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June 2013


payroll  cpp ei vacation  wsib
OntarioEmployment / Labour Standards and Regulations – 2013Minimum Wage·         $10.25 per hourNote:
 This is a general minimum rate.
The rate may vary by type of employment (see s.5 of the Exemptions, Special Rules and Establishment of Minimum Wage Regulation for details).Call-in Pay· 
3 hours at minimum wage or employees regular rate for time worked, whichever is greaterOvertime Pay:
Time + 1/2·         Over 44 hours per week
Note: Overtime pay to be 1.5 times the regular hourly wageProvincial Payroll Tax·         Payroll Tax — (EHT) from 0.98% to 1.95% of gross earnings $400,000 exemption per employer.
Vacation Entitlement·         After 1 year: 2 weeksVacation Pay·         4% of vacationable earningsTip: To determine vacationable earnings, check the Vacationable Earnings chart or consult with employment/labour standards in the jurisdiction.
Statutory Holidays·         New Year’s Day (January 1)·         Family Day (Third Monday in February)·         Good Friday (March 29)·         Victoria Day (May 20)·         Canada Day (July 1)·         Labour Day (September 2)·         Thanksgiving Day (October 14)·         Christmas Day (December 25)·         Boxing Day (December 26)Statutory Holiday Pay (if worked)·        
Regular wages plus vacation pay payable in the previous 4 work weeks divided by 20, plus Time+ 1/2 OR regular wages earned plus alternate day.Notice of Termination
by Employer·   
      Less than 3 months of employment: Nil·         3 months - 364 days of employment: 1 week· 
        1 - 3 years of employment: 2 weeks·         After 3 years of employment: 3 weeks plus 1 week per year to a maximum of 8 weeks
Note: When terminating in groups of 50 or more, group termination rules may apply.Maternity or Pregnancy Leave·         17 weeks after 13 weeks of employmentNote 1: Maximum combined pregnancy/parental leave is 52 weeks. The longer period of parental leave applies if maternity/pregnancy leave is not taken.

Note 2: Most jurisdictions require leaves to be taken within a specified period. Check with the applicable employment/labour standards office.Parental Leave (available to either parent)·         35 or 37 weeks after 13 weeks of employmentNote 1: Maximum combined pregnancy/parental leave is 52 weeks. The longer period of parental leave applies if maternity/pregnancy leave is not taken.

Note 2: Most jurisdictions require leaves to be taken within a specified period. Check with the applicable employment/labour standards office.Bereavement·         10 days/yrNote:In Ontario, a total of 10 days of personal emergency leave is available to any employee whose employer regularly employs 50 or more employees.Compassionate/ Family Care/ Responsibility·         8 weeksNote 1: If family member does not die during 26-week period (or other period that may be set out in regulations), the employee may take another leave after providing the employer with a new medical certificate.

Note 2: Bill 21(first reading: March 5, 2013) would create an additional 8 week period of leave to care for a family member with a serious medical condition, an additional 37 week period of leave to care for a critically ill child, an additional 52 week period of leave for the crime-related disappearance of a child and an additional 104 weeks period of leave for the crime-related death of a child .Emergency·         YesSick·         10 days/yrNote 1: In Ontario, a total of 10 days of personal emergency leave is available to any employee whose employer regularly employs 50 or more employees.

Note 2: Organ donation leave is available.Voting·         3 hoursReservist’s Leave·         YesNote: Leave for Reservists – Employees who are members of the Canadian Forces Reserves and deployed for active service are entitled to a job-protected unpaid leave. Eligibility requirements and period of leave varies-consult applicable employment/labour standards information.
Canada Pension Plan (CPP) is a national insurance program that provides income for Canadians when they retire or if they become disabled. The Quebec Pension Plan (QPP) fulfills the same role in that province.
Employers are required by law to deduct CPP/QPP contributions from their employees' pay and to provide a matching contribution.
Working Canadians between the ages of 18 and 70 must contribute to the CPP or QPP unless they already receive a disability pension from the plan or are exempt for another reason. Unless an employee over 65 years of age files a CPT30 form with CRA and provides the employer with a copy, CPP contributions are to continue being made until the employee turns 70.
CPP/QPP contributions are directly related to annual pensionable earnings. The basic exemption, maximum contribution limit, and benefits are adjusted annually to accommodate changes in the average cost of living. Please refer to the following tables for current rates and amounts.
CPP/QPP Contribution Calculation –2012 & 2013 CPPQPP 2012201320122013Contribution Rate4.95% 4.95% 5.025%5.10% Maximum Employee Contribution$2,306.70 $2,356.20 $2,341.65$2,427.60 Maximum Pensionable Earnings$50,100 $51, 100 $50,100$51,100 Maximum Contributory Earnings$46,600 $47,600 $46,600$47,600 Annual Basic Exemption$3,500$3,500$3,500$3,500
CPP/QPP Exemption Amounts – 2013Pay PeriodBasic Exemption ($)Weekly67.30Bi-weekly134.61Semi-monthly145.83Monthly291.6610 periods350.0027 pays129.6253 pays66.03Annual3,500.00
Pensionable Earnings - 2013To determine whether a particular earning is subject to CPP contributions, please refer to the Canada Revenue Agency’s Special Payments Chart.
Employment Insurance 
Employment Insurance (EI) provides temporary income support for unemployed Canadians who cannot work for reasons of sickness, childbirth, or parenting; or who are providing care or support to a family member who is gravely ill with a significant risk of death.
EI also provides temporary financial assistance for unemployed Canadians while they look for work or upgrade their skills.
Employers must deduct EI premiums from each dollar of their employees’ insurable earnings up to the yearly maximum. Most earnings in Canada are insurable. There is no age limit for deducting EI premiums.
Employers are also required to contribute at a rate 1.4 times the EI premium withheld for each employee (unless eligible for a reduced rate).
Employment Insurance 20122013Rate1.83%1.88%Maximum Insurable Earnings$ 45,900.00$ 47,400.00Maximum Annual Premium$ 839.97$ 891.12
Employment Insurance – Quebec Employees 20122013Rate1.47%1.52%Maximum Insurable Earnings$ 45,900.00$ 47,400.00Maximum Annual Premium$ 674.73$ 720.48
Quebec Parental Insurance Plan Premiums –
QPIP 20122013Contribution Rate (Employees)0.559%0.559%Maximum Insurable Earnings$66,000.00$67,500.00Maximum Employee Premium$368.94$377.33Employer Contribution Rate0.782%
(1.4 x 0.559)0.782%
(1.4 x 0.559)
Reduced EI Rates for Company Paid Portion 20122013 Reduced RateMultipleReduced RateMultipleCategory 10.271.2520.251.267Category 20.401.1810.371.203Category 30.391.1870.371.203Category 40.421.1700.401.187
Reduced EI Rates for Company Paid Portion – QPIP Contributors 20122013 Reduced RateMultipleReduced RateMultipleCategory 10.271.2160.251.236Category 20.401.1280.371.157Category 30.391.1350.371.157Category 40.421.1140.401.137
Summary Chart for Insurable Earnings & Hours - 2012 To determine whether or not earnings and hours are insurable, and, if they are insurable, to which pay period they should be allocated,
Taxable Benefits
When an employer provides a benefit to an employee in addition to salary and wages, they may need to include its value in the employee’s taxable income.A benefit can include a reimbursement of personal expenses, free use of property, goods, or services, or an allowance.
The table below lists examples of taxable benefits and explains how to quantify them.The following information is subject to change.
Some benefits are subject to PST and/or GST, which may become a component of the taxable benefit. It is best to establish the correct ruling with the taxation office.Taxable Benefits Listing - 2013Taxable BenefitDetailsMedical CoverageEmployer portion of provincial health plan premiums (BC). Employer-paid premiums under private health insurance plans (Quebec only).
Group Life InsuranceEmployer-paid premiums on group life insurance.AD & D InsuranceA federally taxable benefit effective January 1, 2013. Historically employer-paid premiums for this benefit were only taxable in Quebec.Company Car (owned)2% of capital cost per month plus pro-rated operating costs.Company Car (leased)2/3 of leasing cost plus pro-rated operating costs.
Gifts/AwardsFederal: $500 exemption for gifts and awards together, plus, a long service award of $500 every 5 years; $500 is now an exemption. Any amount in excess of $500 is taxable;
No limit to number of non-cash gifts and awards an employee may receive in a year, provided FMV does not exceed $500. “Nominal” gifts and awards such as t-shirts, mugs, etc., are excluded from taxability. Quebec: $500 threshold treated as an exemption. No limit on number of gifts/awards provided. Gift certificates and smart cards qualify as a non-monetary gift.Board and LodgingDifference between fair market value and any lower amount the employee pays.Interest-free & Low-interest LoansDifference between interest that would have been paid for the year at the prescribed interest rates, and the amount of interest, if any, that the employee pays in the year.
Income Maintenance PlansEmployer-paid premium to a non-group plan for
A – Sickness & Accident Insurance
B – Disability Insurance
C – Income MaintenanceFor additional information about taxable benefits, contact your district taxation office and/or applicable publications. (i.e., CRA Employers’ Guide Taxable Benefits and Allowances (T4130)/Revenu Quebec - IN-253, Taxable Benefits)
Withholding Tax regulations on lump sum single payments made to an employee, or a withdrawal from an RRSP - 2013 Less than $5,000$5,001-15,000$15,001+Federal TaxIn Quebec5%10%15% All other provinces10%20%30%Provincial TaxIn Quebec* 16%20%20%*If paying bonus/retro and less than $14,000, may use 8% provincial tax rate.
Please check regulations to determine if lump sum rates apply.Prescribed Interest Rates - 2013QuarterRate1st Quarter1%2nd Quarter1%3rd Quarter1%4th Quarter1%Note: For future quarterly rates, see CRA’s web site

