Canadians with major assets wanting to retire under 65
How'd you like to make about $40,000.00 per year - and pay not one cent of income tax?
Not at all.
There are, of course, some major provisos.
1. You must be wealthy.
2. You must have only one kind of income.
3. You can't work.
Well - if you feel that you should work, to pay your way in society, justify your existence, etc., fine - but don't take pay for it.
Quite a number of financial advisors suggest that a worker with major Canada Pension Plan credits built up take retirement at age 60, for, though they take a reduction in benefits of 6% annually for each year under 65, meaning 30% at age 60, they'll be ahead if they die before their early 80s. You only have a choice if you don't need the money. If you can invest that income and get a better than average rate of return on the asset, or arrange to be taxed at a lower than usual rate, you can push the break-even date higher.
It might be better for you to delay starting C.P.P., though.
If you've been resident in Canada for a substantial number of years, even SAHM Moms who've never been employed (outside the home for pay), you'll qualify for Old Age Security at age 65 - just over $470. per month, currently (partially indexed to inflation).
You won't want to forego receiving that, so you'll probably want to start C.P.P. at 65, as well.
If you have in the neighbourhood of a million invested, entirely in Canadian stocks, earning about 4%, that'll produce about $40,000.00 annually.
Income tax liability - $0.
If you have a spouse with under about $9,000. annual income, or make substantial charitable gifts, or make over 3% of net income in medical costs, the tax-free income can be substantially higher.
Don't believe me?
You got your 2006 tax form a while ago - get it out, write down 0 employment or other income, but $40,000. income as dividends from Canadian corporations ...
... and run the numbers.
You're in for a surprise, I'll bet.
You owe me $10.00. Just transfer it to my bank account - No. 123456, please.
Worth it, don't you think?
If you have employment or other income, the tax benefit still applies - but you won't be able to avoid paying income tax entirely.
Have a great week, everyone.