income received by the individ-ual in the taxation year, and

(b) if the individual *has not attained the age of 65 years *before the end of the taxation year, the *qualified pension income *received by the individual in the taxation year;



“*qualified pension income*” received by an individual in a taxation year means the total of all amounts each of which is an amount included in computing the individual’s income for the year and described in

(a) *subparagraph (a)(i)* of the definition “pension income” in this subsection, or

(b) any of subparagraphs 118(7) qualified pension income (a)(ii) to 118(7) qualified pension income (a)(vi) or paragraph (b) of the definition “pension income” in this subsection received by the individual as a consequence of the death of a spouse or common-law partner of the individual.




"pension income" received by an individual in a taxation year means the total of

(a) the total of all amounts each of which is an amount included in computing the individual's income for the year that is

(i) a payment in respect of a life annuity out of or under a superannuation or pension plan,



Therefore, you CANNOT claim the Pension amount on a RRIF payment prior to the age of 65 unless they payment is coming from an RPP.


Good thing my sister didn't listen to her bank when they tried to get her to convert some of her RRSP's to RRIF's at age 50 to try to do what you did for your friend. They were very insistent. They didn't back off until she asked me to come with her, with my copy of the ITA.


----------



## kcowan (Jul 1, 2010)

It is still a useful trick between age 65 and 72 to establish a RRIF that generates enough qualified pension income to gain the deduction/credit. Many people who qualify do not take advantage of it.

(I think belguy was one of them until we alerted him.)


----------



## HaroldCrump (Jun 10, 2009)

warp said:


> Thats why I retired when I was under 30. I have lived off my investments for a long time, although I must admit I wasn't too smart at it at first.


So you did this back in the 1970s?
How?
I wasn't born then, but I'm curious how someone lived by investing before the day and age of online investing, day trading, etc.
Care to share some ideas of your success at early retirement?


----------



## warp (Sep 4, 2010)

warp said:


> Personally, I hate work, and I hate taxes.
> 
> Thats why I retired when I was under 30. I have lived off my investments for a long time, although I must admit I wasn't too smart at it at first.
> 
> ...




MY MISTAKE!!!!!

I am sorry to say that I made a silly mistake in my first post about this converting $10K from your RRSP to a RRIF and taking $2 K a year tax free by using the "pension income deduction"

It was a silly mental error.............................

You can claim the "pension income deduction", on line 314 of your tax return IN THE YEAR YOU TURN 65....not 60 as I posted.

I knew better , but made a mental error.

I am very sorry for my error.

However the premise still works,,,,but you convert $10 K from your RRSP to a RRIF at age 65 NOT 60!!
Then you withdraw $2 k a year tax free till you have to convert your RRIF by law.

Again I apologize profusely for my stupid mental mistake!!


----------



## warp (Sep 4, 2010)

HaroldCrump said:


> So you did this back in the 1970s?
> How?
> I wasn't born then, but I'm curious how someone lived by investing before the day and age of online investing, day trading, etc.
> Care to share some ideas of your success at early retirement?


HAROLD:

It was in the early 80's actually.

Remember that then Canada Savings Bonds were paying 19.5%
Imagine a AAA bond that pays that kind of risk free return!!
Interest rates across the board were wonderful as long as you had cash.

Inflation was high...but you still could live pretty good on that kind of return.

Mortgage rates were 22% +,,,,,,,,,,,,,,,,,,,,,,,,I still scratch my head over how anyone paid those rates, but houses were a lot cheaper too.....

One of the keys was pretty basic.....as many books will tell you, ( I didnt need a book as all this came naturally to me, as I was a starving student until my busniess went well years later.)
The key I'm talking about is to live within your means,,,and SAVE!

That became an old fashioned idea into the 80's and 90's and 2000's....and and its all the rage again. However that old style logic always worked for me.

I went through my share of useless "financial advisors", but then educated myself, and started to take care of my own account as well as my family accounts.

Im not trying to brag or boast......most people who earn a reasonable amount should be able to do the same , to a more or lessor degree if they plan to save and invest over a longer term, but Im convinced the desire for quick gratification costs them huge in the end.

I drive an 18 year old Lexus.......Im not trying to impress anyone.......I have everything I need....Zero debts, and do whatever I want. You simply cant do that if you dont save anything.

