March, 2010
Volume 3, Issue 3
In This Issue
MFG FINANCIAL DISPATCH
A Monthly Publication of MacIntosh Financial Group Ltd.
Celebrating 25 Years of Serving Our Clients
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Win One of Two $25 Starbucks Cards
Old Age Security Basics
Bits and Pieces
Win One of Two $25 Starbucks Cards
Once again we’re giving away a $25 Starbucks card to each of two lucky people this month.
If you would like to be one of our winners, simply click on the word “WIN”, and answer the four multiple choice questions based on information in the articles in this newsletter. We’ll randomly draw two names from the correct entries and award a card to each of those two people.
Last month’s winners were Jane Hansell and Suzanne Humphreys. Congratulations to you both. This month’s draw will happen on March 22nd. All the best!
New Mortgage Rules
In February, Federal Finance Minister Jim Flaherty announced changes to Canada’s mortgage rules. With some renewed concerns about a housing bubble in Canada, the government was attempting to prevent the same kind of experience in Canada that the US had in 2008.
The new rules are as follows:
- All borrowers must meet the standards for a five-year fixed rate mortgage, even if they are seeking a lower rate and shorter term;
- Refinancing will be capped at 90% for government-backed high-ratio mortgages versus 95% previously; and
- Borrowers for non-owner-occupied rental properties will require a 20% down payment instead of the current 5%.
Mister Flaherty said: "The measures will not affect the ability of a Canadian family to buy a house. It will affect those who are speculating. What we're getting at is the speculation in multiple condominium units in particular which we see in Vancouver, Montreal, Toronto and in some other places in Canada."
The new rules are set to come into effect on April 19th.
Old Age Security Basics
Last month did a general overview of Canada Pension Plan (CPP). This month we’re going to do the same with Old Age Security (OAS).
What is it?
The Old Age Security pension is a monthly payment available to most Canadians aged 65 or older. To determine eligibility three factors are considered: your age, your legal status, and the number of years you have lived in Canada. You must live in Canada and be a Canadian citizen or a legal resident at the time your pension application is approved and you must have lived in Canada for at least 10 years after turning 18.
If you are currently living outside of Canada, then you must have been a Canadian citizen or a legal resident of Canada the day before you left Canada and you must have lived in Canada for at least 20 years after turning 18.
You must apply to receive benefits (preferrably six months before turning 65) and you may be entitled to receive the Old Age Security pension even if you are still working or have never worked.
Who pays for it?
Funding for OAS comes from the federal government’s general tax revenue.
How much are the benefits?
The current full benefit is $516.96 per month ($6,203.52 per year). In order to qualify for the full pension you must have lived in Canada for at least 40 years after the age of 18. Those who don’t qualify for the full pension may qualify for a partial pension which is calculated at 1/40th of the full amount for every full year you have lived in Canada after age 18. OAS payments are taxable and are subject to “clawback” for higher income earners.
How does the OAS Clawback work?
OAS recipients with annual taxable income over the threshold amount ($66,733 in 2010) will be required to repay some or all of their OAS payments. The rate of repayment is 15% of every dollar of income over the threshold to a maximum of the full year’s OAS benefit. The full OAS benefit is repayable with income of $108,090 or more. If you have benefits subject to repayment then your OAS payments in the year following will have 1/12th the repayable amount deducted from them each month.
For example, if your income for 2010 is $80,000 the repayment amount would be ($80,000 - $66,733 = $13,267 x 15% = $1,990.05). Your 2011 monthly OAS payments would be reduced by $165.84 ($1,990.05 / 12).
This is just some of the very basic information on Old Age Security pension. If you would like more information you can visit the OAS section on the government website at http://www.servicecanada.gc.ca/eng/isp/pub/oas/oas.shtml.
As always, we’re here to help answer or get the answers to all your questions regarding your financial concerns.
Bits and Pieces
Olympics Mob Dance
In case you didn’t see this, on February 13th thousands of people gathered in the middle of Robson Street in Vancouver to dance. The video is quite amazing and can be viewed by clicking here .
Daylight Saving Time Reminder
This weekend we “spring forward” and start into Daylight Saving Time. Don’t forget to set your clocks ahead one hour. The new time takes effect at 2:00am on Sunday, March 14th.
In 2010 we are celebrating our 25th Anniversary of serving our clients. For 25 years we have been providing financial advice and products to some of the finest people we know. We really do appreciate you and we look forward to continuing to serve you for many years to come!
MFG Financial Dispatch is our monthly email newsletter designed to keep you up to date on timely financial issues that may affect you and to pass on timeless information and advice regarding financial issues. Archived issues are available in the Client Centre on our website (macintoshfinancial.com).
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