We have issued Update 96 of the Personal Financial Planner’s Manual.
The Changes for this update are as follows:
3-12 Federal Budget 2019
On March 19, 2019, the Minister of Finance introduced the Federal Budget for 2019. The personal income tax measures proposed in the Federal Budget include:
- introducing the Canada Training Credit;
- enhancing the Home Buyers’ Plan;
- changing in use rules for Multi-Unit Residential Properties;
- permitting additional types of annuities under Registered Plans;
- changing Registered Disability Savings Plan for cessation of eligibility for the Disability Tax Credit;
- revising tax measures for Kinship Care Providers;
- changing rules for donations of Cultural Property;
- updating the Medical Expense Tax Credit;
- restricting contributions to a Specified Multi-Employer Plan for older members;
- limiting Pensionable Service under an Individual Pension Plan;
- fixing Mutual Funds from Allocation to Redeemers Methodology; and
- restricting the carrying on of business in a Tax-Free Savings Account;
- introducing a temporary, non-refundable 15% tax credit for eligible digital news subscriptions;
- limiting the use of the Employee Stock Option tax regime.
The 2019 Budget also:
- introduced the First-Time Home Buyer Incentive;
- increased the earnings exemption for Guaranteed Income Supplement (GIS) or Allowance benefits;
- introduced legislation to proactively enroll Canada Pension Plan contributors aged 70 or older;
- reduced interest rates for Canada Student Loans and Canada Apprentice Loans.
5-05 Lifelong Learning Plan
This Chapter describes the eligibility requirements for the Lifelong Learning Plan; the limits and timing restrictions on withdrawals; the repayment requirements and consequences of non-repayment; the financial implications of using the Lifelong Learning Plan; the repayment requirements and consequences; and the similarities to the Home Buyers’ Plan.
Under the Lifelong Learning Plan, you cannot withdraw funds from a pooled registered pension plan (PRPP) or the Saskatchewan Pension Plan. However, you can designate a contribution to a pooled registered pension plan (PRPP) or the Saskatchewan Pension Plan as an LLP repayment. This Chapter has been updated to include current years and additional examples.
6-02 Risk of Disability
This chapter was written to enable you to understand the risks of disability; the provisions of policies concerning causes of disability, definitions, of disability, periods of benefits, the nature of the benefits and the limitations; the factors that affect the premiums; the different provisions for the renewal of term policies; the different provisions for the renewal of term policies; the coverage offered by government disability insurance programs ; the income tax considerations of disability insurance; and to be able to evaluate a disability insurance policy; and apply the financial planning process in addressing the risk of disability. This Chapter has been updated to include current rates and examples.
6-09 Property and Casualty Insurance
This chapter was written to enable you to understand the roles of insurance agents and adjusters; understand the difference between named perils and all risk insurance; the valuations placed upon property subject to loss or damage; the differences between burglary, robbery and theft; the types of liability that can arise dependent upon an individual’s situation; the differences between collision and comprehensive automobile insurance; and the factors that affect automobile premiums and the process to settle claims. This Chapter has been updated.
7-02B Canada Pension Plan
This chapter was written to enable you to understand the eligibility requirements for CPP benefits; how contributions the CPP are calculated; the CPP retirement benefits available, including early and delayed pension options; how retirement pensions can be shared between spouses/common-law partners; how CPP pension credits can be split upon divorce or separation; the CPP survivors benefits available; and the CPP benefits available to disabled contributors and their children.
As of 2019, Canada’s Ministers of Finance made 5 changes to CPP benefits:
- increasing the retirement pensions of parents who reduce their income to take care of their children;
- increasing the retirement pensions of people with disabilities, as well as their spouse or common-law partner’s survivor’s pension;
- eliminating the reductions in survivor’s pension for survivors under age 45;
- converting the death benefit to a flat-rate payment of $2,500 for all eligible contributors; and
- providing disability protection for retirement pension recipients under age 65.
They also enhanced the CPP, effectively creating two new plans as supplements to the Base CPP. In some ways, these two new plans just increased the pension benefits; and in other ways, they introduced new costs and features. The greatest distinguishing feature of the two Enhanced CPP plans is a requirement for them to be self-funding, unlike the original plan, the Base CPP, which has been rightly described as a Ponzi scheme.
The chapter has been updated to include the 3 plans: the Base CPP, and the first and the second Enhanced CPP and the 5 changes to CPP benefits. Just a note, the Canada Pension Plan is now much more complicated, and expensive.
The Chapter also addresses the major decisions in managing one’s contributions and benefits from the CPP:
- if you have a choice, should you contribute;
- when should you commence CPP retirement benefits; and
- should you continue to contribute after commencing to receive your CPP benefits?
8-09A Death & Taxes
This Chapter describes the opportunities to rollover certain registered plans to qualified beneficiaries upon death; and the requirements to include income from the Tax Free Savings Account (TFSA), Registered Disability Savings Plan (RDSP), Home Buyers’ Plan (HBP) and Lifelong Learning Plan (LLP).
This Chapter now describes the opportunities to rollover a Pooled Registered Pension Plan (PRPP) to qualified beneficiaries upon death .The Chapter has also been updated for changes in tax rates, deductions and tax credits.
8-09B More Death & Taxes
This Chapter describes the application of the deemed dispositions of capital and depreciable property upon death; how certain income deductions and inclusions apply upon death; the opportunities to file certain optional returns upon death; and how tax credits and deductions can be applied on the final and optional returns. The Chapter has been updated for changes in tax rates, deductions and tax credits.
8-11 Buy-Sell AgreementsThis chapter was written to enable you to understand: the need for a buy-sell agreement; the types of buy-sell agreements; the use of insured corporate buy-sell agreements; and the use of insured partnership buy-sell agreements. There have not been any recent significant changes to the legal or income tax considerations for buy-sell agreements. However, this Chapter has been reviewed and examples updated.
9-01 Quick Reference
This Chapter has been written to provide you with a quick reference to the federal income tax factors, contribution limits for registered plans, prescribed interest rates, Canada Pension Plan contribution rates, Old Age Security benefits, automobile deductions and benefits, and the Consumer Price Index.
The Chapter has been updated for the 2nd quarter prescribed interest rates, OAS benefits and statistics on the Consumer Price Index.