Adopt These 9 Money Habits to Increase Your Net Worth
One way to reinforce habits is to celebrate small wins. If you eat slightly less junk food or exercise a bit more, you can count it as an accomplishment. The positive reinforcement helps to make us feel better, inspire confidence and slowly build habits that makes reaching our goals a bit easier. This is particularly true with financial discipline. It is important to recognize that, like any habit, it is a process that takes time. The good news is that there are tangible metrics to measure your success e.g. when you have more in your investment accounts or a higher net worth.
How to Reflect Investment Income and Capital Gains/Losses on your Personal Tax Return
Residents of Canada are required to reflect all sources of worldwide income on their personal tax returns. For most individuals, who have investments with Canadian based banks and brokerages, this is fairly straightforward as you will receive the relevant tax slips, usually by March 31st of the year following the end of the calendar year i.e. for the 2023 tax year, you should receive all investment related tax forms and slips by March 31st, 2024. It is important, if you have investment income in non registered investments (i.e. not TFSA, RRSPs or FHSAs), to ensure that you have received all tax documents and report them. Failure to report income can result in penalties by Revenue Canada and Revenue Quebec, which is never great, particularly when it can be easily avoided. It should be noted that since most tax documentation is submitted by the issuer to Revenue Canada (CRA) and Revenue Quebec (RQ) electronically, they usually have a record of the various types of investment income for each taxpayer and can easily identify any missing information.
7 Lesser Know Facts About RRSPs
It is the time of year when everyone adult Canadian should be thinking about investing into their registered retirement savings plan (RRSP) prior to the deadline of March 1st. Many of you might think that you are young and have time or conversely that you are older and it’s too late. The truth is that it is never too early or late to start a RRSP. You simply need to set a goal and start doing it.
The great benefit of investing in RRSPs, which is the single best tax optimization strategy available to all Canadians, is that it reduces the amount of income taxes that you will have to pay. The tax savings is based on your marginal tax rate. Since everyone’s income is allocated to different tax brackets as your income increases, the marginal tax rate represents the highest tax bracket which applies to the top portion of your income.
Investment Strategies for Your Incorporated Small Business
One of the benefits of having an incorporated small business is that after paying yourself a salary or dividend any excess funds can be invested directly through the corporation. Since small businesses often cannot predict how their business will perform from year to year, the ability to retain funds in the corporation allows for a cushion to smooth out fluctuations in earnings which can then be paid out in lower performing years. By keeping the funds in the corporation, the business is able to defer tax since usually the small business tax rate is lower than the personal tax rate. Some points to consider: