QUESTION:
My wife quit drawing a pay cheque a few years ago to raise our two children. Because I will have an indexed pension when I retire (in about 20 years), I have been making bi-weekly contributions to a spousal RRSP (mutual funds) in my wife’s name.
We currently have a mortgage on our house that is a very good rate however the term will expire in 2 years. In light of the poor performance, of late, of our RRSP mutual funds and the probability of having to renew our mortgage at a much higher rate in two years, we are considering withdrawing some of my wife’s RRSPs to pay down our mortgage. My wife has some RRSPs that she purchased a few years ago when she working as well as the ones I have purchased in her name as spousal. I have recently been transferred with work and we sold our home and purchased a new house in a different town. We are porting our mortgage to the new house. In the past we have both used the first time home buyers plan (to withdraw RRSPs for down payments), myself 17 years ago to buy my first house and my wife, 5 years ago to buy our first house. Do you know if this plan is still available and could we use it in our situation to reduce our mortgage? If this is not the case, are we able to withdraw RRSPs in my wife’s name in the same year that I am making spousal RRSP contributions? What would be the optimum amount of withdrawal (with the least amount of tax) per year given, that she currently has little personal income. What would the tax hold back be on her withdrawal and does it change depending on her situation? Please let me know what you think and where I might look to find out more information on this. Your help is greatly appreciated Sincerely,---------------------------------------------------------------------------
david ingram replies:
To qualify for a first time Home Buyers withdrawal from an RRSP, you can NOT have owned a house you lived in for five years before the withdrawal. Obviously, that does not work for you.
Any Spousal RRSP withdrawals within 3 years of the date of deposit are taxed to the spouse who contributed the money (you) at 'your' highest marginal tax rate.
Your wife could take up to $35,000 out of her own RRSP at a tax rate of 23%. The withholding would be different but when the tax return is done at the end of the year, her tax rate would be about 23%.
Of course, if she just took out about $9,000, she woul dnot pay any tax and would get a refund any tax (uusally 10% on amounts of $5,000 and less) withheld but you would then lose her as an exemption at the same 23%.
------------------------------------------------
If you are in the lower mainland, consider Fred Snyder's Free Seminamore information and a free written financial plan.
David Ingram wrote:
Every Thursday at 12 noon and 7 PM, Fred Snyder of Dundeee Wealth Management
presents free Financial Seminars for his clients, potential clients and anyone who phones and asks to attend.
THERE is NO CHARGE! (I used to charge up tp $999.00 for essentially the same thing)
AND - NO ONE'S ARM IS TWISTED TO BUY SOMETHING.
They are presented at the Dundee Boardroom (holds about 30 people max)
1764 West 7th
Vancouver, BC
phone (604) 731-8900 - ask for Freda to register for free.
These are genuine educational seminars dealing with everything from how to buy a house to making your mortgage tax deductible to buying an RRSP to alternatives to RRSP accounts to estate planning. SWhat started as 13 separate seminars has now evolved into 23 separate topics.
IT IS NOT UNUSUAL FOR PEOPLE TO COME TO ALL OF THEM.
ONE LADY CAME TO 53 separate seminars and her husband came to about 20 with her.
If you have a financial consultant, bring them. People have brought their bankers and life insurance agents with them.
Take your spouse, your best friend, your son, your daughter, your mother or your worst enemy But do phone 604-731-8900
Fred Snyder also is the host of ITS YOUR MONEY every Sunday morning on CHBD (600 on AM dial) from 9:00 to 10:30. This is a phone in financial show which I appear as a guest on on the last Sunday of every month. (Origianlly I was the co-host but the program is really devoted to BC finances because of BC Securities Legislation and my practice is world wide.) You can listen to 4 weeks back at www.600am.com and listen to the program live around the world every Sunday morning at the same spot. We have taken calls from around the world. In one case, a lady phoned from Florida, got her answer and then asked if I was the David ingram she knew in Regina back in 1959. Small world as they say.
Call (604) 280-0600 with your question on Sunday Morning.
Every Thursday at 12 noon and 7 PM, Fred Snyder of Dundeee Wealth Management
presents free Financial Seminars for his clients, potential clients and anyone who phones and asks to attend.
THERE is NO CHARGE! (I used to charge up tp $999.00 for essentially the same thing)
AND - NO ONE'S ARM IS TWISTED TO BUY SOMETHING.
They are presented at the Dundee Boardroom (holds about 30 people max)
1764 West 7th
Vancouver, BC
phone (604) 731-8900 - ask for Freda to register for free.
These are genuine educational seminars dealing with everything from how to buy a house to making your mortgage tax deductible to buying an RRSP to alternatives to RRSP accounts to estate planning. SWhat started as 13 separate seminars has now evolved into 23 separate topics.
IT IS NOT UNUSUAL FOR PEOPLE TO COME TO ALL OF THEM.
ONE LADY CAME TO 53 separate seminars and her husband came to about 20 with her.
If you have a financial consultant, bring them. People have brought their bankers and life insurance agents with them.
Take your spouse, your best friend, your son, your daughter, your mother or your worst enemy But do phone 604-731-8900
Fred Snyder also is the host of ITS YOUR MONEY every Sunday morning on CHBD (600 on AM dial) from 9:00 to 10:30. This is a phone in financial show which I appear as a guest on on the last Sunday of every month. (Origianlly I was the co-host but the program is really devoted to BC finances because of BC Securities Legislation and my practice is world wide.) You can listen to 4 weeks back at www.600am.com and listen to the program live around the world every Sunday morning at the same spot. We have taken calls from around the world. In one case, a lady phoned from Florida, got her answer and then asked if I was the David ingram she knew in Regina back in 1959. Small world as they say.
Call (604) 280-0600 with your question on Sunday Morning.
----------------------------------------------
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This is not intended to be definitive but in
general I am quoting $800 to $2,800 for a dual country tax
return.
$800 would be one T4 slip one W2 slip one or
two interest slips and you lived in one country only - no self employment or
rentals or capital gains - you did not move into or out of the country in this
year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no
rental
$1,200 would be the minimum with a move in or
out of the country. These are complicated because of the back and forth foreign
tax credits. - The IRS says a foreign tax credit takes 1 hour and 53
minutes.
$1,500 would be the minimum with a rental or
two in the country you do not live in or a rental and a business and foreign tax
credits no move in or out
$1,600 would be for two people with income from two countries
$2,800 would be all of the above and you moved
in and out of the country.
This is just a guideline for US / Canadian
returns
We will still prepare Canadian only
(lives in Canada, no US connection period) with two or three slips and no
capital gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business
likely $450
And an American only (lives in the US with no
Canadian income or filing period) with about the same things in the same range
with a little bit more if there is a state return.
Moving in or out of the country or part year
earnings in the US will ALWAYS be $800 and up.
TDF 90-22.1 forms are $50 for the first and
$25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00
each.
18 RRSPs would be $900.00 - (maybe amalgamate
a couple)
Capital gains *sales) are likely $50.00
for the first and $20.00 each after that.
Just a guideline not etched in
stone.
This from "ask an income trusts tax and immigration
expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram
deals on a daily basis with expatriate tax returns with multi
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