I don't live like a miser......I go on trips whenever I like, and buy whatever I want.......but what I want is not a lot.

Its not easy......but not that hard either.

These days almost all my investments pay me dividends or distributions etc, and I do wish I'd started earlier.
For someone now, with discount brokers and the internet, its much easier, but does require work that many people would rather die than start doing.

Bassically all I care about now is leaving a nice nest egg to my son, and a nice gift to my nephews and nieces.

That gives me infinitely more pleasure than driving a new BMW every year, or going out for highly priced dinners...which often taste like sh*t anyway.

Good luck


----------



## cardhu (May 26, 2009)

warp said:


> One thing for self employed people to remember is that once you start collecting CPP, ( at 60).....you no longer have to pay in!!
> That can easily save you appr $4200.00 a year, on income over appr $43,000
> 5 years = $ 21,000 you keep instead of paying CPP till you are 65


In all the discussion about the pension credit, this one slipped through unnoticed ... this is wrong … beginning in 2012, you cannot opt out of CPP contributions until after your 65th birthday, regardless of whether or not you’ve already started collecting.

Even if you could opt out, it wouldn’t save a self-employed person $4200/yr ... half of that amount contributed generates a tax deduction, and the other half generates a tax credit ... remove the contribution, and your tax bill goes up accordingly ... a self-employed person earning $100k in ON would save, at most, $2960/yr if they were allowed to opt out of further contributions ... but since they can’t opt out, the good news is that those continuing CPP contributions only cost them a maximum of $2960/yr. 



rikk said:


> what I like about the change for 2012 is the ability to start collecting while working (no more 2 month clause). That's an extra $10K+ or so income and an extra $2K in my pocket for no longer contributing (should I choose not to continue contributing which I will choose). Sure it's taxable but still, a nice raise ~$12K for doing nothing except waiting around till 65


See above ... you can’t opt out of ongoing contributions before age 65, and even if you could it wouldn’t save you as much as you think. 

One other factor that is usually overlooked in these analyses of collecting CPP while continuing to work, is that the CPP benefits are subjected to a higher rate of tax while you're working than they otherwise would, if you wait until retirement to begin collecting. 



zylon said:


> 1/ the decision cannot be reversed ... once a RRIF is opened, it can't be changed back to a RRSP.
> 2/ new RRSP contributions are not allowed once a RRIF is opened.


Well, a RRIF cannot be converted back to an RRSP, but there’s nothing preventing you from converting only a portion of your RRSP to RRIF … for example, if you have a $500k RRSP, you can convert only $100k to RRIF, and leave the remaining $400k as RRSP.

New contributions cannot be added to your RRIF, but they can be added to your RRSP, until age 71. You can make your last contribution to your own RRSP just immediately before making the final conversion to RRIF, and if your spouse is younger than you, you can still make spousal contributions to her RRSP up until immediately prior to her final conversion to RRIF. Depending on your circumstances, it may not be worthwhile to do so at that age, but you certainly are allowed to. 



kcowan said:


> It is still a useful trick between age 65 and 72 to establish a RRIF that generates enough qualified pension income to gain the deduction/credit. Many people who qualify do not take advantage of it.


Why limit the RRIF conversion to only that amount? Most people retire long before age 71 ... and most people who used RRSP for its intended purpose will consequently be drawing from it long before age 71 ... therefore, it makes sense to convert as much of the RRSP to RRIF as is necessary so that the withdrawals you’re taking anyway, between the ages of 65 and 72, can be drawn without any withholding tax.


----------



## warp (Sep 4, 2010)

Didnt know about the new rules regarding opting out, coming in 2012...I will check up on them.

What all this mumble jumble points out to me, is how confusing and imcomprehensible the tax system is, to almost all Canadians.

Its all a load of bullsh*t from beginning to end, and its a DISGRACE, seeing as how filing taxes is a legal requirement.

The tax system should be reasonably simple to understand and comply with.

It is now totally out of control, wildly complicated, and written by idiot bearucrats, who dont understand it themselves...every new "law" and layer making it worse and worse and worse.

Thats why I will always contend that a "flat rate " tax system, with much, much, much, less deductions, contributions, withdrawls, ages, exemtions, credits, etc,etc, etc, would serve the citizens a whole lot better.

I would bet real dollars that it would also raise govt revenues.

Why should we have to go crazy to file our returns, and keep up with the non stop changes every year??


