How Much Can I Afford to Donate to Charity?


Like many Canadians, you might be wondering “How much can I afford to give to charity? How can I budget for charitable giving? Is there a smarter way to give?”

The average donation to registered charities in Canada in 2008 was less than $700 in households with gross incomes of more than $100,000. A Fraser Institute Study called, “Generosity in Canada and the United States” revealed that in Ontario, we were giving only 45% as much as those in New York.”

The reason for this is simple:

Most Canadians don’t have the confidence or knowledge to be donating larger amounts of money because no one has ever taken the time to explain to them how much they can afford to donate and the benefits that come along with it.

I believe that if Canadians had a better handle on what they could afford to donate, in many cases they would be comfortable giving more.

To help with this, TriDelta has put together a free and easy online tool called the Donation Planner, which answers the basic question:

“How much could I afford to give?”

The donation planner looks at how much you can afford to donate to charities each year, how much this will save you in taxes, and what your estate will be worth AFTER these donations.

In many cases, the number will surprise you.


How much Can I afford to Donate to Charity?

Avoid These Inflexible Investment “Traps”

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Canadians are voluntarily putting billions of dollars into financial investment “prisons” – where the money is locked in for years, without much flexibility! There are other good alternatives available for investors; however, most people simply don’t know enough about these financial traps.

Here are three examples of financial prisons that you should avoid:

1) The mutual fund deferred sales charge (DSC)

What is the advantage of having to hold money in a fund family for   seven or eight years for fear of a financial penalty? Why buy a DSC version of a mutual fund when there is usually a no-load fund available that is probably just as good? At the Investor’s Group Dividend Fund, if you want to take your money out as cash in the first year, there is a 5.5% penalty! You have to invest for seven years before the penalty decreases to zero.

As an alternative, you could buy the RBC Dividend fund or a similar fund, with no load and a five-year return that is 2-per-cent better than the Investors Group fund – and best of all, no penalties for not “locking in” your money.


Photo: Marlon Bunday

2) RESP scholarship funds

If a seven-year sentence sounds long, how about 18 years? That is what you are voluntarily doing when you set up an RESP using a scholarship plan. These plans can be beneficial, but only if you are willing to do the time, meaning that you are committed to a payment every year (often for 18 years). If you want to leave the plan, you face significant penalties.

A better alternative is any other type of RESP plan, where once you open an account, you can choose to contribute or not, can choose what to invest in, and have real control over your money. This can be set up at any bank or brokerage firm.

3) Five-year GICs

At one time, low market risk was the appeal for investors “locking up” their funds for five years. In today’s world, the rates are simply not worth it. Accord to the CIBC website, you can get 2.1% in a five-year GIC. High interest savings accounts like People’s Trust offer the same 2.1% interest, but you can take your money out at any time. You are better off with this type of alternative.

Just remember: as an investor, you have many options when it comes to choosing where to put your money. Make the flexibility of your funds a top priority when choosing your investments, and you can successfully avoid “investment traps” such as these ones.

If you liked this article, read about another type of investment to avoid: the guaranteed retirement income plans.

Why Should I Use a Tax Professional in Canada?


Have you ever wondered about the benefits of using a professional tax preparer in Canada?

We asked the same question to a highly rated local company and received the following response:
Tax laws can be complicated and change frequently. Your unique situation also changes year to year. Using a professional tax consultant ensures you pay as little tax as possible.  They can dig into your financial situation and are trained to find all the applicable credits available and ensure fast accurate filing.

Over the years, Canada Revenue Agency (CRA) has changed the way they process, monitor and verify the accuracy of the individual returns. They continue to improve their ability to automatically process and validate tax returns as they are filed. They have also improved their ability to verify if a taxpayer has included all pertinent financial transactions in their annual tax return. It is more important than ever that you include all income, deductions, and credits applicable to your unique situation. A tax professional will work with you to ensure this happens.

A tax professional will also review:

  • Your revolving life situation, which results in new or different credits/deductions. Marital status, dependants, even taking care of your parents, can provide opportunities to minimize your tax liability.
  • Programs such as the Home Renovation Tax Credit and Pension Income Splitting must be calculated and reported correctly.
  • Which spouse should claim the Child and Children’s Fitness Tax Credit
  • Your ability to split Capital Gains/Losses and other Investment Income with your spouse.
  • Fees paid to your tax professional are also considered tax deductible.
  • They might show how  you can donate “in kind” to charity. You should consider donating appreciated securities directly to your charity of choice and eliminating all tax on any accrued capital gains.
  • You will be encouraged avoid getting a tax refund. If you get a large tax refund each year, consider applying for a reduction of tax at source using CRA Form T1213.

Benefits of Using a Tax Professional

Establishing a relationship with a financial planner and tax professional means that you will have a team looking out for money saving opportunities that apply to you. You will benefit from their specialized skills and have the ability to discuss life changes to determine how your financial and tax situation may be affected.

[VIDEO] Depending on your Company Pension Plan for Retirement?


If you have a defined benefit pension plan from your company, this is most likely a big part of your retirement plan.

However, there are many things you need to consider before depending only on your company for your post-retirement bills. To begin with, how secure is your company; will they be in business for 30 years? What age do you think you will live to? Can you opt out and build your own retirement “pension package” using preferred shares and corporate bonds?

In the following video, I discuss pension decisions with Financial Post columnist, Jon Chevreau. It is a couple of years old, but contains relevant, timeless information:


If you liked this video, visit our YouTube channel for more financial planning videos from TriDelta Financial.

When Should Retirees Sell their Home?

When Should Retirees Sell their Home?

Photo: Alan Cleaver

As a retiree, when is the right time for you to sell or downsize your house? In many cases, new retirees have owned their homes for decades and seen it increase significantly in value. Many are depending on it to help fund their retirement choices as well. With all this talk about housing bubbles in Canada, how do you know when the right time to sell your house is?

The answer depends on the kind of retirement strategy you already have in place:

1.      Do you have other retirement income to cover your needs?

If you do not need the equity of your home to fund your retirement, you should not worry too much about timing the sale of your house. Emotional factors about the memories created in your family home, the stress of moving to a new neighbourhood and other “readiness” concepts should be explored instead.

2.      Are you planning to sell your home or downsize to help fund your retirement?

In this case, consider putting your house in the market within the next year if you plan to take the proceeds. Despite the fact that there is much controversy about a potential “housing bubble” and the future of the housing market, all that is guaranteed is the value of your house today. Selling now brings certainty (within a few percentage points) of the financial value of your home – and what you can count on for retirement planning and expenses. As with all financial questions and decisions, there is some value in certainty and guarantees. If you are going to sell anyway, sell now.

3.      Do you require the home equity to help fund retirement, but are not ready to sell?

If you do not feel forced to sell your house now, but you still need help funding your retirement, you should ensure that you have a sizable home equity line of credit available to you if you need it. This will allow you to draw money out of the equity in your home if needed and to wait until you are ready to sell.

For a different perspective, read and watch the video on the High Cost of Owning a Home.

Should I Maximize my RRSP Contribution?


Maximizing your RRSP savings is not always a good idea

How do you know if maximizing your RRSP contributions this year is a good idea?

The mutual fund industry will always tell you to maximize, maximize and maximize, despite your personal circumstances. What they fail to mention is that this can lead to massive tax bills on your estate, when almost half of your RRSP/RRIF funds can go to the government in taxes (as the government taxes it as “income earned in one year”)!

The key to avoiding this tax situation lies in how you contribute to your RRSP on a yearly basis. The general idea here is that you should maximize your RRSP in the years when you can save taxation this way. In the years when you have a low tax bill, you should avoid putting anything in your RRSP. This way, you can get the best combination of lower taxes both now and in the future.

For any particular year, these are the three key questions to ask yourself:

1. What is the tax refund I will receive on each dollar of RRSP contribution
If you are in a higher income year, you will be receiving a higher tax refund (i.e. for $127,000 of taxable income, the refund is 46 cents per dollar). Here, you will want to maximize your RRSP contributions to enjoy less present taxes and allow your money to grow tax-free until retirement.

2. What will my tax bill be when I take money out of my RRSP/RRIF?
If you are in a lower income year, then your present tax bill will be fairly low. If you are maximizing your RRSP contributions every year in this situation, then you are simply creating a higher tax bracket for yourself in the future. Consider what your future tax bracket will be in your RRSP/RRIF years, and if this is higher than the present tax bracket, then do not contribute to your RRSP.

3. How much time will the RRSP be able to grow tax-free?
Generally, the younger you are (with a decent income), the more you can benefit from long-term tax free growth so RRSP contributions are encouraged. However, if you are earning less than $40,000 (similar to question 2), consider an alternative like the TFSA.

Remember that RRSP contributions depend on your personal situation and can change from year to year. Speaking to a trusted financial advisor can help you make the most of these tax minimization strategies.
One quick and free tool can be found on our website. The Tridelta Retirement 100 helps you see your likelihood of running out of money, your likely estate size and lifetime tax bill. By playing with RSP numbers, you can see the impact yourself.