Santa has a list, but does he have a plan? Financial planning tips specially
created for Santa Claus from RBC
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."
1. 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
2. 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.
3. Avoid the Old Age Security (OAS) Clawback. Santa's OAS will start
to be clawed back once his 2012 income reaches $63,511.
4. 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
5. 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.
6. 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.
7. 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.
8. 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 tax.
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.
Kathy Bevan, RBC, 416 974-8820 Kate Yurincich, RBC, 416 974-1031
To view this news release in HTML formatting, please use the following URL:
CO: RBC Royal Bank
NI: FIN FIN
-0- Dec/18/2012 10:00 GMT
Press spacebar to pause and continue. Press esc to stop.