Show Transcript
Whether you’re reevaluating your budget or reviewing your portfolio, conducting a mid-year review of your personal finances can be an effective way to ensure you’re still on track to reach your goals. Nicole Ewing, Director for Tax and Estate Planning with TD Wealth, speaks with MoneyTalk’s Greg Bonnell about where to start and the various steps to keep in mind.
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* While summer is a good time for getting outdoors and enjoying the weather, it can also be a good time for a little mid-year review of your personal-finance situation. Joining us now with some of the things you may want to keep in mind is Nicole Ewing, Director for Tax and Estate Planning with TD Wealth. Nicole, always great to have you on the program. Welcome back.
* Thank you. Great to be here.
* All right. So people do find themselves with a little bit of time on their hands. Maybe you go away somewhere and it rains one day, but you've got a computer with you. Maybe you want to start thinking about a few things. Where do you want to start? Want to start-- maybe our budget?
* Sure. That's where we should rein things in or make changes immediately if we're off-site. So a budget is a good place to start. Hopefully you spent the beginning part of the year putting together what you expected to be spending, what you expected to be saving, and making some decisions about discretionary versus non-discretionary spending. Let's reflect on it, see whether or not we're in line with that spending and maybe why we're not if we're not.
* So anything can happen. We're not just-- we're not just stagnant through the first number of months of the year. Life may have changed, as well. We may have had a job change. We may have had a lifestyle change. Perhaps our rent or mortgage amounts have changed, as well. Use that information, bring it into your budget, make the appropriate changes where necessary, and give yourself a pat on the back if you're otherwise on track.
* If you're otherwise on track. Yeah, pat on the back, that anyone out there who is on track because it's hard in the summer. Suddenly, you start having a good time. Maybe you spend more than you should, so that's a good place to think. * Checking your credit score. Why is this important?
* Because, again-- and I get these notifications that I need to go back and check, and check, and check. And frankly, if you're not making a point of going in and checking, you might not be aware of things that have happened that you either intended to happen or that may have not really been your doing but might be a mistake. So if there's something that's wrong, go in and make sure that you're identifying that and making the appropriate-- taking the appropriate actions on that.
* If it has increased or decreased, this may give you an opportunity to reflect on some of the things that your credit score influences. So, for example, maybe you have some debt. Maybe you have some financing arrangements that, if your credit score has increased, you may have the opportunity to renegotiate those in a more favorable way. If your credit score has taken a hit, it might give you a good chance to reflect on why. Maybe something went off the rails that needs your attention.
* All right. So we've taken a look at our budget. We've taken a look at our credit score and see where we stand there. Some of us-- I like to do this. I set monthly contributions for certain things, and I set it, and I forget it. But every once in a while, maybe you need to think about it. Unforget it.
* Unforget it. Yes. Look back and just make sure that it's still consistent with your goals, whether those have changed, whether or not some of your other spending-- if your budget has changed, maybe your contributions are impacted by that, as well. Maybe you have the opportunity to increase that a little bit more than you had anticipated to be able to but also just to make sure that you're on track for the plan. We don't want to be coming year-end and quickly trying to make changes.
* Maybe there's been-- we have TFSAs, RRSPs, first-home savings accounts, RESPs. All of these have the opportunity for us to make contributions. Be aware of what they are, and allocate accordingly.
* Now, obviously, through the course of the year, when you talk about getting some information together, I've had several friends and colleagues who have done various walks or rides for charity. You put some money behind it, good causes. And then a little receipt lands in my Gmail and it's just sitting there. And I'm not going to go looking for it until next January, or February, or March. It's time to maybe get some of those receipts in order?
* Pull those together, not just your charitable receipts but all of your receipts, any that you're need needing to rely on next year for your taxes. I would suggest that when it comes to the charitable giving, really good idea to have a plan for that. Have a strategic approach to your charitable giving. If that means helping out friends this year and giving $20 here, and $20 there, and $20 there, you're going to need to accumulate those so that you're in a position to defend or prove that you have made those contributions.
* Maybe you want to think, as well, about changing your giving strategy so that you're ensuring that you have the biggest bang for your buck and you're contributing in the way that you want to. Maybe you're maximizing things, looking at your gains, your securities that may have gains on them. Maybe there's an opportunity to make a more impactful gift than you would otherwise be able to make.