 Income Tax
Canada levies a personal income tax on income earned. The amount any individual must pay is based on their taxable income (income earned less allowed expenses) for the tax year.
The table below provides information on federal and provincial/territorial income tax rates.
Federal Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum – 11,038.00Code 211,038.01 – 13,147.00Code 313,147.01 – 15,256.00Code 415,256.01 – 17,365.00Code 5 17,365.01 – 19,474.00Code 619,474.01 – 21,583.00Code 721,583.01 – 23,692.00Code 823,692.01 – 25,801.00Code 925,801.01 – 27,910.00Code 1027,910.01 – 30,019.00
Annual taxable incomeRate0 – 43,56115.00%43,561 – 87,12322.00%87,123 – 135,05426.00%135,054 and over29.00%
Alberta Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum – 17,593.00Code 217,593.01 – 20,167.00Code 320,167.01 – 22,741.00Code 422,741.01 – 25,315.00Code 525,315.01 – 27,889.00Code 627,889.01 – 30,463.00Code 730,463.01 – 33,037.00Code 833,037.01 – 35,611.00Code 935,611.01 – 38,185.00Code 1038,185.01 – 40,759.00
Annual taxable incomeRateThe provincial rate that applies to all taxable income for Alberta is still 10%
British Columbia Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum – 10,276.00Code 210,276.01 – 12,495.00Code 312,495.01 – 14,714.00Code 414,714.01 – 16,933.00Code 516,933.01 – 19,152.00Code 619,125.01 – 21,371.00Code 721,371.01 – 23,590.00Code 823,590.01 – 25,809.00Code 925,809.01 – 28,028.00Code 1028,082.01 – 30,247.00
Annual taxable incomeRate0 – 37,5685.06%37,568 – 75,1387.70%75,138 – 86,26810.50%86,268 – 104,75412.29%104,754 and over14.70%
Manitoba Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum –   8,884.00Code 28,884.01 – 10,577.00Code 310,577.01 – 12,270.00Code 412,270.01 – 13,963.00Code 513,963.01 – 15,656.00Code 615,656.01 – 17,349.00Code 717,349.01 – 19,042.00Code 819,042.01 – 20,735.00Code 920,735.01 – 22,428.00Code 1022,428.01 – 24,121.00
Annual taxable incomeRate0 – 31,00010.80%31,000 – 67,00012.75%67,000 and over17.40%
New Brunswick Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum –  9,388.00Code 29,388.01 – 11,470.00Code 311,470.01 – 13,552.00Code 413,552.01 – 15,634.00Code 515,634.01 – 17,716.00Code 617,716,01 – 19,798.00Code 719,798.01 – 21,880.00Code 821,880.01 – 23,962.00Code 923,962.01 – 26,044.00Code 1026,044.01 – 28,126.00
Annual taxable incomeRate0 – 38,9549.10%38,954 – 77,90812.10%77,908 – 126,66212.40%126,662 and over14.30%
Newfoundland and Labrador Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum –   8,451.00Code 28,451.01 – 10,276.00Code 310,276.01 – 12,101.00Code 412,101.01 – 13,926.00Code 513,926.01 – 15,751.00Code 615,751.01 – 17,576.00Code 717,576.01 – 19,401.00Code 819,401.01 – 21,226.00Code 921,226.01 – 23,051.00Code 1023,051.01 – 24,876.00
Annual taxable incomeRate0 – 33,7487.70%33,748 – 67,49612.50%67,496 and over13.30%
Northwest Territories Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum – 13,546.00Code 213,546.01 – 15,875.00Code 315,875.01 – 18,204.00Code 418,204.01 – 20,533.00Code 520,533.01 – 22,862.00Code 622,862.01 – 25,191.00Code 725,191.01 – 27,520.00Code 827,520.01 – 29,849.00Code 929,849.01 – 32,178.00Code 1032,178.01 – 34,507.00
Annual taxable incomeRate0 – 39,4535.90%39,453 – 78,9088.60%78,908 – 128,28612.20%128,286 and over14.05%
Nova Scotia Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum –   8,481.00Code 28,481.01 – 10,081.00Code 310,081.01 – 11,681.00Code 411,681.01 – 13,281.00Code 513,281.01 – 14,881.00Code 614,881.01 – 16,481.00Code 716,481.01 – 18,081.00Code 818,081.01 – 19,681.00Code 919,681.01 – 21,281.00Code 1021,281.01 – 22,881.00
Annual taxable incomeRate0 – 29,5908.79%29,590 – 59,18014.95%59,180 – 93,00016.67%93,000 – 150,00017.50%150,000 and over21.00%
Nunavut Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum – 12,455.00Code 212,455.01 – 14,821.00Code 314,821.01 – 17,187.00Code 417,187.01 – 19,553.00Code 519,553.01 – 21,919.00Code 621,919.01 – 24,285.00Code 724,285.01 – 26,651.00Code 826,651.01 – 29,017.00Code 929,017.01 – 31,383.00Code 1031,383.01 – 33,749.00
Annual taxable incomeRate0 – 41,5354.00%41,535 – 83,0717.00%83,071 – 135,0549.00%135,054 and over11.50%
Ontario Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum –   9,574.00Code 29,574.01 – 11,637.00Code 311,637.01 – 13,700.00Code 413,700.01 – 15,763.00Code 515,763.01 – 17,826.00Code 617,826.01 – 19,889.00Code 719,889.01 – 21,952.00Code 821,952.01 – 24,015.00Code 924,015.01 – 26,078.00Code 1026,078.01 – 28,141.00
Annual taxable incomeRate0 – 39,7235.05%39,723 – 79,4489.15%79,448 – 509,00011.16%509,000 and over13.16%
Prince Edward Island Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum –   7,708.00Code 27,708.01 –   9,308.00Code 39,308.01 – 10,908.00Code 410,908.01 – 12,508.00Code 512,508.01 – 14,108.00Code 614,108.01 – 15,708.00Code 715,708.01 – 17,308.00Code 817,308.01 – 18,908.00Code 918,908.01 – 20,508.00Code 1020,508.01 – 22,108.00
Annual taxable incomeRate0 – 31,9849.80%31,984 – 63,96913.80%63,969 and over16.70%
Quebec Deduction Codes - 2013CodeAmount ($)NilA1 – 11,195B11,195 – 13,000C13,001 – 15,000D15,001 – 18,000E18,001 – 19,000F19,001 – 20,000G20,001 – 21,000H21,001 – 23,000I23,001 – 25,500J25,501 – 28,000K28,001 – 29,500L29,501 – 31,000M31,001 – 32,000N32,001 – 34,000N-column Z34,001 or overXExemption
Annual taxable incomeRate0 – 41,09516.00%41,095 – 82,19020.00%82,190 – 100,00024.00%100,000 and over25.75%
Saskatchewan Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum – 15,241.00Code 215,241.01 – 17,202.00Code 317,202.01 – 19,163.00Code 419,163.01 – 21,124.00Code 521,124.01 – 23,085.00Code 623,085.01 – 25,046.00Code 725,046.01 – 27,007.00Code 827,007.01 – 28,968.00Code 928,968.01 – 30,929.00Code 1030,929.01 – 32,980.00
Annual taxable incomeRate0 – 42,90611.00%42,906 – 122,58913.00%122,589 and over15.00%
Yukon Claim Codes - 2013Claim codeTotal claim amount ($)Code 0No claim amountCode 1Minimum – 11,038.00Code 211,038.01 – 13,147.00Code 313,147.01 – 15,256.00Code 415,256.01 – 17,365.00Code 517,365.01 – 19,474.00Code 619,474.01 – 21,583.00Code 721,583.01 – 23,692.00Code 823,692.01 – 25,801.00Code 925,801.01 – 27,910.00Code 1027,910.01 – 30,019.00
Annual taxable incomeRate0 – 43,5617.04%43,561 – 87,1239.68%87,123 – 135,05411.44%135,054 and over12.76%
F/T & P/T
FEDERAL1$11,038.00$11,038.00$6,854.00$2,000.00$465/ $140/MTH$7,697.00$4,490.00/ $6,530ALBERTA$17,593.00$17,593.00$4,903.00$1,355.00$684/ $205/MTH$13,571.00$10,185/ $10,184B.C.2$10,276.00$8,860.00$4,421.00$1,000.00$200/ $60/MTH$7,394.00$4,314.00MANITOBA$8,884.00$8,884.00$3,728.00$1,000.00$400/ $120/MTH$6,180.00$3,605.00N.W.T.$13,546.00$13,546.00$6,626.00$1,000.00$400/ $120/MTH$10,985.00$4,490.00NEW BRUNSWICK$9,388.00$7,971.00$4,584.00$1,000.00$400/ $120/MTH$7,600.00$4,434.00NFLD. & LAB.$8,451.00$6,906.00$5,395.00$1,000.00$200/ $60/MTH$5,703.00$2,684.00/ $2,683.00NOVA SCOTIA$8,481.00$8,481.00$4,141.00$1,173.00$200/ $60/MTH$7,341.00$4,898.00/ $2,798.00NUNAVUT$12,455.00$12,455.00$9,341.00$2,000.00$465/ $140/MTH5$12,455.00$4,490.00ONTARIO4$9,574.00$8,129.00$4,674.00$1,324.00$515/ $154/MTH$7,735.00$4,513.00P.E.I.$7,708.00$6,546.00$3,764.00$1,000.00$400/ $120/MTH$6,890.00$2,446.00QUEBEC$11,195.00$11,195.00$2,410.00$2,140.00666SASKATCHEWAN3$15,241.00$15,241.00$4,643.00$1,000.00$400/ $120/MTH$8,979.00$8,979.00YUKON1$11,038.00$11,038.00$6,854.00$2,000.00$465/ $140/MTH5$7,697.00$6,530.00 

