November 01, 2021Money Education Lifestyle Good reads
Year End: Your Employee Benefits and Overall Financial Checklist
Believe it or not, the end of the year is just around the corner. And for many Canadians, there are a list of financial considerations that should be reviewed around this time of year.
Most company benefits follow the calendar and roll over on January 1st. Here’s some tips to help you get the most from your employee benefits.
Your health insurance package may have yearly limits that reset at the end of the year. Whether it’s medical or dental benefits, consider maximizing your limits before December 31st:
- Book a cleaning, checkup or major procedure you’ve been putting off with your dentist. Don’t forget about your spouse and kids, too.
- Schedule an eye exam and/or order new glasses or contacts before December 31st.
- Consider a recommended chiropractor, physiotherapist or massage therapist to increase overall wellbeing. You may require a course of treatment that exceeds the yearly limit, so it’s best to get started before year end to use up this year’s limit.
Also be sure to keep any receipts. And if you pay part of your medical insurance premiums, claim that too.
Registered Retirement Saving Plan (RRSP) Matching
If your company matches your RRSP contributions, check to see what limits, if any, apply. If you’re below the limit, consider maximizing your contributions before year end. Not only are you increasing your retirement fund with the additional matching; your extra contributions also further reduce your net income at tax time. It’s a win/win.
From clothing allowances to higher learning, do you know all the benefits your company has to offer? Check your employee handbook or consult with human resources to find out about any benefits you may have overlooked. Yearly limits may be in effect, so be sure to investigate before the end of the year. These benefits may include:
- Reimbursement for tuition. Check into online courses which can start at any time during the year.
- Bursaries/scholarships available for your children. Often, these benefits roll over at the end of the year.
- Laptop/cell phone upgrades.
- Public transit pass reimbursement.
- Matching programs for charitable donations.
- Reimbursements for steel-toed footwear, prescription safety glasses, or other personal protective equipment.
- Tools allowance for those with trades including power saws for forestry employees or hand tools for carpenters, mechanics, etc.
- Uniforms allowance if your employment requires special clothing.
Overall Year-End Financial Checklist
We’ve made it through another unprecedented year of unforeseen events, routines and challenges. But the one thing you can count on are a few simple tips and tricks to help you prepare for this year’s end while planning for the year ahead. Here’s some considerations:
- Review your financial goals: The end of the year is a great time to review the goals you made at the beginning of the year and set new ones for 2021. You may also want to take time now to review your net worth. That’s one way to gauge the progress you’ve made in your financial health this year.
- Fill up your Tax-Free Savings Account (TFSA): Any Canadian resident with a social insurance number who has reached the age of majority in their province can open a TFSA and save up to $6,000 every year. And regardless of what you are saving for, a TFSA is a great way to save for any financial goal – a long-term goal such as retirement or a short-term goal such as a car or a vacation.
- Max out your Registered Retirement Savings Plan (RRSP): In Canada, an RRSP is a great retirement savings vehicle. Since they're tax-advantaged accounts, they are almost like a gift from the Canadian government! Contributions to an RRSP reduce the amount of income tax individuals must pay each year, so the Canada Revenue Agency (CRA) sets an annual limit on the number of contributions each eligible taxpayer can make to RRSPs to avoid excess contributions. Chat with us for more information or look at last year’s tax return for your personal limit.
- Update your overall budget: The end of the year gives you a solid end point to assess whether you met the goals you set at the outset of 2021. You’re moving into a new year, so why not put something realistic together that works.
- Create a holiday budget that sticks: Holidays can be budget breakers, so why not incorporate them into your spending goals right from the start?
- Make any last charitable contributions that are meaningful: December 31st is the last day your charitable contributions can be deducted on your 2021 tax return, so plan carefully.
- Defer income and incur expenses: If you’re a business owner, an easy way to reduce your tax liability for 2021 is to look at ways to defer income into 2022 or pay for business expenses you anticipate for early next year.
- Will, PoA and trust review: The end of the year is a good time to take a thoughtful look at changes in your life—like getting married or divorced, having children, starting a business or retiring. Your estate plan should reflect these changes.
- Review insurance documents: Insurance documents are another way to protect yourself, so they need to cover your current situation. Look at your different insurance policies to make sure they protect your current income and those dependent on it.
The holidays are around the corner and they’re a wonderful time reflect and appreciate what you have. Living our lives through a pandemic has shown all of us what matters most and every one of us at Allan Bush Investment Team wish you much comfort, peace and time with those you love.