From the Wires
Santa has a list, but does he have a plan? Financial planning tips specially created for Santa Claus from RBC
Dec. 18, 2012 05:01 AM
TORONTO, Dec. 18, 2012 /CNW/ - At this time of year, Santa Claus is
understandably busy with pressing global priorities. However, the
end-of-year period is a particularly crucial time for financial
planning. That's why RBC would like to offer the "jolly old elf" some
financial planning tips specifically tailored to his unique financial
needs and lifestyle.
"Santa is not only Canadian, he is also a prominent philanthropist,
business owner, senior citizen, extensive traveler and last of all, a
taxpayer. This makes his financial planning needs highly unique," said
Richa Hingorani, regional financial planning consultant, RBC Financial
Planning. "Because of that, he needs to take into account several
taxation and financial planning considerations this time of year as do
many Canadians, regardless of whether or not they celebrate Christmas.
That's why we've come up with this handy list so he can focus his
attentions on more important issues this season."
Charitable donations. Santa is one of the world's most prominent
philanthropists. Fortunately, most of his donations will be made by the
December 31 deadline so that credit can be made on his 2012 tax return.
Income Splitting. This is an important consideration as Mrs. Claus is
not (as far as we know) employed. Santa might want to consider income
splitting with Mrs. Claus to minimize his annual tax liability by using
a prescribed rate loan to Mrs. Claus. Depending on the amount loaned
(the current interest rate is one per cent), the amount of tax paid by
Santa could be substantially reduced.
Avoid the Old Age Security (OAS) Clawback. Santa's OAS will start to be
clawed back once his 2012 income reaches $63,511.
Santa does extensive travelling. Because of that, he needs
out-of-country travel insurance for his Christmas Eve flight. He should
also consider out-of-country medical insurance, just in case.
If Santa has made investments, the last trading day to ensure losses can
be used to offset gains from this year is December 24 for Canadian
transactions and December 26 for U.S. transactions.
Is Santa getting ready to RRIF? If Santa has yet to turn 71, he will
need to start drawing down his RRSP in 2013. The minimum withdrawal
amount will be 7.31 per cent.
Santa is an (incorporated) business owner with an eternity of active
years ahead of him. As such, he should consider opening an Individual
Pension Plan (IPP). An IPP is structured to provide tax relief for the
corporation and enhanced retirement savings (more than an RRSP) for
Santa will need some hard-earned relaxation after the holiday season. As
a Snowbird heading south for the winter, he will need to keep in mind
that if he should stay in the U.S. for more than 183 days in two
consecutive years, he may be considered to be liable for U.S. income
About RBC's financial planning advice, resources and interactive tools
The RBC Advice Centre offers free online advice, resources and tools
regarding retirement and estate planning including RRSPs, the RSP-Matic® Savings Calculator. Whether Canadians want to save and invest, buy their first home, get more from their day to day banking, protect what's important, or
take care of their businesses, the RBC Advice Centre can help answer their questions. In addition, RBC's myFinanceTracker, a comprehensive online financial management tool, offers all personal
RBC online banking clients the ability, at no cost, to create a set budget and track their
spending habits and to access tax-related apps in the myTax Centre, to help manage and plan their taxes.