Category: Tax Tips

Give more to charities, less to the CRA

RobH1 Comment

It’s probably not news to most of you that charitable giving in Canada attracts tax breaks that reduce your tax owing to the CRA. It’s a nice deal — support the causes that are meaningful to you while saving a bit of tax owed.

But for those of you with non-registered accounts holding stocks and ETFs, did you know there’s even a better option that can save you even more tax? By donating shares in-kind to your chosen charity, you get the same donation credit AND you avoid paying capital gains tax on the shares donated!

The differences can be sizeable depending on the unrealized capital gains you have in your portfolio.

Here’s a quick example: let’s say I bought $10,000 of XGRO1 5 years ago in my non-registered account. Per this dividend calculator featured in “Tools I Use” I see that it’s currently2 worth $15,850.

Say I want to donate $1000 to a charity — selling $1000 of XGRO today would generate a capital gain of $369. That’s taxable at 22.48% marginal rate in Ontario in 20253, so I have to pay an additional $83 in taxes4.

If I instead donate the shares in kind to the charity, I pay nothing on the capital gain, and I keep $83 either for me, or for additional charitable works.

So how do you do this? Well, it will depend on the online broker you deal with, but generally the steps are something like:

  • Let the charity know you’re intending to do this. Larger charities will have a published process, for example the Ottawa Food Bank’s is here5. Smaller charities can still benefit if you use a service like CanadaHelps6.
  • Let your broker know your intent. Every broker will have a different process, usually including some kind of form. Here’s some examples I found:7

And that’s it. The receiving charity will issue a donation receipt reflecting the market value of the donated securities for your tax filing. The nullification of the capital gain is done using form T11708 when it comes time to file your taxes.

I plan to do this more systematically for the charities I support; it’s admittedly a bit more effort than automated contributions. Since Questrade (my current broker) charges me $25 every time I do this, I’ll have to be a bit more strategic about amounts and timing.

  1. XGRO is a significant part of my portfolio, and as such it is included in my ETF all-stars page. What is also true is that I don’t hold much of it in my non-registered portfolio, but that’s just a historical investing habits showing up. ↩︎
  2. 5 year return, WITHOUT dividends reinvested as of July 17, 2025. Not reinvesting the dividends means my cost base is clearly $10k, useful for the example that follows. ↩︎
  3. Per https://www.taxtips.ca/taxrates/on.htm for taxable income between $114k and $150k. Don’t forget that capital gains are only taxed at 50% of the value of the gain. ↩︎
  4. Ignoring the tax savings generated by the charitable donation in the first place since that’s the same in both scenarios. ↩︎
  5. Googling “donate securities” <charity name> is helpful ↩︎
  6. They do keep a portion of the donation to offset their expenses, so it may not be a good idea for small donations. ↩︎
  7. Sorry Scotia iTrade users, I did my best but could not find their form. Let me know if it’s available somewhere and I’ll update. I’ve successfully used the process with both BMO and QTrade. ↩︎
  8. i’m not an accountant. Consult a professional if you have concerns. ↩︎

News: Webinar Roundup

RobHLeave a comment

Global X: “Beyond Borders: Why International Equity is Capturing Attention”

This webinar (registration link) takes place on July 28 at 11:30am EDT. I don’t myself make bets on any particular segment of the market, choosing instead to maintain my geographic splits consistent, including international equity (see my latest report on that). But maybe you don’t have any exposure to international Equity at all; this might be worth checking out in that case.

Global X is the newish name of Horizons, a company I’ve been dealing with for a long time thanks to their innovative swap-based ETFs, namely HXT (Canadian Equity), HXS (US Equity) and HXDM (International Equity)1 . They are useful funds to hold in non-registered accounts because they pay no dividends of any kind; this allows you to defer tax until you need the money and sell them2.

Wealthsimple: Five Costly Retirement Spending Mistakes and How to Avoid Them

I listened to the recording of this webinar, and you can too by registering here. Fair warning: this webinar is at least partly a sales pitch for Wealthsimple’s managed portfolios3, and you can expect a follow-up if you do register.

Sales pitch aside, I thought the presenters did a decent job in explaining the common errors associated with

  • Asset mix
    • Getting the asset mix wrong based on your needs. I talk about the concept of asset mix here.
  • Order of withdrawal (RRIF versus TFSA versus non-registered)
    • This was something my fee-based financial advisor helped me with. Even a DIY investor can benefit from a bit of oversight as you make the preparations for retirement.
  • Age to start CPP/OAS
    • Lots of Canadians take the money as soon as they’re eligible (age 60 for CPP, 65 for OAS) but that’s not always the best choice. I used the CPP calculator to figure out what my best option was.
  • Underspending
  • Ignoring Estate and Final Tax costs
    • These can be significant. In the case of my mother’s estate, Final Tax (and not Probate) was the expensive one4. The easiest way to reduce Final Tax is to give away your money while alive.

