My_question_is: Canadian-specific
Subject: RIF account
Expert: taxman at centa.com
Date: Wednesday August 16, 2006
Time: 02:04 PM -0700
QUESTION:
I have a Rif account with TD Waterhouse worth approximately $42,000. I am
71 years old and would like to close the account and take out all the cash
to invest elsewhere. What would be the best way to do this and pay the
least taxes?
My income for the year is:
TWU pension..............$18,376.00
CCP......................$3,640.00
OAS......................$5,706.00
Total Income (&Taxable)..$30,192.
Thank you,
==========================
david ingram replies:
You need an RRIF or RRSP drawdown.
BORROW the money you need for your investment and take enough out of the
RRIF to make the payments.
The interest you pay out for your investment is deductible and washes
(balances) the withdrawal from the RRIF and is tax neutral on your tax
return.
That way you have more money working for you.
This is a GREAT idea if the investment you make goes UP because of leverage
because you have more than twice as much working for you because you did not
have to pay 25% or more tax to cash in the RRIF.
At the same time, this is a BAD idea if the investment goes down because you
will lose more.
You need a written financial plan such as you can get "for free" by
attending one of Fred Snyder's (I am involved peripherally) free seminars as
follows:
Every Thursday Evening, Fred Snyder of Dundee Wealth Management conducts one
of 17 different financial seminars in the boardroom of his office
Time: 7:00 to 9:30 PM
Date: Every Thursday evening
Place 1764 West Seventh
Vancouver (corner of Burrard)
Phone (604) 731-8900 to register
No cost - no obligation
Topics always cover mortgage interest as a deduction
other topics - getting the mortgage, estate planning, critical care
insurance, income taxation, differences between stocks and bonds, and
usually the most innovative HELOC mortgage offered in Canada from Manulife
Bank
If you are starting in downtown Vancouver and do not want to go home first,
one of the excellent THAI HOUSE restaurants is in the same building and
makes a nice start to the evening. If it is your first seminar, Fred will
buy you dinner if you are pre-registered.
I, david ingram, will be at the Thursday evening following the last Sunday
of each month to cover mortgage interest as a deduction and give the class
an adding test.
--------------
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