March 15, 2008
By W. Michael Thomas, CFP, CLU, CH.F.C., R.F.P.

It’s the time of year when your minds shift to filing tax returns and reviewing your financial situation.

There were some proposed changes in October that may positively affect you today.
  1. GST rate cut. Since January 1, 2008, the Goods and Services Tax (GST) rate has been reduced from six to five per cent. This reduction represents savings of a further $100 on a $10,000 purchase.
  2. Increase in Basic Personal Amount. Come tax time in April, you will be able to claim a basic personal amount of $9,600 on your taxes; up from $8,929.
  3. Lowest personal income tax rate reduced. As promised by the government, the lowest personal income tax rate has been reduced to 15 per cent from 15.5 per cent. The combination of this reduction and the increase in the basic personal credit translates into a savings of about $242 for a person earning $40,000 a year.
  4. Increase in RRSP maturity date. The change made in 2007 to the RRSP maturity date gives you new options to consider regarding your RRSP contributions and RRIF payments, if you are between the ages of 69 and 71.

If you have already converted your RRSP to an RRIF, the good news is that the federal government is not requiring you to start withdrawing from it until your 72nd year. So you don’t need to switch your RRIF back to an RRSP if you’re not ready to start withdrawing.

Here are some options available to you:
  • If you have already received RRIF payments in 2007, you can re-contribute these payments (up to normal minimum for the year) to a RRIF or an RRSP and claim an offsetting tax deduction.
  • If you are a RRIF client turning 70 or 71 in 2007, you can stop your RRIF withdrawals until your 72nd year.
  • You can also set up a new RRSP and make contributions (up to your contribution limit) keeping in mind that you must convert this RRSP to a RRIF no later than the end of the year in which you turn 71.
  • You can transfer your RRIF assets to a new RRSP, as long as this new RRSP is then converted to a RRIF no later than the end of the year in which you turn 71.
For further information on the Budget rules pertaining to Pension Income Splitting, see our website at

If you have any questions please contact Michael Thomas at the address below. The Investment Guild, HortProtect, 345 Renfrew Dr., Suite 302, Markham, ON L3R 9S9, 1-800-459-8990, website:, e-mail:
W. Michael Thomas is a partner with The Investment Guild – endorsed provider of the HortProtect Group Insurance Program and is a director of Ontario Horticultural Trades Foundation.