* But you need to be able to defend your position to CRA next year, not only for your charitable donations but for all of the spending. Maybe you're at the cottage, and maybe you're doing some work that will allow you to increase the adjusted-cost base of that property. Again, you'll need to be able to demonstrate that down the road. You might not sell for another 10 years. Make sure you know what you're doing with your receipts. Have a plan and a way of ensuring that you know where they are when you need them.
* Could lead us into a discussion there of tax implications. We might turn off parts of our brains during summer vacation. The tax regime never goes away. Reevaluate maybe withholding taxes, tax-loss harvesting.
* Yes. So withholding taxes, if you are having with taxes withheld on an income, for example, and you've either changed-- your life circumstances have changed, you have the opportunity to ask your employer to make changes to those withholdings so that you can better maximize the use of those funds.
* For tax-loss harvesting, again, this is something that shouldn't just be done at the end of the year. We need a strategy around that. We need to understand what we're doing. And certainly, this year with the change and the capital-gains inclusion rate, having those two different periods where the taxes are going to need to be thought about, tax-loss harvesting might look a little bit different to people in 2024 than it has previously. And the way that it's going to look in 2025.
* Certainly, if you are doing any investing through a corporation where you have a capital-dividend account at play, making sure that your timing, with respect to pulling out your funds tax-free from the capital dividend account, and making your tax-loss harvesting choices if you're selling at a loss, that's going to impact that, as well. So just make sure you have your strategy set and you're ready to act.
* I feel like this last one here is a big one-- estate plans.
* Things can change. Maybe there's been some great news. Maybe there's weddings been announced or baby's been announced. Maybe we're moving across the country. All of these things need our attention, making sure that we have the appropriate documentation in place to really ensure that if something happens to us, if we find ourselves incapacitated, or if there's a death in our family, that we have the appropriate documents to be able to go out there and do what we need to do to administer those affairs effectively. And things change.
* The law, fortunately, hasn't changed too significantly in that regard. In the one, again, capital-gains tax, we will expect that taxes on death will be higher than they would have been previously because we're deemed to have disposed of all of our assets, we have a capital-gains bill. So maybe that estate planning, in terms of planning for any taxes on death, would need to be updated this year. But otherwise, if your personal circumstances have changed, absolutely, they should be reflected in your documentation.
[AUDIO LOGO]
[MUSIC PLAYING]
* While summer is a good time for getting outdoors and enjoying the weather, it can also be a good time for a little mid-year review of your personal-finance situation. Joining us now with some of the things you may want to keep in mind is Nicole Ewing, Director for Tax and Estate Planning with TD Wealth. Nicole, always great to have you on the program. Welcome back.
* Thank you. Great to be here.
* All right. So people do find themselves with a little bit of time on their hands. Maybe you go away somewhere and it rains one day, but you've got a computer with you. Maybe you want to start thinking about a few things. Where do you want to start? Want to start-- maybe our budget?
* Sure. That's where we should rein things in or make changes immediately if we're off-site. So a budget is a good place to start. Hopefully you spent the beginning part of the year putting together what you expected to be spending, what you expected to be saving, and making some decisions about discretionary versus non-discretionary spending. Let's reflect on it, see whether or not we're in line with that spending and maybe why we're not if we're not.
* So anything can happen. We're not just-- we're not just stagnant through the first number of months of the year. Life may have changed, as well. We may have had a job change. We may have had a lifestyle change. Perhaps our rent or mortgage amounts have changed, as well. Use that information, bring it into your budget, make the appropriate changes where necessary, and give yourself a pat on the back if you're otherwise on track.
* If you're otherwise on track. Yeah, pat on the back, that anyone out there who is on track because it's hard in the summer. Suddenly, you start having a good time. Maybe you spend more than you should, so that's a good place to think. * Checking your credit score. Why is this important?
* Because, again-- and I get these notifications that I need to go back and check, and check, and check. And frankly, if you're not making a point of going in and checking, you might not be aware of things that have happened that you either intended to happen or that may have not really been your doing but might be a mistake. So if there's something that's wrong, go in and make sure that you're identifying that and making the appropriate-- taking the appropriate actions on that.
