WINTER 2015

Samuel (Sam) Madio

CPA, CGA, CFP, EPC

Senior Financial Advisor

Telephone: (416) 840-3843

Cellular: (416) 576-2975

Email: smadio@assante.com

Barb Smith

Administrative Assistant

Telephone: (416) 840-3838

Email: basmith@assante.com

Assante Capital Management Ltd.

303 – 1 Eva Road,

Etobicoke, ON M9C 4Z5

Fax: (416) 626-2569

We hope you enjoyed a

pleasant holiday season

surrounded by friends and family.

January and February are the

traditional months for a check-up

of your Registered Retirement

Savings Plan (RRSP). March 2, 2015

is the deadline for making a

contribution that you can deduct

on your 2014 income tax return.

Be sure to come see us before

then. We can help you reach your

maximum contribution and set

your RRSP investing plan for the

year ahead. We can also review

your Tax-Free Savings Account

(TFSA) strategy – an additional

$5,500 of contribution room

became available as of January

1.

Prevent retirement savings anxiety

Ideally, retirement is something we dream about and look forward to. But

with people living longer and needing to fund 25 to 30 years or more, it’s become a source of worry for many. Will I have enough to fund the lifestyle I want? What if I outlive my savings?

One of the most effective ways to ease this anxiety is to get a handle on your financial future.

Step 1: Choose the year you aim to retire. As a guideline, you might want to consider that the average retirement age, from 2009 to 2013, was 61 for public sector employees, 63 for private sector employees and 66 for self-employed individuals.1

Step 2: Estimate the future value of your nest egg. We can help you to estimate future contributions and rates of return to project the value of your savings at retirement.

Step 3: Think about how you will use your savings. If you’re worried about outliving your savings, you may want to

build a dependable income source that covers basic lifestyle expenses for your lifetime. It may be guaranteed or highly secure and include government pension benefits, life annuities and low-risk investments. A healthy portion of your nest egg can also be invested for growth, to help fund long-term needs.

Making these financial projections helps turn a hazy future into a known quantity. If you’re on track to meeting your retirement goals, great. If not, we can work with you to develop a plan to get you back on track. That might involve saving more, retiring later or modifying your desired retirement lifestyle. Simply having a plan will help reduce retirement savings anxiety.

If you have any concerns about meeting your retirement goals, please talk to us. We’ll work with you to put together retirement projections and plans that will help put your mind at ease. n1. Statistics Canada CANSIM, Table 282-0051, accessed 2014

2

FINANCIAL PLANNING

You slip on the ice, injure your back, and can’t work for over half a year. It’s not a far-fetched scenario – back

injuries are among the most common claims for disability insurance.1 You may not be able to control everything life sends your way, but you can prepare financially for some of the more common calamities.

Emergency fundsYou never know when a hardship will arise – job loss, illness, major home repair, emergency travel or another unexpected event. To manage the financial consequences, many experts recommend keeping an emergency fund of secure investments equal to three to six months of living expenses.

If you’re reluctant to tie up that much capital in secure, generally low-interest investments, an alternative is to set up a line of credit you can access easily in case of emergency.

Job lossIf you lose your job and receive severance, the first thing to do is seek advice, not just sign the documentation. Speak with a lawyer to confirm that terms are acceptable. Find out from your accountant if any portion of the payment is eligible to roll over to your Registered Retirement Savings Plan (RRSP). You may also want to

find out about the possibility of splitting the taxable amount over two years.

Next is your job search. If you’re fortunate enough to find a position quickly, your severance becomes a windfall. On the other end of the spectrum, if your severance runs out before you find your desired position, you may need to dip into your emergency fund or find alternative sources of income to supplement Employment Insurance (EI) benefits.

Illness or injuryA Statistics Canada survey showed that more than one in seven Canadians aged 15 and over has a disability that limits them in their daily activities, with almost half classifying their disability as severe or very severe.2 What happens if it’s a disability that prevents you from working?

Mental health conditions and musculoskeletal/back issues are the most common claims in Canada for long-term and short-term disabilities. The next most common claim for short-term disabilities is injury, and for long-term disabilities, cancer.1

To protect yourself from the financial repercussions of illness or injury, insurance can help. There are two types of coverage you may want to consider.

Disability insurance. Disability insurance replaces a portion of your regular income if illness or injury prevents

you from working. If you have disability insurance under your employer’s group plan, you may want to check the level of coverage. If the definition of disability is too restrictive, the percentage of income replaced is too low, or the benefit period is too short you may want to add personal coverage. If you’re self-employed, you can purchase personal disability insurance to replace a percentage of your income.

Critical illness. Where disability insurance replaces income, critical illness insurance covers expenses associated with an illness — so you don’t have to use your savings. Cancer, heart attack and stroke are the most common conditions covered by critical illness insurance policies. Two of five Canadians are expected to develop cancer during their lifetimes.3 Every year an estimated 70,000 Canadians have a heart attack and 50,000 Canadians have a stroke.4

If you want to make sure you’re prepared for any calamities, talk to us. Knowing that you and your family are protected from the unexpected can help provide you with peace of mind. n 1 Towers Watson, Staying@Work survey, 2011/2012 2 Statistics Canada, Canadian Survey on Disability, 2012 3 Canadian Cancer Society, Canadian Cancer Statistics, 2013 4 Heart and Stroke Foundation, 2014 Report on the Health

of Canadians

Do you really need both disability and critical illness coverage? Both can be worthwhile

When it comes to disability insurance and critical illness insurance, it’s worthwhile to have both. For one thing, the benefits operate differently.

Disability benefits are paid out over time. They are designed to replace a percentage of your income to cover regular living expenses when an illness or injury prevents you from working.

A critical illness benefit, on the other hand, is a one-time payment made if you develop one of the conditions covered by your policy, such as

cancer, heart attack or stroke. You can use it for whatever you want: to pay for a private nurse or caregiver, childcare, medication and treatment not covered by provincial healthcare, out-of-country medical treatment, or fund a leave of absence for you or your spouse.

While some conditions are covered by both types of insurance, disability insurance protects you from a great many injuries and medical conditions that are not critical illnesses.

Managing finances when life throws you a curve ball

3

INVESTMENT PLANNING

When it was introduced in 2009, people weren’t sure how best to use the Tax-Free Savings Account (TFSA). Replace a regular savings account? Complement a Registered Retirement Savings Plan (RRSP)? In the half dozen years since then, numerous strategies have emerged, helping Canadians at every stage of life benefit from tax-free saving. n

Make tax-free investing a family affair

Young and starting out

When you’re starting out, a TFSA is ideal to save for short-term goals, like a vacation or car. It’s also a tax-free way to save for a down payment on a house in addition, to or instead of, using the RRSP Home Buyers’ Plan, which has a $25,000 limit per person.

If you think you may need to withdraw funds in the near future, start with a TFSA. Later on, when your annual income increases and you pay tax at a higher rate, you can contribute to an RRSP and benefit from a greater tax deduction. You might even consider withdrawing TFSA funds to make an RRSP contribution and then use any tax refund to help replenish the TFSA the next year.

As a parent, you can use TFSA strategies to help your children get off to a good start. For example, you and your spouse might use your TFSAs to help cover post-secondary education costs. When your child turns 18, you can give him or her the funds for his or her own TFSA. Your child can draw down these funds over the course of the school year, as needed.

Established

A TFSA is an ideal spot for investments that you expect to earn the highest returns possible, as returns are completely tax-free both within the account and upon with-drawal. But that’s just the beginning of the many ways you might make the most of the TFSA’s unique attributes.

Income splitting. You can gift funds to children 18 and over and your lower-income spouse for their own TFSAs – without attribution back to you.

Retirement savings. A TFSA is an ideal complement to your RRSP for retirement investing. It’s also a great way for a non-working spouse to save for retirement.

Estate planning. Let’s say you want to create an inheritance for your adult child. By dedicating the TFSAs belonging to you, your spouse and child, you can make annual contributions of $16,500 (indexed for inflation). Funds grow tax-free and are paid out tax-free. If you plan on leaving your TFSA to your spouse, funds can be transferred to your spouse’s TFSA without affecting his or her contribution room.

Another estate planning application involves taxes payable by your estate. You can designate TFSA assets to help offset the tax liability so your heirs receive more of what you planned to leave.

Retirees

TFSA withdrawals are not considered taxable income, so they’re an excellent way to support your retirement lifestyle, especially if you’re in a higher tax bracket. Withdrawals won’t affect tax credits or reduce your eligibility for income-based benefits, such as Old Age Security (OAS).

If the withdrawals you are required to make from your Registered Retirement Income Fund (RRIF) are more than you need to cover your living expenses, you can put the excess in your TFSA, where it can grow free of tax.

And finally, here’s a strategy for the pension income credit that could be sweetened with a TFSA. At age 65, you transfer $14,000 from your RRSP to a RRIF and make $2,000 annual RRIF withdrawals from 65 to 71. These withdrawals allow you to claim the credit available on the first $2,000 of eligible pension income. Now, deposit the withdrawals in your TFSA and stretch the tax benefits even further.

We can help you make the most of your TFSA at every stage of life. With another $5,500 of contribution room available for 2015, now is a great time to come in and talk to us.

This material was prepared for and published on behalf of the advisor named herein and is intended only for clients resident in the jurisdiction(s) where their representative is registered. This material is provided solely for informational and educational purposes and is not to be construed as an offer or solicitation for the sale or purchase of any securities or as providing individual investment, tax or legal advice. Consult your professional advisor(s) prior to acting on the basis of this material. Insurance products are available through advisors registered with applicable insurance regulators. Individual equities are available only through representatives of Assante Capital Management Ltd. In considering any particular investment, please remember that past performance is no guarantee of future performance. Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or completeness. All opinions expressed and data provided herein are subject to change without notice. Neither Assante Financial Management Ltd. or Assante Capital Management Ltd. nor their affiliates or their respective officers, directors, employees or advisors are responsible in any way for any damages or losses of any kind whatsoever in respect of the use of this material. Certain names, logos or graphics herein may constitute trade names, trade-marks or service marks (“Trade-marks”) of CI Investments Inc. and/or its affiliates or of third parties. The display of Trade-marks herein does not imply any licence has been granted to any third party. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Copyright © 2015 Assante Wealth Management (Canada) Ltd. All rights reserved.

Should you incorporate?

If you’re a business owner or professional, the question of whether to incorporate may have crossed your mind. Incorporation offers a variety of benefits, but the number one reason to incorporate is generally for potential tax advantages.

Tax rates on income vary by province, but as an example, an Ontario corporation pays tax of only 15.5% on the first $500,000 of taxable income. But here’s the issue to consider – this attractive rate applies to profits that are retained in the company. Incorporation, therefore, makes most sense when income from your enterprise is substantially more than what you need to fund your lifestyle – so you can retain profits in the company.

What about the drawbacks? Costs and paperwork come near the top of the list. You’ll incur legal and accounting expenses to set up the corporation and meet annual reporting obligations, including filing a corporate tax return annually. And it can take significant time and effort to meet numerous corporate requirements and make corporate decisions, such as whether to draw a salary or take dividends.

Also bear in mind that your corporation is completely separate from you. Any money you take out of it will be subject to personal income tax rules. In addition, you will no longer be able to use business losses to offset taxable income from your other sources of income.

If you are thinking of incorporating, talk to us as well as your accountant and lawyer for guidance. If you’re a professional, consult with your provincial governing body or professional association, as the rules regarding professional corporations vary by province. n

When it comes to siblings and money, there are no set rules or guidelines – especially

where money is at stake. And family conflict around financial matters is all too common.

Here are three typical situations involving family and finances, and some strategies to help maintain harmony.

Lending moneyYour brother comes to you and asks for a loan. What do you do? The easy option is simply to grant the request. But some people might first want to know what the money’s for. If it’s to pay a gambling debt, your answer might be no. If it’s for an uninsured medical matter, your answer might be yes, and you might even give the money as a gift.

Another approach is to set repayment terms and put them in writing. Such formality may help to protect the relationship.

Some people believe you should be prepared for such a loan to not be repaid, and lend only what you can afford to lose.

There’s still another option – just say “no”. You can tell your sister or brother you’ve heard of siblings having a falling out over money issues, which isn’t a chance you’re willing to take.

So many choices – the only guideline is what seems right to you.

Settling an estateNaming one child as executor or estate trustee of a will is a common practice, but not always problem-free. A non-executor sibling may feel that key decisions should be made together – a potential source of conflict when opinions differ.

The inheritance itself can be a source of friction, and not only in the case of siblings claiming that assets are split

unfairly. Take the situation of inherited vacation property where one sibling wants to keep it in the family and another wants to sell.

Resolving sibling conflicts over an estate can involve expense and delays. It’s a problem best managed at the outset by making a will that anticipates and avoids conflicts.

Unique situationsAny siblings may have a financial matter specific to their family. There’s the situation of a sibling with special needs requiring lifetime support who’s being cared for by the parents. What happens when the parents pass away? Is another sibling willing and able to help? If not by providing care, perhaps by organizing and handling finances for administering care? It’s a matter to address in advance between parents and children.

When financial matters involve relatives, the starting point is communication. Talking it through and gaining an understanding of each person’s situation can help prevent conflicts and maintain family harmony. n

Brothers, sisters and dollars