  1. Full disclosure, I own all three in my non-registered accounts. ↩︎
  2. At which point you will have to pay tax on capital gains, naturally. ↩︎
  3. And although I like and am more than capable of doing a DIY retirement, I need a plan B in the event I lose the capability to do this sort of thing myself. And so I pay attention to service offerings out there. Wealthsimple’s fees seem less onerous so that’s a vote in their favor. I hate fees of all kinds. ↩︎
  4. They would have been horrified at the tax bill and probably would have more aggressively donated their wealth had they known. ↩︎

Taxes in Retirement

RobH1 Comment

There’s really no avoiding paying taxes, even in retirement. You probably have to do some budgeting to make sure you aren’t being caught unaware, though.

My retirement today is funded from a combination of my spouse’s part-time salary, my/my spouse’s RRIF, selling off assets from my non-registered account, and interest/dividend income from non-registered accounts.

The big difference, as I’m slowly becoming aware, is that aside from my spouse’s paycheque (which has the usual tax deductions / CPP contributions / EI contributions), there is nothing being set aside to pay my tax bill come April 2026. So it goes without saying that I had better make sure there’s a nugget somewhere that I set aside for the upcoming tax bill.

How much should that be? Enter a tool I use to help figure out that sort of thing, referenced in the “Tools I Use” section of this blog: namely, the Basic Canadian Income Tax Calculator1.

The Basic Canadian Income Tax Calculator, from TaxTips.ca

The basic tool, as implied, is pretty basic. It doesn’t include any sorts of deductions aside from the basic personal deduction and dividend tax credits. There’s an advanced calculator that has a bunch more inputs, but for the purposes of this article, the basic tool is good enough.

For the purposes of this tool, your income is in 4 buckets:

  • Other income: This is how 100% of RRIF payments are treated, as well as interest from non-registered assets (e.g. interest from a GIC, bank account, HISA, some ETFs)
  • Capital gains: This is only applicable to non-registered accounts. Note that many ETFs actually generate capital gains and a corresponding T3/T5 slip even if you don’t touch the fund at all2. Larger capital gains are typically generated when you sell an ETF that you’ve held for a while, which includes everything I hold in my non-registered accounts.
  • Canadian eligible dividends: This includes dividends paid by all public companies in Canada.
  • Canadian non-eligible dividends: I don’t have any of those, but if you own shares in a private corporation, you might.

Since my 2025 strategy is to simply collect RRIF minimum payments, I already know what that dollar amount is. I also execute non-registered asset sales monthly to fund my retirement, as I mentioned here. This generates capital gains every month; the exact amount this will sum up to in 2025 is unknowable in advance since it depends on factors like:

  • what specific asset I choose to sell
  • the price of the asset at the time I choose to sell
  • how many shares of the asset I sell at that price

I do track a metric I call “capital gain dollars per dollar of asset sold3” so I can compare the capital gain impact of generating (say) $1000 cash for every asset I own in my non-registered account. So I have a bit of control over the capital gain metric for a given year, but not a lot. My spouse also has non-registered assets in her name, but since she’s earning a salary, I’ll let that be for now.

Some examples might help illustrate the different tax impacts of different withdrawal strategies.

Let’s consider 4 examples, all of which give you 100k gross salary, before taxes:

  • The “RRIF and interest only” strategy: All income for the year is generated by either RRIF payments or interest payments from non-registered accounts.
  • The “non-registered asset sale only” strategy: All income for the year is generated by selling assets in non-registered accounts that create 70 cents of capital gain for every dollar of income thus generated4.
  • The “Dividends only” strategy: All income for the year is in the form of dividends. You’d need a pretty large portfolio to generate 100k of dividend income, just sayin’.
  • The “Blended Approach” strategy: Income comes from a mix of RRIF payments, non-registered asset sales, and dividends. You could play with the percentages yourself; this is an excellent way to see how different liquidation strategies generate (in some cases) very different tax bills.

The table below uses the basic tax calculator to generate the tax bill of the different payment strategies.

Withdrawal strategyRRIF + Interest incomeIncome from asset salesActual Capital GainDividendsTotal Gross IncomeTotal Tax Bill (ON)Avg Tax Rate
RRIF and Interest only100k000100k21.4k21.4%
Non Registered asset sales only0100k70k0100k3.9k5.6%
Dividends only00100k100k3.3k3.3%
A blended approach50k25k17.5k25k100k10.6k11.5%

Fair warning: don’t try to use this table to estimate your own situation. I chose 100k to keep the math easy, but since Canadian tax brackets have different tax rates, the overall gross salary chosen makes a huge difference in the tax bill — enter the numbers yourself!