----------



## GeniusBoy27 (Jun 11, 2010)

warp said:


> Didnt know about the new rules regarding opting out, coming in 2012...I will check up on them.
> 
> What all this mumble jumble points out to me, is how confusing and imcomprehensible the tax system is, to almost all Canadians.
> 
> ...


Yay! Joins the Forbes' flat tax idea. Think of how many accountants will go out of business! *gasp*


----------



## kcowan (Jul 1, 2010)

Politicans love complex tax systems because they always introduce new favours for their constituents.


----------



## steve41 (Apr 18, 2009)

> Thats why I will always contend that a "flat rate " tax system, with much, much, much, less deductions, contributions, withdrawls, ages, exemtions, credits, etc,etc, etc, would serve the citizens a whole lot better.


 I wish I held on to it, but I had a copy of my Dad's T1 for the 1940s. It had 12 (count em) separate tax brackets! Guess what? There were no computers or calculators around in 1940.... everything was done by hand. Fast forward to 2010. Each household has individually, more computing power than we used to put a man on the moon, and we are complaining about our progressive tax brackets. Give your head a shake.


----------



## kcowan (Jul 1, 2010)

Anyone who doesn't use tax preparation software today is missing an opportunity for savings.


----------



## andrewf (Mar 1, 2010)

kcowan said:


> Anyone who doesn't use tax preparation software today is missing an opportunity for savings.


Care to elaborate? I've done both, and I can't say the software uncovered some magical secret tax credit I wasn't otherwise aware of.


----------



## warp (Sep 4, 2010)

steve41 said:


> I wish I held on to it, but I had a copy of my Dad's T1 for the 1940s. It had 12 (count em) separate tax brackets! Guess what? There were no computers or calculators around in 1940.... everything was done by hand. Fast forward to 2010. Each household has individually, more computing power than we used to put a man on the moon, and we are complaining about our progressive tax brackets. Give your head a shake.


Steve:

Its actually your head that needs a shake.

A "computer system" will NOT do your taxes to your best benefit.

I personally do my, and my entire families taxes every year by hand.

And just because your fathers taxes were complicated 60 years ago,,,does that mean our tax system should be complicated now?

And where does it say that taxpayers should be FORCED to pay tax preparers,
or buy software systems to comply with the leagal requirment to file???

Filing should be simple , straight forward , and easily done by all.

Why does this confuse you??


----------



## steve41 (Apr 18, 2009)

Rightly or wrongly, our life is more complicated now than in decades past. If the programmer knows his stuff, I imagine the resulting tax prep software will be able to do a much more efficient and optimum (lowest tax) job than you can. Unless you spend your entire free time buried in the income tax act, I don't see how you would be able to outperform a T1 program.

Some of these programs will allow to repetitively crunch the T1 for both spouses dozens of times in order to optimize/minimize your tax. This is complicated even more by income splitting. If you think you can outperform the process manually, go for it.


----------



## kcowan (Jul 1, 2010)

andrewf said:


> Care to elaborate? I've done both, and I can't say the software uncovered some magical secret tax credit I wasn't otherwise aware of.


The what-if questions such as how much pension should be split between spouses. I would have used 50% but the software recomeded 33% and that saved me a lot of reading and calculations. Plus Ufile is free.

I also run proformas for the current year to decide what to sell.


----------



## Northof60 (Nov 22, 2010)

NorthernRaven said:


> It sounds like Warp's RRSP->RRIF idea doesn't work because of the under-65-except-via-spousal-death rules. A older person with a spouse age 60-65 might want to take note if they suddenly take an interest in watching _Double Indemnity_ or _Throw Momma From The Train_, however...
> 
> It does look like the one qualifying income source for under-65s is "income from registered pension plan payments". I know with federal government pensions if you leave before retirement the most common option is a deferred annuity, and these kick in at age 60, and presumably those payments would qualify for the pension income amount. There are probably many other pension plans where payments might kick in before 65 in some circumstances.


If you are in a DB plan it is my understanding that you don't even have to wait until 60 (let alone 65) to get the $2000 pension credit. My wife and I will be retiring early (52 me and 54 her) and are taking the "annual allowance" as opposed to the deffered anninuity. My understanding is that the annual allowance is eligible pension income for the $2000 credit, even if you are below 60.


----------

