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Tax-Free Savings Accounts Part II
Ontario's Aging at Home Strategy


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# Tuesday, January 20, 2009
Tuesday, January 20, 2009 1:58:49 PM (GMT Standard Time, UTC+00:00) ( General Life ) published a blog in November regarding the new Tax-Free Savings Accounts that are now available to Canadians. The initial blog gave general information regarding this subject; this blog is intended to provide more detailed information.

The Tax-Free Savings Account (TFSA) gives Canadians more choice in how they wish to accumulate savings, retirement assets, etc. It allows all Canadians over the age of 18 to contribute initially $5000.00 per year into this account; this amount will increase in increments of $500.00 per year as inflation grows. The income derived from this account is exempt from taxation, including withdrawals; however there is no tax deduction available for deposits made to the account. Any withdrawals can later be replenished to the account without affecting that particular year's allowance.

This new type of account offers several advantages. As there is no taxable liability, 'income' taken from this plan does not increase your marginal tax rate. It also allows for long term financial planning; and as the added cash flow doesn't affect taxable income it can increase the after tax income you receive from other taxable plans, i.e. RRIFs. The TFSA can be a very effective estate planning tool as well as there is no taxable liability. While the language of the plan is somewhat unclear, it does suggest that there will be no tax on any income/gains accrued up until death.

The TFSA is almost as successful as an RRSP when used as a wealth accumulation tool. When the taxation is factored in, money saved in the TFSA is comparable to the RRSP due to the tax rates that are involved when withdrawing funds from the RRSP. As well, RRSPs can create other 'costs', i.e. loss of tax credits. As well, taxes can be higher on RRSP income due to the triggering of OAS when the minimum withdrawals are mandated. The total amount accumulated will be dependent on the tax rates that are applicable to withdrawing the funds from the RRSP; the TFSA does not incur any taxation costs upon withdrawal.

For Canadians who are trying to save money while earning a lower income, the TFSA can actually be more advantageous than an RRSP. The advantage of the RRSP deduction is reduced by the lower tax rates that this income bracket would pay. For people who will more than likely be earning more in their future, the TFSA can be a better financial planning tool and the RRSP room can be carried forward for future deductions at higher tax rates. For Canadians who are saving for their retirement, the TFSA has the advantage of allowing the individual to avoid the withdrawal penalties. Most people end up having to take more income from their RRIF due to the legislated minimums; the TFSA can be used as a way to continue to save these excess proceeds from future tax penalties, and does not affect any income-tested tax benefits.

The TFSA can be a great financial tool when it comes to financial planning for their child(ren). The parents can fund more of the education for the child with the agreement that the child save an equivalent amount in their TFSA. This allows the parents to benefit from the tax deductions and credits for funding their child’s education and benefits the child as they will begin to accumulate savings. As the majority of students are lower-income their contribution towards the TFSA comes with a very low after-tax cost and enables them to begin saving towards purchasing a home, starting a business, etc.

The TFSA gives all Canadians another tool when in regards to their financial planning needs. Alone, or combined with other saving strategies, this type of account can help Canadians save more money, especially when it comes to the amount of taxable income. It also allows for a more comprehensive saving strategy for those who are not only planning for retirement, but for other major financial transactions. When it comes to retirement planning, it's always a wise idea to ensure that your life insurance coverage is suitable for your estate planning needs.

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# Sunday, January 04, 2009
Sunday, January 04, 2009 2:48:18 PM (GMT Standard Time, UTC+00:00) ( General Life )

The government of Ontario has launched a $1.1 billion over four year plan that is designed to help seniors reside in their own homes. The initiative was started at the end of August, 2007 and will help match the needs of seniors and their caregivers access the local support services they require to maintain their independence. The Aging at Home Strategy hopes to develop new ways to provide supports and/or services that ensure seniors can spend their final years living where and how they wish to.

The stated goals of the Aging at Home Strategy are:

• To ensure that seniors home support them;
• To ensure that seniors have supportive social environments;
• To ensure easy accessibility to senior-centered care;
• To identify innovative solutions to ensure that seniors are and stay healthy.

The Aging at Home Strategy will increase traditional services that enable seniors to be healthy and live independently in their homes such as:

• Community support services;
• Home care;
• Assistive devices;
• Assisted living services, supportive housing;
• Long-term care beds;
• End-of-life care.

This new approach will combine traditional services that are currently offered with new services that will be provided by Local Health Integration Networks (LHINs) on a community-based level. Each LHIN will be required to allocate a minimum of 20% of the funding throughout the first three years in order to deliver innovative care for seniors. Innovation proposals must be either evidence-based and/or build in an evaluation component if previously untested. Ultimately the goal is for LHINs to assume more responsibility for the planning, managing and funding of senior healthcare services at a local level. Support at the local level is intended to help seniors, especially those with chronic health issues, remain living at home, avoid unnecessary hospital emergency room visits and as well as avoid/delay admission to a Long Term Care facility.

This program is targeted for seniors who are living with age-related health conditions and/or age-related disabilities. Consideration will also be given to services, programs and/or supports that allow the family, friends as well as neighbors to help care for seniors in their community. The strategy will be based on the senior population of the community in Ontario; therefore services will vary depending on where the senior resides. Funding for each LHIN will be allocated on estimates of the basis of age, gender, socio-economic status and rural geography and health status in order to estimate the demand for services. The funding will also depend on the estimated population growth as well as the type of seniors who live in a specific LHIN territory and the current service level that is already in place.

For more information regarding this initiative please visit the Ministry of Health and Long-Term Care.

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