The Holiday Season is upon us and 2024 is right around the corner. Beyond celebrating and spending time with your family, now is also a great time for you to reassess your investment portfolio and maximize contribution in your tax-efficient accounts. The public markets have been extremely volatile over the past few years, and this presents a challenge for retail investors to plan for their next stages of life.
Many investors have found private alternative investment opportunities, such as Morrison Financial’s Mortgage Income Funds, to be a great way to grow their portfolio consistently and securely. Our Funds accept investment from registered accounts so you can use such accounts to grow your portfolio in a tax-efficient manner.
Let’s review the recent changes to Canadian registered accounts that you can benefit from today:
- First Home Savings Account (FHSA): The FHSA was launched in April 2023 as a new dedicated tool for Canadians to save for their first home. FHSA offers advantages like income tax deduction and tax-free interest, making homeownership more accessible. Some FHSA tips for you:
- FHSA contribution can be up to $8,000 a year with a lifetime limit of $40,000. However, it is important to note that the unused contribution room only starts to accrue when you open a FHSA. If you are eligible, you should open an account now even if you do not have the money to invest today.
- The amount of deduction on your income tax return is equal to the amount you contribute to your FHSA! This is a great tax benefit. However, unlike the RRSP, contributions made to your FHSA in the first sixty days of the subsequent year cannot be used to deduct income tax for the previous year. If you are looking to utilize the tax deduction, make sure to contribute by December 31st.
- Tax-Free Savings Account (TFSA): The TFSA continues to offer significant benefits for Canadian investors as any TFSA withdrawals, including gains and investment income, are entirely tax-free. This flexibility makes TFSAs suitable for various purposes, including short-term investment goals, emergency funds, or long-term wealth building. Starting in 2024, TFSA contribution limit will be increased from $6,500 to $7,000. The increase provides the opportunity for investors to consider alternative investment as an investment option.
Other registered accounts that can be used to invest in our Funds include:
Registered Retirement Savings Plan (RRSP): The RRSP on its own, or as a compliment to the TFSA and other registered accounts are a powerful tool for retirement planning. The RRSP stands out with its larger capital capacity and tax-deferred growth. Contributions are tax-deductible, reducing taxable income immediately. This feature, coupled with the potential for withdrawals in retirement at a lower tax bracket, enhances the long-term tax efficiency of RRSPs, and are especially valuable features when considering private products with returns taxable as interest income.
Registered Education Savings Plan (RESP): The RESP is used by parents to save for their children’s education; contributions aren’t tax-deductible, but investment income is tax-sheltered until used for education.
Registered Pension Plan (RPP): A workplace pension plan where both employers and employees can contribute, with contributions often being tax-deductible.
Locked-In Retirement Account (LIRA): Holds locked-in pension funds created when and individual leaves an employer with a pension plan, with funds “locked in” until retirement.
Reach out to our team at Morrison Financial should you have any questions about how you can utilize your registered accounts to invest in our Funds.
Morrison Financial is one of Canada’s longest-standing private real estate finance firms. During its 35 years in business, Morrison Financial has advanced over $1.5 billion in loans. Morrison Financial operates two mortgage income funds which invest in a diversified portfolio of short-term residential development projects across Ontario, and its trust units are eligible to be held within any of the registered accounts outlined above. Morrison Financial has retained Belco Private Capital (“Belco”) as its exempt market dealer. A dealing representative from Belco will discuss whether if this investment is suitable for you.
