Year: 2025

POSSIBLE USA TARIFFS

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Needless to say, we as Canadians have all been deeply concerned about the implications of a possiblity  25% USA imposed tariffs on our lives and livelihood’s. The uncertainty of this is stressful for all of us. As recommened we should always whenever possible to try and put aside enough funds for 3 months living expenses. While this may be onerous for for many of us it is a good protection against “Black Swan” events such as these. I recall  during the COVID pandemic the Country of Greece actually severely restricted the amount of cash that could be withdrawn from bank accounts. Having actual cash on hand for such events can be quite a valuable asset.  Remember, we as Canadians have many choices from which countries we may purcahse products from. Making an effort to support Canadian manufacturers and producers supports OUR economy. Furthermore there are a myriad of products that can be obtained from non-USA sources. Look for these products when Canadian eviquvalents are not avaiable. 

TFSA CONTRIBUTION FOR 2025 HITS $7000

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Opening a Tax-Free Savings Account (TFSA) in Canada offers several advantages:

  1. Tax-Free Compounding: Investments inside a TFSA grow tax-free, allowing your investment to compound faster without the drag of annual taxes.
  2. Flexibility: TFSA withdrawals can be made at any time and without any withholding tax. This gives you the flexibility of a savings account with the long-term compounding of an investment account1.
  3. No Age Limit: You can contribute for as long as you want to—there’s no age limit.
  4. Different Saving Goals: The TFSA account lets people save money for any reason, not simply for retirement3. For example, you can save for a car, for your education, to buy a home, to set aside extra living expenses, and/or for retirement3.
  5. No Impact on Government Benefits: TFSAs are great for extra retirement savings since the income generated within the account does not impact government benefits1.

Please note that while TFSAs offer many benefits, it’s always recommended to consult with a financial coach to understand the best strategies for your specific situation.

The Difference Between Dividend and Interest Income

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In Canada, the taxation rates for dividend and interest income are different due to the preferential tax treatment given to dividends in the form of a “dividend tax credit”.

Interest Income: Interest income is fully taxable and is taxed at your marginal tax rate based on where you live in Canada. For example, if an individual receives $1,000 in interest income, they are taxed on the entire amount2. In the top tax bracket, you’d pay roughly $530 in taxes on $1,000 in interest income3.

Dividend Income: Dividends from stocks are taxed at a lower rate, making them a more tax-efficient investment option. Dividend income is eligible for a dividend tax credit in Canada. For instance, you would pay $390 on $1,000 in dividend income in the top tax bracket.

The difference in taxation rates between dividend and interest income is designed to encourage investment and economic growth. However, the best strategy for an individual will depend on their specific financial situation and goals. It’s always recommended to consult with a financial coach for personalized advice.