Vacationable Earnings
Vacationable earnings vary by province and territory but typically include regular earnings, overtime and shift premium pay, public holiday pay as well as bonuses and commissions related to hours of work, production or efficiency.
The table below was created in consultation with Labour/Employment Standards offices and provides an overview of earnings typically included or excluded from vacation pay calculations in each jurisdiction.
Individual circumstances can determine whether an earning is vacationable, so please obtain confirmation as required.
Y = included
– = not included or not applicable
Vacationable Earnings -
2012 EarningsFEABBCMBNBNLNTNSNUONPEQCSKYT Allowances-------------- Benefits (Taxable) - Board & LodgingY--Y---Y-YY-Y- - Employer Provided/Leased Auto-------------- - Life Insurance-------------- - Company Loans-------------- - Medical Coverage (Provincial)-------------- Bonuses (Paid in Cash) - Work RelatedYYYYYYYYYYYYYY Call-In Pay/Call-Back PayYYYYYYYYYYYYYY Commissions (Earned at Employer Premises)YYYYYYYYYYYYYY Commissions (Earned Away from Employer Premises)Y-YYYYY-Y-YYYY Commissions (Route Salesman)YYYYYYYYYYYYYY Directors' Fees----Y------Y-- Gifts (Cash/Kind)-------------- Gratuities/Tips-----------Y-- Overtime PayY-Y-YYYYYYYYYY Profit SharingY----------Y-- Salary/Earnings/Retroactive PayYYYYYYYYYYYYYY Severance Pay--Y----------Y Shift PremiumYYYYYY-YYYYYYY Sick PayY-YY---YYYYY-Y Standby PayY------YY-YY-Y Statutory/General HolidaysY-YY-YYYYYYYYY Vacation Pay (Previously Paid)YYY--Y-----YY- Wages in Lieu of Notice; Compensatory indemnity--Y-Y-YYYYYY-Y 
Workers' Compensation 
Each province and territory administers the workers' compensation system within its jurisdiction. This no-fault insurance system is funded by employer-paid premiums.
It ensures that employers share collective liability for work related injuries and illnesses, and injured workers receive a full range of benefits such as wage replacement, healthcare treatments and rehabilitation services.
Employers report assessable wages to the WCB, which are then used to determine premiums. There is no minimum assessable earnings level for workers but the amount employers report per worker is subject to a maximum assessable earnings level. There is no assessment charged on the portion of a worker’s earnings that exceeds that maximum.
Workers’ Compensation Maximum Assessable Earnings - 2013Province/TerritoryMaximum Assessable AmountsFiling Deadlines 20122013 Alberta$86,700$90,200February 28British Columbia$73,700$75,700February 28
March 1-15*Manitoba$104,000$111,000February 28New Brunswick$58,100$59,500February 28Newfoundland and Labrador$52,885$54,155February 28Northwest Territories/Nunavut$82,720$84,200February 28Nova Scotia$53,900$54,400March 31Ontario$81,700$83,200March 31Prince Edward Island$49,300$50,000February 28Quebec$66,000$67,500March 15Saskatchewan$55,000$55,000February 28Yukon$80,024TBDFebruary 28
*  Staggered deadlines apply. E/R’s paying annually must report according to last 2 digits in account number and corresponding dates.
Workers Compensation Assessable Earnings - 2013For a list of the earnings that are taken into consideration when determining the amount an employer is assessed on (by jurisdiction), please refer to the Association of Workers’ Compensation Boards of Canada website.

Payroll and Your Business

Payroll and Your Business
Payroll and Your Business Setting up payroll can be confusing for small- or medium-sized businesses.
Employers must make deductions from amounts paid to employees, report them on the applicable slips and send the payments to Revenue Canada.
How it works
In Ontario  and the rest of Canada (with some exceptions in Quebec), employers have to deduct Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums and income tax from the amount they pay employees. Throughout the year, employers send these deductions to Revenue Canada on their employees' behalf, along with their share of contributions.
At the end of February, the following year, employers report an employee's income and deductions on the appropriate information slip — like the T4 or T4A.
Registering for an account
If you are an employer paying salaries, wages, advances or other benefits, you need to register for a payroll account with Revenue Canada. Companies need to attach the payroll account to their Business Number (BN). Companies that don't yet have a BN need to obtain a BN and then a payroll account.
Companies have to register for a payroll account before the 15th day of the month following the month in which they began withholding deductions from their employees' pay.
Hiring an employee
When you hire an employee, one of the first things you need to do is obtain the person's Social Insurance Number (SIN). Employees have to show their SIN card to their employer, and the employer has to always use the correct name and number as shown on the employee's SIN card.
The employee must then complete a TD1 and Personal Tax Credits Return Form. These forms tell the employer how much federal and provincial or territorial tax to deduct from his or her income.
How much to deduct
As an employer you calculate the CPP, EI and income tax deductions based on the amounts you pay your employees. These amounts are determined with the help of various guides published by Revenue Canada. Some of these guides may be T4001, Employers' Guide -- Payroll Deductions -- Basic Information, T4130, Employers' Guide -- Taxable Benefits or T4032, Payroll Deductions Tables. A complete list of downloadable guides can be found on Revenue Canada's website.
You hold these payroll deductions in trust for the Receiver General and must keep these amounts separate from the operating funds of your business.  You then remit these funds to Revenue Canada using the remittance forms and following the procedures and due dates outlined on the Revenue Canada website.
The final step consists of filing employer information returns that summarize the numbers. The summaries and slips are due on the last day of February for deductions from the year before. Companies can use the Internet to file T4 slips. More information about filing employer information returns can be read in the guide titled,
When an employee leaves your employment, you have to prepare a Record of Employment (ROE). Revenue Canada suggests calculating the employee's earnings and deductions for the year to date, and giving the employee a T4 slip. Then you can keep a copy of their slip and include it with your T4 Summary when you file it with Revenue Canada by the end of February of the following year.
More information
Payroll is an extensive and sometimes complex area of running a business. The Canadian Revenue Agency website contains instructions, news, forms and resources to help your business with  any inquires about  payroll. You can  contact Revenue Canada's information number at 1-800-959-5525  for more info .

Assess Your Financial Spending and Savings Decisions to Meet Goals

Assess Your Financial Spending and Savings Decisions to Meet Goals
Assess Your Financial Spending and Savings Decisions to Meet Goals
The Financial Assessment Calculator links your client’s trigger questions about life events, financial events, and economic events with changes needed to get the financial results needed now and in the future. See it in action with the following what-if-scenario and then try it for yourself, risk-free!
Most important, this calculator allows for analysis of the use of money in two stages:
·         non-discretionary spending
·         discretionary spending
The calculator then moves clients from thinking in the present to a future orientation: how to use their “redundant income” as a tool to build income-producing capital (affectionately called “don’t see it, don’t need it” money).
Now you and your clients are ready to make decisions about making changes to spend and save to meet goals.
Kevin lives in Saskatchewan. His 2011 income is $100,000. His current assets and liabilities are:
·         RRSP: $125,000
·         Mutual Funds: $100,000
·         TFSA: $15,000
·         Other deposits: $5,000
·         Principal residence: $450,000
·         Vehicle: $10,000
·         Credit Cards: $10,000
·         Line of Credit: $12,000
·         Investment Loan: $50,000
·         Home mortgage: $300,000
Using the Calculator
Step 1: What’s on your mind?
In your interview with Kevin, you determine what Kevin is thinking about and his immediate an long-term concerns. In the first section of the calculator you record that he is concerned about saving for his son’s college (his son is just graduating from elementary school), saving for his own retirement, and also recovering from losses in the market.
Step 2: What do you want to accomplish?
The next section of the calculator explores where Kevin would like to be in the future, but this is really a summary of the details of the next three steps so we’ll get back to this section after completing those steps.

Step 3: Where do you stand?
The next section of the calculator allows you to determine Kevin’s current net worth and key data regarding his financial health. Entering Kevin’s assets and liabilities in the next section gives the following:
Kevin’s current ratio is 1.89. His assets exceed his liabilities which is a healthy situation.
Kevin’s debt to income can’t be determined until we enter his income. 
Kevin’s Debt to Equity is 1.11 indicating he owes more than his net worth – this number should be reduced.
Step 4: Where would you like to be?
The next step is to look at where Kevin would like to be in the future. For now, we’ll look at a goal for five years from now when Kevin’s son enters college. Kevin would like to grow his RRSP, mutual funds and TFSA deposits; he’d like to establish an RESP for his son; and he’d like to pay off his consumer debt and reduce his investment loan and mortgage. His target Net Worth statement shows:
This target improves his current ratio and move is debt to equity ratio within the target range of less than 0.50.  Further analysis requires income and spending data – Step 5.
Step 5: How are you using your cash?
Entering, Kevin’s current income and spending as well as target figures gives the following:
As we can see, Kevin is currently spending almost all of his income (only $277 remaining per month). By projecting a modest increase in income, reduction in lifestyle purchases as well as in increase in RRSP contributions, RESP contributions and a reduction in debt service, Kevin’s remaining income increases to over $2,000 per month.
Wrapping Up
Now that we have income, we can look back at Kevin’s debt to income ratios. Currently it’s 7.04 but is reduced to 5.2 after changes to income, spending, assets and liabilities are taken into account.
Back on the first tab, “What would you like to accomplish” shows:
This section summarizes the plan to decrease discretionary spending, and increase capital.
On the Net Worth tab, the middle section shows:
Part A gives details of the savings required to maintain the current or retirement income if current income sources did not exists.
Part B summarizes the plan to build capital and reduce debt.

The TFSA is Your Ticket to Tax Freedom

The TFSA is Your Ticket to Tax Freedom
The TFSA is Your Ticket to Tax Freedom
Make sure you contribute $5,000 for each resident adult in the family every year. $5500  for  2013  and going forward .
Earnings are not taxed either in the plan or when they are removed. It provides an excellent parking place for transferred assets from the higher-income taxpayer to lower-income taxpayers in the family.
The TFSA is an absolute gift to your future financial freedom. It will help you create a tax-free pension. Given its full accumulation period (age 18 to date of death, every resident of Canada has the opportunity to become a millionaire, by simply investing $5,000 each year. Being very conservative, if you deposit $5,000 each year, indexed by 2%, for 50 years in a TFSA that earns only 4.5% interest on those deposits, the balance after the last deposit will be over $1,103,000.

RDSP Income

RDSP Income
RDSP Income
If you have a Registered Disability Saving Plan and are receiving disability assistance payments from the plan, a portion of these payments will be shown in Box 131 of a T4A slip.
That amount must be reported and is taxable. When you enter these benefits in your tax software, they will be posted to Line 125 of your return. The portion of your disability assistance payments that represents contributions to the RDSP will not be taxable

Disability Awareness: EI Benefits for Disabled People

Disability Awareness: EI Benefits for Disabled People
Advisors should be aware of and discussing income replacement opportunities with their client families if disability has entered into the picture.
These income sources can pay medical bills and assistance; however, they may be instrumental in ensuring that other investments stay intact. Here are some basic components of EI Disability supports:
You may be entitled to receive benefits from Employment Insurance as a result of your inability to work for up to 15 weeks. These benefits are taxable. They can amount to up to 55% of your average insurable earnings to a dollar maximum. Lower income families can receive up to 80% of the average insurable earnings. However, applying for them involves a qualification process with Service Canada, including health information with a doctor’s certificate, as well as detailed employment records. If you are eligible the payments will start in 28 days, after a two-week waiting period.
Complications arise when EI is received in conjunction with other income. For example, any money you receive during the two-week waiting period will be deducted from the benefits you are entitled to receive for the first three weeks, dollar for dollar.
Likewise if you work while receiving EI sickness benefits, or receive commissions, compensation under a work accident plan, group health or group wage loss replacement plan, payments under an accident insurance plan, or retirement income under a public or private plan, the amount you earn will be deducted dollar for dollar.
The good news is that the following types of income noted on the EI benefits website have no impact on EI:
·         retroactive salary increases.
·         disability benefits;
·         survivor or dependent benefits;
·         workers’ compensation benefits paid under specific regulations;
  additional insurance benefits paid under a private plan that is approved by Service Canada (for example, payments for pain and suffering or medical expenses that you receive from an insurance company after you have been injured in a car accident);
·         additional sickness benefits paid by your employer from a supplemental unemployment benefit plan (as long as the income, benefits, and additional amounts combined do not exceed 100% of your weekly earnings);
·         sickness or disability payments received under a private wage loss replacement plan.
Repayments of EI and CPP. Because there is often a multi-year process to sort out repayments of those various income sources that overlap in the onerous qualification process and waiting periods. If a repayment is necessary, it is claimed as a deduction on Line 232 Other Deductions, in the year the repayment took place.
Legal Fees. Paid to object to or appeal a decision under the Income Tax Act, the Unemployment Insurance Act, the Employment Insurance Act, the Canada Pension Plan Act or the Quebec Pension Plan Act are deducted here, too.

Living to 100 –Financial Literacy Matters More

Living to 100 –
Financial Literacy Matters More
Interestingly, financial literacy enters into the discussion. The real challenge of living to 100 will be to systematically weave financial literacy into elementary, middle, and high school programs, according to Olivia Mitchell, Professor of Insurance and Risk Management at Wharton. 
The article contemplates worklife will extend well into age 70 and 80 for many and, if that is indeed so, the many changes that are required to plan for an older generation of employees are interesting. Will there be more outsourcing?  Less physical work? More part-time work?  More or less supervision? More or less empowerment ?  How will younger generations adapt?
The phenomenon could, in fact, make for a much better work life balance – even for the younger members of the workforce.
“We need to get people thinking differently about investing in themselves, in their human capital. . . (and to). . .assemble a tool kit that will get them not only a first job. . .but to fashion several different 20 year careers over a lifetime,” says Ms. Mitchell. Her biggest concern is the scant knowledge the average worker has about basic economics and the importance of readiness for longevity risk with a proper retirement plan. That requires knowledge about saving and investing throughout one’s lifetime.
It’s Your Money. Your Life. What would you do differently to plan your finances to live to be 100?

Discussing Pre-nuptual Agreements Important

Discussing Pre-nuptual Agreements Important
New Family Law Act in BC triggers wealth preservation considerations.
New provincial laws makes marriage or co-habitation agreements much more important, and therefore critical for advisors to include in conversations with their clients. The new Family Law Act came into force on March 18th in British Columbia, for example, but the effects of this legislation may take years to fully realize. The important aspects to be studied is how the new Act will affect asset distribution, not only in matrimonial relationships, but also regular co-habitation arrangements in British Columbia.
Although the new Act provides an avenue of asset preservation by allowing individuals to enter into an agreement to protect all assets brought into the relationship, the Act will deem partners who have a child or have been cohabiting for two or more years to be spouses, with asset division resulting from any breakup of that relationship. Without such an agreement though, the partner who brings fewer assets to the table no longer has to prove “contribution” and will be treated as a spouse for asset division purposes. This might catch many couples off guard because intention is not a factor in this deemed relationship.
A welcome change in the new Act is the law pertaining to inheritances – they no longer have to be shared with your spouse and are presumed to be yours. Therefore, parents who want to provide directly for their children and protect family wealth will be able to use this new law as an estate-planning tool. This change is welcomed because with the aforementioned deemed spousal rule, many unintended complications can be avoided with prudent planning.
Under the new Act, the courts will look at pre-nuptial agreements with less scrutiny, so long as they are not perceived to be terribly inequitable.
 Agreements that are entered into prior to co-habitation will be very important. The way in which these are drafted will also be important. For instance, the value of the items brought into the relationship must clearly be stated at the outset. 

