It’s your Money – Keep It!

1. It’s your Money – Keep It!

2. Two tax-saving strategies • Income splitting • Pension income tax credit

3. Income Splitting

4. Now available for income splitting • Married & common law couples • Spouses can split retirement income • Save thousands in taxes each year • Have up to 50% eligible income transferred to lower income spouse

5. Eligible • Life annuity payments from a Registered Pension Plan (RPP) • Annuity payments from a Registered Retirement Savings Plan (RRSP) • Withdrawals from a Registered Retirement Income Fund (RRIF) • Annuity and installment payments out of a Deferred Profit Sharing Plan (DPSP)

6. Eligible, continued • Income from some foreign pension arrangements and U.S. Individual Retirement Accounts (IRAs) • The interest element of a non-registered annuity contract (prescribed and non-prescribed) • Accrued (interest) income from a non-registered deferred annuity contract such as a Guaranteed Investment Contract (GIC) provided by an insurance company

7. Not eligible • Old Age Security (OAS) • Canada / Quebec Pension Plan (CPP / QPP) • Lump-sum death benefits • Retiring allowances

8. Not eligible, continued • Salary deferral arrangements, retirement compensation arrangements, employee benefit plans and employee trust plans • Gains resulting from a policy loan or disposition • Capital gains, dividends and interest

9. Income splitting options • Eligible income • Canada/Quebec Pension Plans • Spousal RRSPs

10. Eligible income • Split up to 50% • Optimum transfer may be less than 50%

11. Canada/Quebec Pension Plans • Spouses of at least 60 years of age can share up to 50% of benefits earned while living together

12. Spousal RRSPs • Income splitting at any age • Not restricted to 50% • Younger spouse – delayed until the year after spouse reaches age 71

13. Example 1 For illustrative purposes only. 1 Taxes owing are calculated using graduated rates for the province of British Columbia taking into account the Basic Personal Exemption and the Pension Income Credit ($367) if applicable. Generally others will also apply. 2 The Age Credit is $1,034 less clawbacks.

14. Example 2 For illustrative purposes only. 1 Taxes owing are calculated using graduated rates for the province of British Columbia taking into account the Basic Personal Exemption and the Pension Income Credit ($367) if applicable. Generally others will also apply. 2 The Age Credit is $1,034 less clawbacks. 3 Even though under age 65, Elaine now has a Pension Income Credit on the transferred company pension income.

15. The Pension Income Tax Credit

16. Reduce taxes even more • Even at age 65 or older • Available even without income from RRIF or private pension

17. Pension income tax credit • Deduct a tax credit equal to 15.5% on first $2,000 • Up to $310 in federal tax savings • Plus provincial tax credits • Non-refundable

18. Eligible • Life annuity payments from a Registered Pension Plan (RPP) • Annuity payments from a Registered Retirement Savings Plan (RRSP) • Withdrawals from a Registered Retirement Income Fund (RRIF) • Annuity and installment payments out of a Deferred Profit Sharing Plan (DPSP)

19. Eligible, continued • Income from some foreign pension arrangements and U.S. Individual Retirement Accounts (IRAs) • The interest element of a non-registered annuity contract (prescribed and non-prescribed) • Accrued (interest) income from a non-registered deferred annuity contract such as a Guaranteed Investment Contract (GIC) provided by an insurance company

20. Not eligible • Old Age Security (OAS) • Canada / Quebec Pension Plan (CPP / QPP) • Lump-sum death benefits • Retiring allowances

21. Not eligible, continued • Salary deferral arrangements, retirement compensation arrangements, employee benefit plans and employee trust plans • Gains resulting from a policy loan or disposition • Capital gains, dividends and interest

22. Creating the income from an insurance GIC

23. Income splitting where both spouses are age 65 or more • Invest double the amount of non-registered savings • Make an election on tax returns to each claim $2,000 • Maximize tax benefits of the $2,000 • Double your tax credits

24. Transferring unused credits to a spouse • At least age 65 • Have eligible income but unable to use full credit • Transfer unused portion to spouse • Receiving spouse can claim at any age • No eligible income required

25. Speak to your advisor • Income splitting and pension income tax credit • Two ways to minimize tax during retirement • Maximize your retirement income

26. Important notes The commentary in this presentation is for general information only and should not be considered investment or tax service to any party. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation. Manulife Investments is the brand name identifying the personal wealth management lines of business offered by Manulife Financial and its subsidiaries in Canada. As one of Canada’s largest integrated financial services providers, Manulife Investments offers a variety of products and services including: segregated funds, mutual funds, principal protected notes, annuities and guaranteed interest contracts. Manulife and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation.