Filing taxes can be a daunting task, but with the right approach, it can be a smooth process. Here are some best practices to consider when filing your taxes in Canada:
Gather Your Documents Early
Start by collecting all necessary documents:
T4 slips (employment income)
T5 slips (investment income)
T3 slips (trust income)
RRSP contribution receipts
Receipts for tax credits (e.g., charitable donations, childcare, medical expenses)
Details of any government benefits (e.g., Canada Child Benefit, GST/HST credits)
Records of any business income and expenses (if self-employed)
Other relevant tax documents (e.g., student loan interest, union dues)
Having everything in one place will save you time and stress.
Know Your Deadlines
The deadline for filing individual tax returns in Canada is usually April 30th. If you’re self-employed, you have until June 15th, but any taxes owed are still due by April 30th.
Use Tax Software
Tax software: Many Canadians use tax software (like TurboTax, SimpleTax, or UFile) to file their taxes. These tools are user-friendly, often guide you through the process, and can help you maximize deductions and credits.
Tax professional: If your tax situation is complex (e.g., you’re self-employed, have rental income, or claim multiple deductions), it may be worth hiring a tax professional or accountant to ensure you’re getting all the deductions and credits you’re entitled to.
Maximize Deductions and Credits
Take advantage of available deductions and credits, such as RRSP contributions, medical expenses, and education credits. These can significantly reduce your taxable income.
Double-Check Your Return
Before submitting, review your return for accuracy. Ensure all information is correct to avoid delays or penalties.
File Electronically
Filing electronically is faster and more efficient. The Canada Revenue Agency (CRA) processes electronic returns quicker than paper ones, and you can receive your refund faster.
Keep Records
Maintain records of your filed return and supporting documents for at least six years. This is important if the CRA requests further information or audits your return.
Be Aware of Tax Scams
Be cautious of tax scams, especially during tax season. The CRA will never ask for personal information via phone or email. Always verify requests for information directly through the CRA’s official website or phone number.
By following these best practices, you can make tax season less stressful and potentially save money. Happy filing! YNCUniversity is here for all your financial literacy needs. Need one-on-one help? We got you! Reach out to our advisors. Don’t forget to follow us on Instagram and Tik Tok for more Honest Money Talk tips!
Power of Attorney vs. Joint Accounts: What You Need to Know
March 11, 2025
Managing money isn’t just about budgeting and paying bills—it’s also about making sure the right people have access when you need them to. Whether you’re planning for the future or assisting a loved one, you may be considering a Power of Attorney (POA) or a Joint Account. While both provide financial access, they serve very different purposes. Let’s break it down so you can make the best choice for your situation.
What is a Power of Attorney (POA) in Ontario?
A Power of Attorney is a legal document that allows someone you trust (the attorney) to act on your behalf (the grantor) when it comes to financial matters. Depending on the type of POA, your attorney can help with tasks like paying bills, managing investments, and making banking transactions. However, they do not become an owner of your assets.
Types of POAs in Ontario:
General POA – Gives broad financial authority but ends if the grantor becomes mentally incapacitated.
Continuing (Enduring) POA – Remains valid even if the grantor becomes mentally incapacitated.
Limited POA – Covers specific tasks or time periods.
Springing POA – Takes effect only when certain conditions are met (e.g., a medical diagnosis of incapacity).
What is a Joint Account?
A Joint Account is a bank account owned by two or more people. In Ontario, most joint accounts come with rights of survivorship, meaning that if one account holder passes away, the surviving holder(s) automatically take full ownership of the funds. Unlike a POA, all joint account holders have equal access and control over the money in the account at all times.
POA vs. Joint Account: Key Differences
Feature
Power of Attorney (POA)
Joint Account
Ownership
Grantor retains full ownership
Both parties share ownership
Decision-Making
Attorney acts on behalf of grantor
Each account holder acts independently
Survivorship
Ends upon grantor’s death
Surviving account holder retains full ownership of funds
Control Over Assets
Grantor can limit attorney’s powers
All account holders have equal access
Financial Risk
Attorney has a legal duty to act in grantor’s best interest
Each holder can withdraw/spend without consent
Legal Termination
Ends when revoked, upon death, or if not continuing
Ends only if the account is closed or modified
Which One Should You Choose?
Go with a POA if:
You need someone to manage your finances but don’t want them to own your assets.
You want control over what they can and can’t do with your money.
You’re planning for a time when you might be unable to manage your finances yourself.
Consider a Joint Account if:
You want shared financial access with a spouse, partner, or family member.
You’re comfortable with the co-owner using the funds freely.
You want to ensure seamless access to funds after one holder passes away.
When to Become a POA or Joint Account Holder
You might need a POA when:
A loved one requires financial assistance due to illness, aging, or incapacity.
You want a backup plan for managing your finances if you become unable to do so.
You want financial control without giving away ownership.
A Joint Account makes sense when:
You share household expenses with a partner.
You want easy access to joint savings or emergency funds.
You need a practical way to share financial responsibilities with a family member.
When Does Access End?
For a POA:
When the grantor revokes the POA in writing.
Upon the grantor’s death (POAs do not survive death in Ontario).
If it was a limited POA, access ends once the task is completed.
If it was not a Continuing POA, it ceases when the grantor becomes mentally incapacitated.
For a Joint Account Holder:
Access remains unless the account is closed or ownership is changed.
If an account holder passes away, the surviving holder(s) take full control unless otherwise specified in estate planning.
Choosing between a Power of Attorney and a Joint Account depends on your financial goals and comfort level with access and control. If you need assistance managing money but want to retain ownership, a POA is the way to go. If you want shared access and control, a Joint Account may be more suitable.
Before making a decision, consider speaking with a legal or financial advisor in Ontario to ensure you choose the best option for your specific situation.
YNCUniversity is here for all your financial literacy needs. Need one-on-one help? We got you! Reach out to our advisors. Don’t forget to follow us on Instagram and Tik Tok for more Honest Money Talk tips!
Mistakes You Can Make with an RRSP & How to Avoid Them
February 20, 2025
When it comes to RRSPs (Registered Retirement Savings Plans), there are a few common mistakes that can negatively impact your savings or tax strategy. Here are some of the most common mistakes and tips on how to steer clear of them.
Exceeding Your Contribution Limit (Over-Contribution)
Mistake: Going over the RRSP contribution limit, even by a little, can trigger a penalty. In Canada, the over-contribution penalty is 1% per month on the excess amount, which can add up quickly.
How to Avoid: Always check your RRSP contribution room before contributing. You can find it on your Notice of Assessment from the CRA or through the CRA My Account portal. If you go over by up to $2,000, you won’t face penalties, but anything above that will incur a 1% monthly penalty.
Failing to Carry Forward Unused Contribution Room
Mistake: Not utilizing unused contribution room from previous years can be a missed opportunity. RRSP contribution room is carried forward indefinitely, so if you didn’t use the full limit in one year, you can make it up in future years.
How to Avoid: Make sure you track your contribution room each year, which the CRA reports on your Notice of Assessment. If you missed contributing in prior years, try to catch up in later years, particularly in high-income years to maximize tax savings.
Withdrawing RRSP Funds Early Without Considering the Tax Implications
Mistake: Withdrawing funds from your RRSP before retirement means the withdrawal is taxed as income, which can be a significant hit, especially if you’re in a high tax bracket.
How to Avoid: Avoid early withdrawals unless absolutely necessary. If you’re buying your first home, use the Home Buyers’ Plan (HBP), where you can withdraw up to $35,000 tax-free to buy a home, provided you repay it over 15 years.
Not Taking Advantage of the RRSP Deadline (Contribution Deadline)
Mistake: Missing the contribution deadline for the year. In Canada, contributions made before the March 1st deadline count for the previous year’s tax deduction.
How to Avoid: Set a reminder well in advance, as missing the deadline means you’ll miss the chance to claim a tax deduction for that year.
Not Considering a Spousal RRSP for Income Splitting
Mistake: If you and your spouse have significantly different incomes, not using a Spousal RRSP can be a missed opportunity for tax planning.
How to Avoid: If one spouse has a higher income, contribute to a spousal RRSP to help balance retirement income between both spouses. This can help reduce overall taxes in retirement since withdrawals from the spousal RRSP are taxed in the hands of the lower-income spouse.
Investing Too Conservatively (or Too Aggressively)
Mistake: If you’re too conservative with your RRSP investments (e.g., holding too much cash or low-interest bonds), your returns may not outpace inflation over time.
How to Avoid: Make sure your RRSP portfolio is diversified. Review your asset allocation periodically and adjust based on your retirement timeline and risk tolerance. If you’re young, you might want to take more risk in your RRSP by investing in equities. As you near retirement, gradually reduce the risk by shifting towards more stable investments.
Using RRSPs for Short-Term Goals
Mistake: RRSPs are meant for retirement savings, so using them for short-term needs, such as a car or vacation, is a mistake.
How to Avoid: Stick to using your RRSP for retirement purposes. If you need short-term savings, consider a Tax-Free Savings Account (TFSA), which offers more flexibility without the tax penalties of early RRSP withdrawals.
Neglecting the Impact of RRSP Withdrawals on Government Benefits
Mistake: In retirement, RRSP withdrawals can push you into a higher income bracket, potentially reducing your eligibility for government benefits like the Guaranteed Income Supplement (GIS) or Old Age Security (OAS).
How to Avoid: Plan your withdrawals strategically to avoid large lump sums that may push you into a higher income bracket. You may also want to consider converting your RRSP to a RRIF (Registered Retirement Income Fund), which provides more predictable income in retirement and potentially lower taxes.
Not Taking Full Advantage of RRSP Tax Deductions
Mistake: Many people contribute to an RRSP but fail to take advantage of the tax deduction in the year they contribute. The RRSP deduction reduces your taxable income, which can lower the amount of tax you owe.
How to Avoid: Always claim your RRSP contribution on your tax return in the year you make the contribution. This will result in a lower tax bill for that year.
Forgetting to Convert Your RRSP into a RRIF (Retirement Income Fund)
Mistake: By the time you turn 71, you must convert your RRSP into a RRIF (or another retirement income product). Failing to do so can result in a large lump-sum taxable withdrawal.
How to Avoid: Ensure you convert your RRSP before the deadline at age 71. The conversion can be gradual (via a RRIF), allowing you to receive regular payments from the account while continuing to benefit from tax deferral.
By avoiding these mistakes and taking a proactive approach to managing your RRSP, you can maximize your retirement savings and minimize your tax burden. Haven’t opened your RRSP yet? YNCU has more than one RRSP investment option for you. Check out which option would work best for you.
YNCUniversity is here for all your financial literacy needs. Need one-on-one help? We got you! Reach out to our advisors. Don’t forget to follow us on Instagram and Tik Tok for more Honest Money Talk tips!
A troubling new theft scheme is making the rounds. Criminals are watching unsuspecting victims as they enter their PINs at ATMs or while making in-store purchases. Once the thief has seen the PIN, they execute a plan to deceive you to allow them access to the card in some way.
Here’s how the scheme works:
Surveillance: The thieves position themselves in a way that allows them to view your PIN entry, either at an ATM or while making a purchase.
Steal the Card: They then either take the card from your purse/wallet or pickpocket it when you’re distracted.
Use the Card & PIN: With both the card and the PIN in hand, they can withdraw money or make purchases without any suspicion.
How to protect yourself:
Shield your PIN – Always cover the keypad when entering your PIN at an ATM or point of sale.
Stay aware of your surroundings – Look around to ensure no one is too close when you’re using your card.