* If it has increased or decreased, this may give you an opportunity to reflect on some of the things that your credit score influences. So, for example, maybe you have some debt. Maybe you have some financing arrangements that, if your credit score has increased, you may have the opportunity to renegotiate those in a more favorable way. If your credit score has taken a hit, it might give you a good chance to reflect on why. Maybe something went off the rails that needs your attention.
* All right. So we've taken a look at our budget. We've taken a look at our credit score and see where we stand there. Some of us-- I like to do this. I set monthly contributions for certain things, and I set it, and I forget it. But every once in a while, maybe you need to think about it. Unforget it.
* Unforget it. Yes. Look back and just make sure that it's still consistent with your goals, whether those have changed, whether or not some of your other spending-- if your budget has changed, maybe your contributions are impacted by that, as well. Maybe you have the opportunity to increase that a little bit more than you had anticipated to be able to but also just to make sure that you're on track for the plan. We don't want to be coming year-end and quickly trying to make changes.
* Maybe there's been-- we have TFSAs, RRSPs, first-home savings accounts, RESPs. All of these have the opportunity for us to make contributions. Be aware of what they are, and allocate accordingly.
* Now, obviously, through the course of the year, when you talk about getting some information together, I've had several friends and colleagues who have done various walks or rides for charity. You put some money behind it, good causes. And then a little receipt lands in my Gmail and it's just sitting there. And I'm not going to go looking for it until next January, or February, or March. It's time to maybe get some of those receipts in order?
* Pull those together, not just your charitable receipts but all of your receipts, any that you're need needing to rely on next year for your taxes. I would suggest that when it comes to the charitable giving, really good idea to have a plan for that. Have a strategic approach to your charitable giving. If that means helping out friends this year and giving $20 here, and $20 there, and $20 there, you're going to need to accumulate those so that you're in a position to defend or prove that you have made those contributions.
* Maybe you want to think, as well, about changing your giving strategy so that you're ensuring that you have the biggest bang for your buck and you're contributing in the way that you want to. Maybe you're maximizing things, looking at your gains, your securities that may have gains on them. Maybe there's an opportunity to make a more impactful gift than you would otherwise be able to make.
* But you need to be able to defend your position to CRA next year, not only for your charitable donations but for all of the spending. Maybe you're at the cottage, and maybe you're doing some work that will allow you to increase the adjusted-cost base of that property. Again, you'll need to be able to demonstrate that down the road. You might not sell for another 10 years. Make sure you know what you're doing with your receipts. Have a plan and a way of ensuring that you know where they are when you need them.
* Could lead us into a discussion there of tax implications. We might turn off parts of our brains during summer vacation. The tax regime never goes away. Reevaluate maybe withholding taxes, tax-loss harvesting.
* Yes. So withholding taxes, if you are having with taxes withheld on an income, for example, and you've either changed-- your life circumstances have changed, you have the opportunity to ask your employer to make changes to those withholdings so that you can better maximize the use of those funds.
* For tax-loss harvesting, again, this is something that shouldn't just be done at the end of the year. We need a strategy around that. We need to understand what we're doing. And certainly, this year with the change and the capital-gains inclusion rate, having those two different periods where the taxes are going to need to be thought about, tax-loss harvesting might look a little bit different to people in 2024 than it has previously. And the way that it's going to look in 2025.
* Certainly, if you are doing any investing through a corporation where you have a capital-dividend account at play, making sure that your timing, with respect to pulling out your funds tax-free from the capital dividend account, and making your tax-loss harvesting choices if you're selling at a loss, that's going to impact that, as well. So just make sure you have your strategy set and you're ready to act.
* I feel like this last one here is a big one-- estate plans.
* Things can change. Maybe there's been some great news. Maybe there's weddings been announced or baby's been announced. Maybe we're moving across the country. All of these things need our attention, making sure that we have the appropriate documentation in place to really ensure that if something happens to us, if we find ourselves incapacitated, or if there's a death in our family, that we have the appropriate documents to be able to go out there and do what we need to do to administer those affairs effectively. And things change.
* The law, fortunately, hasn't changed too significantly in that regard. In the one, again, capital-gains tax, we will expect that taxes on death will be higher than they would have been previously because we're deemed to have disposed of all of our assets, we have a capital-gains bill. So maybe that estate planning, in terms of planning for any taxes on death, would need to be updated this year. But otherwise, if your personal circumstances have changed, absolutely, they should be reflected in your documentation.
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[MUSIC PLAYING]