CRA: Victim Surcharges to Be Doubled

CRA: Victim Surcharges to Be Doubled
CRA: Victim Surcharges to Be Doubled
Are you aware of the possibility of paying victim surcharges?
On June 12, 2013 the Canada Revenue Agency (CRA) announced that a resident of Fort St. John British Columbia was fined $2,000 for failing to file personal tax returns for the years 2004 and 2008.
Interestingly, the Provincial Court also imposed a $300 victim surcharge. Whether evasive taxpayers have to pay victim surcharges or not depends on many factors and at this time still involves much judicial discretion.
With the passing of the Increasing Offenders' Accountability for Victims Act on April 30, 2013, victim surcharges will become mandatory when that legislation is brought into force. Also, as that legislation demands, the monetary amount of victim surcharges will be doubled.
Under the amendments to the Criminal Code, the victim surcharge will be 30 percent of any fine imposed or, if no fine is imposed during sentencing, $100 for a summary conviction and $200 for an indictable offence (an offence punishable by two or more years in prison).
Victim surcharges are imposed on offenders at the time of sentencing.
Even in taxation cases, judges are guided by Part 23 of the Criminal Code in determining an appropriate and just sentence for the offenders. Sections 718 through to 718.2 have particular relevance. They require the balancing of a number of sentencing objectives, including denunciation of the unlawful conduct, deterrence of the offender and other like-minded individuals, separation from society where necessary, rehabilitation, reparation, and promotion of a sense of responsibility.
It is thought that victim surcharges are consonant with some of these notions.
Although the legislation is passed, it has not been brought into force at this time. For more examples of victim surcharges being imposed on taxpayers, see the links below.
On October 30, 2012 there was a similar conviction for failing to file tax returns in BC. The taxpayer was fined $2,000 and ordered to pay a victim surcharge of $300.
On June 27, 2012 a taxpayer in Summerland, BC was fined $3,000 and a $50 victim surcharge.

Understanding Government Benefits

Understanding Government Benefits
Understanding Government Benefits
Government benefits represent the cornerstone of the Canadian Retirement Income System. If you are nearing retirement or in retirement it is important for you to understand how these government benefits play a role in your retirement income. In this article we will touch on the key components of the Canadian Government Benefits.
Canada Pension Plan (CPP)
CPP is a contributory plan. If you have made at least one payment into the CPP plan, you qualify to collect a benefit. The benefit you receive is based on how much, and for how long, you contributed to the Plan. The pension is designed to replace about 25% of the earnings on which you paid into the Plan
In 1998, the average Canada Pension Plan retirement pension taken at age 65 was $408.55 per month. The maximum for that year was $744.79 per month. Here are the maximum CPP amounts since then:
·         2012 – $986.67 per month
·         2011 – $960.00 per month
·         2010 – $934.17 per month
·         2009 – $908.75 per month
·         2008 – $884.50 per month
·         2007 – $863.75 per month
·         2000 – $762.92 per month
You can collect the CPP as early as age 60 but at a reduced amount. The reduction amount is being increased from 0.5% for every month you take CPP before your 65th birthday to 0.6% and will be phased in over a 5 year period from 2012 to 2016.
·         2012 – 0.52% reduction
·         2013 – 0.54% reduction
·         2014 – 0.56% reduction
·         2015 – 0.58% reduction
·         2016 – 0.60% reduction
Finally, it is important to note that CPP does not come to you automatically, you must apply for the CPP benefit.You can get an estimate of your Canada Pension Plan retirement pension, by checking your Statement of Contributions, or call 1 800 277-9914. The closer you are to the date on which you want to begin your pension, the more accurate the estimate will be.
Old Age Security (OAS)
The Old Age Security program is one of the cornerstones of Canada’s retirement income system. Benefits include the basic Old Age Security pension, the Guaranteed Income Supplement and the Spouse’s Allowance. After briefly describing the program’s history and overall features, each of the specific benefits is described in turn. Unlike CPP, the Old Age Security program is financed from federal government’s general tax revenues.
The Old Age Security pension is a monthly benefit available, if applied for, to anyone 65 years of age or over. Here are the maximum benefits:
·         2012 – $540.12 per month
·         2011 – $524.23 per month
·         2010 – $521.62 per month
·         2009 – $516.96 per month
Old Age Security residence requirements must also be met. An applicant’s employment history is not a factor in determining eligibility, nor does the applicant need to be retired. Old Age Security pensioners pay federal and provincial income tax.  In 2012, The government announces changes to the age of eligibility of Old Age Secutiry moving to from age 65 to 67.  This change will be phased in 2023.
Higher income pensioners also repay part or all of their benefit through the OAS clawback.  The clawback for starts at
·         $69,562 for 2012
·         $67,668 for 2011
·         $66,733 for 2010
·         $66,335 for 2009
The Guaranteed Income Supplement (GIS)
The Guaranteed Income Supplement is a monthly benefit paid to residents of Canada who receive a basic, full or partial Old Age Security pension and who have little or no other income.
Recipients must re-apply annually for the Guaranteed Income Supplement benefit by filing an income statement. Thus, the amount of monthly payments may increase or decrease according to reported changes in a recipient’s yearly income.
Unlike the basic Old Age Security pension, the Guaranteed Income Supplement is not subject to income tax. To receive the Guaranteed Income Supplement benefit, a person must be receiving an Old Age Security pension. The yearly income of the applicant or, in the case of a couple, the combined income of the applicant and spouse, cannot exceed certain limits.
Currently the maximum GIS benefit for 2012 is $738.96 per month for a single person and $489.98 for a married person.
For more information on GIS, visit the government website
The Allowance and Allowance for the Survivor
The allowance provides a benefit for low-income earners between the ages of 60 to 64 if still married. The allowance for the survivor occurs if the spouse is deceased. After age 64, the OAS replaces the spouses allowance.
While many people believe the government will take care of them in retirement, we can see from the numbers that this is far from the truth. Government benefits will help retirees but it will not provide adequate levels of retirement income.
You must continue to invest in RRSPs, pension plans, or investments to ensure a safe and happy retirement.
That being said, be sure to incorporate the government benefits into your retirement plans

4 ways to calculate your retirement number and be secure during your golden years

4 ways to calculate your retirement number and  be secure during your golden years
4 ways to calculate your retirement number and  be secure during your golden years
When it comes to retirement planning, most of us are consumed by figuring out "the number" - that elusive savings goal we aim to hit by age 65, or there about.
Figuring out how much to save for retirement can be confusing, to say the least. You've got to factor in your current income, your retirement lifestyle expectations, inflation, income growth, returns.  To complicate matters, different financial planners and accountants recommend different calculations to find "the number."
Each calculation approach has its own pros and cons, and each will probably lead you to a different retirement goal. It's up to you to decide which approach or combination of approaches works best for your needs so that you can calculate your own retirement plan.
Keep in mind that there are top-down and bottom-up approaches to retirement goals. The top-down approach attempts to determine how big your nest egg will need to be at retirement, such as 25 times your annual expenses.
The bottom-up approach seeks to determine how much you'll need to save each year to reach your goals, perhaps 15 percent of your salary.
Think about lifestyle first.
Most retirement calculations assume you'll want to live a similar lifestyle to the one you're currently in once you retire. But because you'll generally have fewer expenses, like payroll taxes, work expenses and (hopefully) debt payments, you probably won't need to withdraw 100 percent of your current income during your retirement years.
 It is  estimated  that most retirees need about 70 percent of their pre-retirement income during retirement, though lower-income earners may need 90 percent or more of pre-retirement income. If you plan to travel and live it up, you'll need more, but if you plan to live a quiet, simple life at home, you may get by easily on less.
The point is that each of these approaches hinges on the question of what kind of lifestyle you want to lead in retirement, as this will have a huge impact on how much you need to save.
1. The "quick and dirty" approach.
The "quick and dirty" approach described is a very basic way of planning for retirement. Even though it's pretty simple, this approach can actually help you set realistic goals and motivate you to work towards them.
2. Safe savings rates.
The safe savings rates method focuses more on how much, at a minimum, you should save for retirement.
you focus on  a strict savings plan.
3. Age-based goals. Age-based retirement  savings goals do focus on the end number, but this method of calculation actually gives you several smaller numbers along the way. These benchmarks help you see if you're on track for retirement savings, or if you need to ramp up your savings to hit your final goal in time.
Age-based benchmarks are often based on either a very complicated retirement goal calculation or on a "quick and dirty" calculation like the ones outlined above. One popular age-based goal list is from Fidelity Investments and suggests benchmarks like saving your annual income by 30, 3 times your annual income by 45 and 6 times your annual income by 60.
4. Complex retirement calculators. The above three options for finding your retirement number are relatively simple and straightforward. This isn't necessarily a bad thing, but many of us would prefer a little more detail. In this case, there are a plethora of complicated retirement calculators that take everything from income goals to  CPP TO  OLD AGE SECURITY  to inflation to annual interest into account before setting a retirement goal.
No option is perfect. Most financial planners will tell you that figuring out a retirement goal is more art than science. In the end, you're really just making an educated guess, since none of us knows exactly what the market will look like in ten months, let alone ten or more years.
When you're covering decades' worth of financial information and assumptions with a single calculation, expect things to get a little messy. But don't let that discourage you.
Instead, let it motivate you to save as much as you can, so that you'll be secure during your golden years.

Plan Your 'Retirement Landing'

Plan Your 'Retirement Landing'
Plan Your 'Retirement Landing'
You know that feeling when you've been flying all day and you're almost to your vacation destination?
You're tired. You've changed time zones, and everything seems just a little off. As your plane is on approach, you know you should organize everything, but the thought is exhausting.
You need to collect your trash, assemble your scattered belongings, and maybe dig out some gum.
You should be excited because your vacation is about to get fully underway, but wrestling with the logistics leaves you weary and nervous -- you know it's going to be great but you can't help wondering what you've forgotten.
That feeling can be similar when you're "on approach" to retirement. Here are eight tips to help you work out those pesky logistics so that you'll be in a position to really enjoy stepping into those golden years:
1. Put your budget on approach to retirement. Gradually reduce your monthly budget over several years until you reach the level of spending that you've budgeted for your retirement years. You'll avoid retirement sticker shock, plus you should be able to contribute more money to your  RRSP  OR RPP’S  - because that budget surplus has to go someplace.
2. Take advantage of catch-up contributions, which help you to make a final push toward your retirement goals.
3. Stay invested in equities. Don't make overly aggressive moves with your retirement savings, but do remain invested across several different types of investments. Investing as you approach retirement involves a balancing act - balancing the need to protect your savings with the need to increase your savings to outpace inflation.
4. Decide what you're going to do with your retirement dollars when you initially retire, and have everything ready to go when the day arrives. You don't want to retire and find yourself without income for three months because you submitted your paperwork late. I  generally advise against taking a lump-sum cash distribution of all your savings, however, as you're responsible for ordinary income taxes on all pre-tax contributions and earnings and you could bump yourself up several tax brackets.
5. If you have any doubts about whether your savings will last through retirement, work a little longer. Financially, it's a win-win-win scenario. Another year of work gives you another chance to max out your  RRSP  contributions and gives your investments one more year to grow. Plus it's one less year you'll be drawing down your retirement savings.
6. Get long-term care insurance. Long-term care isn't covered by health insurance, so it can deplete a retirement nest egg at an alarming rate. Most people will be in a better position to receive more favorable underwriting on long-term care insurance during the approach to retirement, instead of waiting until after you retire.
7. Get life insurance. If you want to leave a legacy for your family, life insurance can be a good way to do so. In most cases, as long as you've taken care to designate beneficiaries appropriately, the death benefit will be tax-free. As with long-term care insurance, you're likely to receive better underwriting during the approach to retirement than you will post-retirement.
8. Find a financial adviser you trust. Don't work with someone who pushes you toward products that make you uncomfortable. You want an individual who will thoughtfully help you make tough financial decisions and manage your investments.

Is Freedom 35 possible?

Is Freedom 35 possible ?
Is Freedom 35 possible?
 If not, is Freedom, 40, 45, 50 or even 55 possible?  After all, the big joke now is people who are now on track for Freedom 75.I had a reader pose this very question “I am 31. Is freedom 35 possible?”  I’ve thought about this a lot so I thought I would share my thoughts in this post.
Don’t confuse Financial Freedom with Retirement. 
 Financial freedom and retirement are separate concepts.  Retirement is typically and traditionally a term associated with the decision to stop working.  You retire when you choose not to work.  Long ago, retirement happened because you were old.  This happened 30 to 40 years ago when you statistically retired at 65 and you lived until 70.  Today, retirement is still a concept that revolves around not working but one of the biggest changes that is occurring is the reality that more and more people are continuing to work in retirement.
Financial freedom, independence and security can be associated with retirement but it does not have to.  On one hand, in order to retire, you have to have some financial ability to be able to retire and create your own paycheque to replace the one you had from work.  In other words, you have to have some level of financial independence in order to retire. 
 That being said, you don’t have to stop working even if you are financially independent.
Is freedom 35 possible?
The answer to this question is clearly yes. 
 However, in reality, it’s not easy.  In fact, I believe the freedom 35 is simple, just not easy
 The simple part is you need to have enough passive income to meet your lifestyle price tag.  It’s a variation of live within your means.The idea of live within your means suggests that no matter what your means are, you spend less than you earn.  In other words INCOME minus EXPENSES is greater than $0.
Extreme Frugality
For some, living within your means is possible because their expenses are low. 
 At the extreme this end of the spectrum, we call these people extreme frugalists.  There are some people that brag about living on as little money as possible.  Some people love the fact that they use teabags multiple times, the live in the dark to save on electricity, and making reusable toilet paper out of flannel clothes (gross!).
The term frugal is often synonymous with minimalist, cheap, stingy and boring but some frugalists take offense by that.  There may not be a perfect universally accepted definition of frugal but the point is these people try to live on less and as a result typically have a lower cost of living.  Is some respects frugal is in fashion.
The pursuit of maximum wealth
At the other end of the spectrum, some people believe the only way to live within your means is to make sure you have the highest means possible.  When you ask a room of 100 people whether they like money and whether they want more money, 99 to 100 are likely to say (or think) yes.The other way to live within your means is to increase the mean. 
 In other words find ways to make more income
 Many people would agree that financial freedom is possible if you have lots and lots of money or wealth.How do you attain wealth?  Some think it’s about luck. How has that worked for you?  Other’s think it’s about working smarter, not harder.  In other words it’s about the path of least resistance. 
 I’ve met a lot of wealthy people in my life and every single one of them worked hard to get what they have.  In fact these people will tell you about the strong correlation between hard work and wealth.
So if we get back to the questionYes, freedom, 35, 40, 45, 50 or 55 is very possible but you have to recognize what it takes to make it happen. 
 You have to save money
You have to watch your spending and expenses.  You have to live within your means no matter what your means are.  You have to work hard and do smart thing with your money.
  In the end, it’s pretty simple, but far from easy!

Help your teenager build credit responsibly

How to help your teenager build credit responsibly
How to help your teenager build credit responsibly
Solid credit scores take time to build. Everyone has to start somewhere, and as your teenager begins the transition to financial independence, he or she probably doesn't have any credit history.
Lack of credit history can be a hindrance to young adults as they apply for auto loans, shop for interest rates on an auto insurance or go to lease their first apartment.
As such, it's important to start building credit as early as possible.
Consider these tips from financial advisers on how to help your teen build credit, while encouraging financial responsibility.
Co-sign for a debit card - but always review the statement.
Jay Freeberg, a financial adviser in Garden City, N.Y., said parents who want to help their child build credit should first consider co-signing for a debit card linked to the teenager's bank account. "This will limit the purchases to the amount in the bank account, and it will also give the child some independence on how they are spending their money," Freeberg says. "I suggest that parents review each monthly statement - at least in the beginning - with the child to discuss the charges, reinforce the link between the actual spending and payment and outline a budget."
Get your child in the habit of checking their own credit score.
This simple step may be more effective than the financial literacy classes many colleges offer, says Elizabeth Pleck, a certified financial planner in Wellesley, Mass. Pleck cited a 2011 study published in the Journal of Family and Economic Issues that looked at the effectiveness of financial literacy courses for University Alabama undergraduates and graduate students. The study found students who took a financial literacy course were no better at managing credit cards than students who didn't take such a class. "Mom or dad should not put much faith in those financial literacy courses so popular on campus," Pleck says. "My recommended alternative:
Tell your child to check their credit score. If they do it, they are interested in figuring out how the financial world works. If they pay no attention, [it's] time to leave the training wheels on."
Get your teenager a credit card with a small credit limit.
 If you co-signed to get your teenager a credit card, Laurie Itkin, a financial adviser in La Jolla, Calif., recommends setting a small credit line on the card. Itkin tells teenagers to be patient. "Over time, you will be able to establish a higher line of credit if you demonstrate responsible use of the credit you are given." Above all, she says it's crucial teenagers pay off their credit card in full each month. "That's the number one thing a child can do to not only establish good credit but also learn good habits now, so they don't get into trouble later," she says. Itkin suggests credit card newbies start out by making a few small purchases each month on the credit card, such as gas, haircuts or small meals.
Credit has its benefits, but you can have too much of a good thing.
"It is important to explain to kids the proper use of credit and when it should be used," says Russell Francis, a certified financial planner in Beaverton, Ore. Francis says credit can be useful when purchasing high-ticket items like a car. However, he says it's easy for many teenagers to start abusing credit and living outside their means.
While some parents may feel like they can't control their son's or daughter's credit behaviors, attitudes towards financial matters are imprinted when children are young. "Kids clearly follow the parent's actions when it comes to money," Jay Freeberg says.
If you haven't always managed your credit responsibly yourself, make sure your child understands your slip-ups had consequences. "I recommend that parents share stories of what happened to them when they missed a credit card payment. What fee did they get hit with? How much did the balance grow when interest charges [were] imposed? What did it feel like to see a balance grow, and how hard was it to pay it down?" Itkin says.
Giving teenagers a good understanding of the pros and cons of using credit - and how to use it responsibly - will help them become financially independent.

Retirement is all about freedom; or is it?

Retirement is all about freedom; or is it?
When it comes to retirement planning, we often hear people using this old saying to describe retirement, “In retirement every day is a weekend.” 
 This language is used to represent the fact that retirement is supposed to represent freedom – the freedom to do what you want, when you want where you want and however you want to do it.  The word freedom has become a universal symbol for retirement and it stems back to the London Life advertising campaign –
When people are still working , what is the one day most people look forward to every week? 
How many of you look forward to Fridays because it is the start of the weekend?  For most people, weekends represent precious days of freedom because you are away from what you do most of the time and that’s work!
Is there such a thing as too much freedom?
I think freedom is a great concept and most people’s perception of the ideal retirement would represent this life of freedom where you choose to do what you want and when you want to do it.  Freedom and time are great concepts but the problem comes when you have too much time and freedom on your hands.
 Is it possible to have too much time?  Do you know people who have too much time on their hands and don’t know what to do with it?  People with too much time often become bored which does not represent the ideal retirement, right? 
Do you know people who retired assuming it would be great only to find they were bored out of their mind?In my retirement planning workshops we often ask people to describe their perfect day. 
 One response went like this:“When I retire, I plan to sleep in.  I look forward to the days when I don’t have to plan my day and I can just do whatever I want.  If I want to stay my pyjamas all day I can.  If I want to go for a walk, I can.  I can’t wait till the day when retirement has no boundaries. I will be free to do whatever I want.
As much as this may appeal to some people, there are some fundamental problems with this thinking.
Freedom is great when it is harnessed.  Freedom without a plan may lead to useless freedom.  Freedom is such a generic term that it can lead to no action.  The risk with the response above is there is this person values freedom so much that nothing happens.  Action comes out of being specific and detailed.  For example, in retirement we have the freedom to travel more. 
 Everyone wants to travel more but until you come up with details about what travel means to you, travel has no meaning.Freedom of choice is great unless there is too much choice.Choice is something the corporate world gave us.  Their solution to increase sales is to give more options and more choice.  Different colors, models, sizes, shapes, options, styles, versions, etc.  Some studies have shown the more choice we have, the more confused we get and sometimes to the point where we don’t make any decisions because it is all too overwhelming.
Financial Freedom is not enoughFor most of us, retirement is really entwined with finances.  Most of us think if we just save enough money, then we can retire to the best years of our life but is this really the case?  Money is an important retirement concept but it is closely linked to your lifestyle. 
 You can have all the money in the world but if you don’t know what to do with your time, what good is the money?  Ironically, I have met lots of retirees have a difficult time spending money in retirement because of fear of spending it too quickly or to avoid paying taxes on withdrawal.Successful retirement planning comes from the harmonization of both lifestyle issue and money issues. 
 As a result, freedom in retirement works best when you have some structure.  In other words, we all look forward to our weekends when work is part of our lives.  But if every day is a weekend, then what do we have to look forward to?