Use FLASH/mobile payments: Whenever possible, use FLASH (Tap) or mobile wallets like Apple Pay or Google Pay, which don’t require entering a PIN.
Monitor your accounts: Keep an eye on your bank statements and transaction history for any unauthorized activity.
Alert your bank immediately – If you believe your card or PIN has been compromised, you can report your card as lost/stolen by calling your financial institution immediately.
Stay safe out there and be vigilant when using your debit or credit cards!
YNCU members, if you know, or think your card or pin has been compromised, please contact our Service Excellence Centre at 1-800-413-YNCU (9628). You can also contact the Canadian Anti-Fraud Call Center at 1-888-495-8501. Don’t forget to follow us on Instagram and Tik Tok for more Honest Money Talk tips!
THE CRUCIAL ROLE OF REGULARLY UPDATING INFORMATION
January 22, 2025
In the fast-paced world of modern finance, where technological advancements and changing circumstances are constant, maintaining up-to-date information with your credit union is not just a formality but a crucial part of responsible financial management.
At YNCU, protecting our members is our top priority. To enhance security and reduce the risk of fraud, we will regularly ask members to update and verify their personal information. Keeping your details current helps us safeguard your accounts and provide secure, reliable service.
Here’s why regular updates with your financial institution are of paramount importance:
Security and Fraud Prevention
Keeping your contact details, such as phone numbers and email addresses, current with your credit union ensures that we can promptly reach you in case of any suspicious activity on your accounts. Timely communication is vital for preventing and addressing potential fraud, identity theft, or unauthorized transactions.
Effective Communication
Financial institutions often rely on electronic communication for various purposes, including account statements, transaction alerts, and important updates. If your contact information is outdated you may miss critical messages, leading to potential misunderstandings, missed payments, or overlooked opportunities.
Account Verification and Access
Regularly updating your personal information helps streamline the account verification process. In cases where you need assistance or access to your account, accurate details such as address, phone number, occupation/employer, and email become essential. This ensures a smoother experience when interacting with your credit union.
Compliance with Regulations
Financial institutions are obligated to comply with regulatory requirements, including customer identification and verification procedures. Keeping your information current helps your credit union fulfill these legal obligations, ensuring a transparent and accountable financial system.
Efficient Service Delivery
Updated information enables financial institutions to provide better and more efficient services. Whether it’s processing loan applications, issuing new cards, or resolving account-related issues, having accurate details ensures a quicker and more precise response from your credit union.
Emergency Situations
During unforeseen events, such as natural disasters or emergencies, banks may need to reach out to their customers quickly. Updated contact information is crucial in such scenarios to convey important instructions, offer support, or provide information about service disruptions.
Changes in Personal Circumstances
Life is dynamic and circumstances change. If you move to a new address, change your phone number, change jobs, or update your email, informing your bank ensures that your financial records align with your current situation, preventing potential complications.
Access to Modern Banking Features
Banks frequently introduce new technologies and services to improve customer experience. Updating your information ensures you have access to the latest features, whether it’s mobile banking, online transactions, or digital security enhancements.
Information that should be regularly updated include the following:
Name change
Address
Phone Number(s) – think of both landline and mobile
Email address (es)
Valid Photo Government Issued ID and expiration date
Occupation and Employer
In conclusion, maintaining accurate and up-to-date information with your financial institution is not just a matter of compliance but a proactive step towards securing your financial well-being. It contributes to a smoother, more secure, and efficient banking experience, ultimately empowering you to manage your finances responsibly in an ever-evolving financial landscape. Regularly reviewing and updating your information is a small yet impactful way to stay in control of your financial situation and financial safety.
YNCU members, if you know, or think you are a victim of a scam, please contact our Service Excellence Centre at 1-800-413-YNCU (9628). You can also contact the Canadian Anti-Fraud Call Center at 1-888-495-8501.
Don’t forget to follow us on Instagram and Tik Tok for more Honest Money Talk tips!