My retirement planner advised me to target an average tax rate of no more than 15%, and besides the “RRIF and interest only” approach, all of the withdrawal strategies in the table accomplish that. The other takeaway is that on an income of $100k, all of the approaches generate a tax bill in excess of $3k — which happens to be the magic number CRA uses to determine whether or not you have to pay tax in installments.

As a result of doing this exercise, I’ve started a monthly automated contribution to a separate “tax” account5 so that I have money at the ready to pay my tax bill next year. All DIY retirees may want to do the same!

  1. You will probably have to close a bunch of ads before ultimately getting to the page that matters. It’s a forgivable tax to for this useful site, IMHO. ↩︎
  2. If you prefer to avoid annual capital gains, dividends and interest payments, then Global X has ETFs that are designed to do just that. I hold HXT (for Canadian Equity) and HXS (for US Equity) in my non-registered accounts for this reason. ↩︎
  3. This is just the per share capital gain divided by the current share price. I use Adjusted Cost Base to keep track of my capital gains. ↩︎
  4. This is a bit higher than the average of my portfolio, which is about 60 cents for long-held assets. You could choose a different number based on your own holdings. You only pay tax on half of your capital gains, and the calculator knows this. ↩︎
  5. I used Wealthsimple for this since it’s stupidly easy to create a new investment account. And they pay a reasonable amount of interest. ↩︎

RRIF and RRSP coexistence

RobHLeave a comment

Summary: It’s possible for you to collect income from a RRIF at the same time as contributing to (and taking deductions from) an RRSP.

If you’re new to world of RRIFs, or think that they only come into play once you turn 71, then you might want to give Demystifying RRIFs a read.

In my case, I worked until the end of 2024, having opened RRIF accounts and funding them with my RRSP holdings1 in the last quarter of 20242. Unsurprisingly, my Notice of Assessment for the 2024 tax year included the usual “new” RRSP contribution room based on salary earned during the 2024 tax year.

But what to do with that RRSP room? And if I use it, when should I take the deductions?

Can I even take advantage of it?

Answer: yes, as long as i do it before I turn 71.

The CRA rules are pretty clear on this topic. You can make and deduct contributions up until the year you turn 71, even if you’re retired.

Ok, but then there’s the problem of coming up with the money to MAKE the contributions.

Making contributions to the RRSP in retirement

One of the reasons you seem to have “more” money when you retire is that you stop saving money for retirement. RRSP contributions constituted a significant line item in my annual budget while working. In retirement, I don’t really need to save the money, but taking advantage of the possibility to defer taxes seems like a good idea.

One way to tackle the issue is to initiate a small monthly contribution to my RRSP; at least this starts to build up deductions I can use when it makes sense to; I don’t need to make it a huge amount, but over time it will build up a deduction that could come in handy later.

So, when is “later”, exactly?

When to take the RRSP deduction when retired

My annual salary in retirement, by design, is variable, based on my net worth calculated every month. You can read about it here. I expect that over time my salary will increase3, so “future me” will be the one taking the deduction.

My guess is that there will be a few places where having a deduction ready might come in handy:

  • Generally, I’m just trying to reduce my overall tax bill. My advisor suggested that I try to optimize my income every year to get to an overall (not incremental) tax rate of 15% for the household. The RRSP deduction is another lever I’ll be able to use to help accomplish that.
  • I’m trying to avoid paying tax by instalments. Looks like if your tax owing is >$3000 in two consecutive years, then you’re going to be asked to pay your taxes four times a year. Taking RRIF minimum payments (as I do) means no withholding tax, so it’s rather likely that at some point I’m going to be faced with this. Having the possibility to delay this is a nice thing; I hate giving the government access to my money any sooner than strictly necessary.
  1. Most writing on this topic talks about “converting” RRSPs to RRIFs. But that’s not really how it works, at least not with two providers I have dealt with. In reality, you open new RRIF accounts and move the RRSP assets in-kind to those RRIF accounts. The RRSP account remains intact, albeit with nothing in it. ↩︎
  2. RRIF payments become obligatory in the calendar year AFTER the year in which you open them. You can take payments sooner, but that’s a manual process, and any payment so taken will be subject to withholding tax. Since I wanted to take RRIF minimum payments in 2025, I had to have the RRIFs ready in 2024. ↩︎
  3. The percentage of my net worth used to fund my monthly salary increases every year, just like how a RRIF calculation works. In theory, the rate of return of my retirement investments is currently higher than my percentage withdrawal, meaning that future salaries are likely to be higher than current ones, but that’s not an ironclad guarantee. ↩︎

Death, Taxes and Estates: Part 3

RobH1 Comment

I am not a lawyer, accountant or tax expert. Your situation may be a lot different than mine. Seek professional guidance if needed.

Part 1 of this blog is found here, and Part 2 is here.

I’m in the tax season stage of wrapping up my Mom’s estate, who died a little over a year ago, a year and a bit after my father died.

Current status

I decided to hire a pro to do the Final Return and the Estate Return since I couldn’t figure out the fine details1 of doing an Estate Return. The Final Return (that’s the easy one, it’s just a regular tax return, except you have to inexplicably file it on paper) would have been within my skill set, but the Estate Return (the one that you have to file to deal with any income generated by the estate after death) was new and confusing to me.

I knew I was going to have to pay taxes on both returns, and using the tax calculators referenced here, I had a pretty good idea of what tax was going to be owed. In essence,

  • The Final Return takes the full value of the RRIF on the day of death as income. This will mean a lot of tax if the RRIF is sizable.
  • The Final Return also assumes any non-registered assets are liquidated on the day of death, which in the case of equity holdings, typically attracts capital gains and the associated taxes2.
  • The Estate Return is going to have to pay tax on any dividends, interest, or capital gains realized by the assets in the estate. Here the tax rate is high, because an Estate is treated as a Trust, and trusts don’t get personal deductions, meaning you get taxed on the first dollar of gains you manage.

A few wrinkles

Submitting the necessary paperwork to the accountant was the usual tedium of getting scans of T-slips, charitable donations and the like to the accountant. I did encounter a few problems.

BMO Investorline Problem 1: Sending T-slips to invalid addresses

My Mom’s assets were all held with BMO Investorline. Imagine my surprise when her retirement home let me know that snail mail from BMO (not BMO Investorline) had arrived at the home. I changed the address of all communications with BMOI to me nearly a year ago at that point, so you can imagine I was less than happy about having to drive across town to pick up what turned out to be a T-slip for the HISA I bought in her self-directed account. At that point, I was a few steps away from livid.

After spending some time with hapless agents who could not tell me why the mail ended up at an invalid address, I penned a note to the formal complaint department of BMO. I just figured that if there was some systemic issue at play here, that at least I could help those who followed me.

The complaints department ultimately admitted it was a screwup on their part and offered their apology. Whether or not it will happen to someone in my shoes in the future is unknown to me, but beware.

BMO Investorline Problem 2: Not providing an RC249 slip

The RC249 is a CRA slip that covers the losses incurred by a RRIF post-death.

It makes some sense: as mentioned above, the owner of the RRIF is assumed to get income equal the the value of the RRIF on day of death. But the RRIF assets aren’t automatically liquidated; they remain invested in whatever they were invested in. If that includes stocks/ETFs and the like, then it’s possible for the value of the RRIF to actually decline post-death. And that is what happened in my case. This loss becomes a tax benefit to the estate return, but only if you have an RC249 to prove it.

Now, the RC249 is clearly intended to be filled out by the issuer/carrier of the RRIF, in my case BMOI. And so, you would expect that to be automatically provided, wouldn’t you? Wrong again.

Another set of back and forth, first with the standard BMOI agents, and then the BMOI estate department, eventually produced a valid RC249 that I could send to the accountant.

Paying taxes owed

As much as I disliked the entire process of working with BMOI’s estate department, the one thing I did like about BMOI was that their non-registered accounts can be linked with a bank account (AccountLink) against which cheques can be written3. (This is something I set up months ago to help distribute some assets early to the beneficiaries). So once the accountants informed me of the eye-watering tax bill (which was pretty much aligned with what I expected), I was able to write the cheques and drop them off with little fuss. Thinking about how you will do that is something to consider in dissolving the estate.

Final Return Notice of Assessment

This was received in pretty short order, a few weeks after it was submitted, and the tax bill was correct.

Next steps

I await the Notice of Assessment for the Estate Account, at which point my accountant will be able to apply for a clearance certificate from CRA. This certificate essentially tells me that CRA considers all business with my mom and her estate closed. Once I have this, I can fully distribute all funds from the estate without having the CRA come after me for monies owed. This takes “up to 120 days” per the website.

  1. More accurately: I couldn’t bear spending hours reading arcane text on various CRA websites hoping I didn’t make a mistake ↩︎
  2. Note that unless directed, the liquidation doesn’t ACTUALLY take place. In my case, I moved all assets to HISA accounts once I gained control of the assets via probate, (a delay of a few months) and then liquidated the assets at the end of 2024. This I did to avoid earning any income from the estate holdings in 2025, which would have delayed the estate return. ↩︎
  3. No matter how hard I tried, I could not convince anyone at BMOI/BMO to send me a debit card for the account, which would have allowed me to “Bill Pay” CRA instead of writing cheques. ↩︎