Compass Newsletter January 2019
RRSP vs. TFSA
Which is Better for You?
As we approach the deadline for your Registered Retirement Savings Plan (“RRSP”) contributions you may be thinking whether they are right for you or whether you should focus on a Tax-Free Savings Accounts (“TFSA”).
When you contribute to your RRSP account, you get a tax deduction for 100% of your allowable contribution (the lesser of 18% of your earned income up to $26,500 plus all the unused contributions from past years). You can find your contribution limit on your 2017 Notice of Assessment from the Canada Revenue Agency under the section RRSP deduction limit statement “Available contribution room for 2018.”
When you make a withdrawal from your RRSP, you will need to include the entire gross amount as taxable income for that year. For all the years in between, you will be earning interest on what would otherwise be CRA’s money! If you are in a higher tax bracket today than you will be when you cash in those RRSPs, you will not only have deferred tax, but will have reduced the rate at which those dollars are taxed.
The TFSA program was introduced in 2009 as way to provide Canadian residents with tax benefits on their savings. The annual limit accumulates for any year you did not contribute commencing from the year you reached the age of majority. There are no tax deductions when contributing as you must use after tax dollars, leaving you with less to invest. However, all the growth and income earned within your TFSA is tax free. In 2018, the annual limit is $5,500 and the cumulative limit is $57,500. TFSA’s benefit all who utilize them, but you may be better off contributing to RRSPs first.
Which is better for you?
This is a tax driven question so in general we suggest:
- Higher income individuals – (Taxable income of more than $145K) You may want to consider maxing out your allowable RRSP limit until your income is at least reduced to 145K since you are paying a higher marginal tax rate.
- Middle income individuals – (Taxable income of more than $47K and up to $145K) You have a more difficult decision to make, and should speak with your Tax Advisor to discuss your options and make a decision that is best for you and your tax situation. It is likely preferable to find the right mix of both options.
- Lower income individuals – (Taxable income of less than $47K) It is most likely better for you to max out your TFSA limits prior to making any RRSP contributions, since you may only get the benefit of deferring tax as you may still be in a similar tax bracket.
March 1st, 2019 is the deadline to get your RRSP contributions made. To ensure that you don’t miss it, please speak to your Pinnacle Dealing Representative today.
PINNACLE ONLINE COMING SOON!
As an investor, you know first-hand there is a lot of paperwork to be manually completed when making a private market investment. Among other things, you have to complete and sign your Know-Your-Client form and related information with your Pinnacle Dealing Representative, but also your subscription agreement and various schedules. This takes a lot of time and effort especially if you want to be diversified and invest in various products offered by Pinnacle.
Well, we have some good news!
Pinnacle is making a substantial investment in financial technology to eliminate paperwork, reduce errors and provide a seamless service to our investors, issuers and Dealing Representatives. Pinnacle is currently working with software developers to provide an automated customer-friendly solution for accessing investment opportunities and completing deals on-line that combines technology with the human interaction of a Pinnacle Dealing Representative.
As Darvin Zurfluh, Pinnacle’s CEO and Founder states, “The time investors spend with their Dealing Representative should be spent on planning and education of our various investment choices. An automated/human solution is a big part of our growth strategy for 2019.”
Accordingly, Pinnacle is pleased to announce that we are looking to launch our unique investment platform called “PINNACLE ONLINE” in late Q1 of 2019.
Some of the benefits of Pinnacle Online for investors include:
- No Paper – Completing your investment documents on-line will reduce any errors or missing information since the system will prompt all required information through this paperless process.
- Ease of Access through Mobile Devices – You will be able to access all your investment documents and related information on-line through a modern, mobile friendly experience. You will be able to do this through your client sign on, providing you the ability to download and save any important documents.
- Electronic signatures – by using the latest e-signature technology, you can more easily sign and initial your investment and related documents through the use of your computer or other mobile device.
- Ability to Review All Pinnacle Offerings – with Pinnacle Online, you will be able to review all investment offerings on Pinnacle’s product shelf including the offering memorandum and related marketing materials in an easy and convenient manner.
We look forward to launching Pinnacle Online for our investors to make your investment experience easier.
Investor Alert: ASC warns public about Global Advocacy Association
Article originally published by the Alberta Securities Commission (ASC) on Jan 24, 2019 The original article can be found HERE
CALGARY – January 24, 2019 – The Alberta Securities Commission (ASC) is warning Alberta investors about Global Advocacy Association/Global Advocates, an organization targeting investors in the Walton Group of Companies and others including Canyon Acquisition and CBI Group. Global Advocacy Association/Global Advocates are purportedly working to recover investor losses and they claim to have locations in Sweden and Panama. This appears to be a recovery room scheme.
Recovery room schemes typically involve companies that contact investors who may have lost money in an illiquid or fraudulent investment and offer to recover their funds. Once investors agree to the deal, they are typically asked to pay upfront fees for the service or transaction. In reality, the operators keep the funds, but do not action the service.
There are several “red flags” or risks common to illegal investment schemes present in Global Advocacy Association/Global Advocates’ promotions and sales techniques, including:
- Suspicious contact information. No company by the name “Global Advocacy Association” maintains offices at the addresses provided on its website. Further, a phone number for Sweden is incorrectly listed with the country code missing. The phone number for “The Americas” is listed in Maryland, where the physical address is listed in Panama City.
- Don’t miss this opportunity. Albertans have reported that Global Advocacy Association has extended the deadline to participate. Albertans should be aware that this is a common tactic used in fraudulent investments or recovery room schemes.
- Upfront fees. Care should be taken when advancing funds prior to receiving a service.
- Offshore offices. Sending money offshore compounds the risk. You may not receive the service offered and have no way to recoup those funds.
The ASC urges investors to familiarize themselves with some common red flags of investing and other resources available at its investor focused website, checkfirst.ca.
The ASC is the regulatory agency responsible for administering the province’s securities laws. It is entrusted with fostering a fair and efficient capital market in Alberta and with protecting investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada’s capital markets.