Tax Settings

Many forms of retirement income can be split between spouses, resulting in a reduction in income taxes. Income Splitting is entered as a global value within RazorPlan and will affect all years of retirement.Some sources of income, such as government benefits, will be split automatically independent of the values entered on this screen.

Income Splitting Efficiency: Enter the assumed level of income splitting your clients can attain. You can alter this value in the future to view different outcomes. The percentage entered will define the portion of interest income, RRSP/RRIF income, and Locked-In Plan income that will be split equally between spouses. Generally speaking, it would be very difficult to achieve 100% income splitting without proper planning started years in advance of retirement.

*The Income Splitting percentage entered will determine what portion of both spouse’s income will be split equally with the other spouse. If 80% is entered, each spouse will receive 40% of the other spouse’s income (80% / 2 = 40% Client and 40% Spouse/Partner). The remaining 60% will be retained by the original spouse and taxed in their hands.

Corporate Dividends: When dividends are paid from the corporation you can choose to have those dividends paid to the client and spouse based on the income splitting efficiency, or the values entered in Share Value or some other percentage. When other is selected two additional fields are displayed where the new payout percentages between the client and spouse/partner can be entered.

Capital Gains Budget 2024: The tax changes and updates introduced in the 2024 budget can be applied to the financial plan using this toggle. This feature when set to Yes ensures that the calculations and projections within the software reflect the tax rates, rules, and regulations as outlined in the 2024 budget. The capital gains inclusion rate will be increased to 66% when a capital gain is over $250,000 or if the capital gain occurs within the Corporate Assets area of the program. The No option leaves the capital gain inclusion rate at the 50% rate that existed prior to Budget 2024.