Add/Edit Income

This form captures present and planned income sources.

Note that OAS, CPP/QPP, and U.S. Social Security pensions are not to be included here as they will recalculated for you, or if you are collecting any of these pensions the amount you are currently receiving will be entered in the Additional information screens under the TIME MACHINE tab.

Any CPP/QPP disability income, however, should be added. Also do not record withdrawals from your accounts or any investment income here, as it will be calculated separately.

You should add any and all taxable income earned by your dependents and identify them as the income owner.

If you started with the Simple Retirement Calculator on your first login, you may already have entered a pre-retirement income (if you're not already retired), and a post-retirement income. Make sure these incomes are set to the correct type. You can edit the income and select the correct type from the drop-down menu. If you have rental income, make sure to add your properties in REAL-ESTATE first. If you income from a CCPC make sure the CCPC is added in your PROFILE first.

The start date can be set as the last day of the previous year if the income existed before the present year. For planned incomes, you can set the start date in the future.

The end date can be set into the far future (or not entered) if the income will only end in the case of passing (a pension, for example).

The yearly income amount should be entered as gross income, before taxes and deductions, For incomes that start in the future, you can enter the amount in today's dollars or in future dollars. If entered in today's dollars, the TIME MACHINE will grow the amount with inflation up to the start date automatically. If entered in future dollars, the amount entered will be used.

Please annualize the income, even if it is received for less than a year. For example, if you receive $1000/month for only 3 months, enter that as $12,000/year with start and end dates 3 months apart. When it comes to a one-time source of income (e.g. an inheritance), the lump sum (in today's dollars or future dollars) can be recorded with the same day start and end date.

You can set how the INCOME grows in time. We ask if the INCOME is indexed, a multiplier (default is 1), and an addend rate (default is 0% and can be negative). If you check "Index to inflation", the INCOME will grow with inflation multiplied by the multiplier, plus the specified addend rate. Essentially: growth rate = inflation × multiplier + addend. If not set to be indexed with inflation, you can still set an alternate rate to grow it. In that case: growth rate = addend. This could be useful if you think you will get raises above inflation after the start date set (or alternatively below inflation if a negative addend and/or multiplier below 1). It is particularly useful for a pension that is, for example, indexed to 50% of the inflation rate (in that case the multiplier is 0.5). Note that pensions and annuities may have additional criteria for how they are indexed, usually involving 'if' statements, for example: "the pension is indexed to inflation, minus 1% if inflation is greater than 3%". We don't consider such if statements.

If you are currently taking, or are planning on taking, parental leave(s) from your employment or self-employment, check the relevant box. You will then be prompted to specify the dates of your leave. WARNING: If you have already recorded your leave(s) from a particular source of income, the box will be checked when you go to edit said income. If you uncheck the box, all previously recorded dates of leave from that income will be deleted. Ignore the parental leave checkbox if the source of income is not employment or self-employment.

If you record any Pension income, Rental income, Annuity income or any Other income, you will be prompted to provide additional information.

Most income is taxable, but some "Other Incomes" might not be. While spousal support income is taxable, for example, child support income is not. Therefore, these 2 sources of income should be entered separately.

Pensions: If you are contributing to a defined benefit pension, please enter a salary income first.

If you have a bridge benefit for your defined benefit pension, it should be entered separately.

Your latest pension statement should tell you how much you will get for your defined benefit pension plan at specific retirement dates. Make sure you match the corresponding amount for the income start date (or the retirement date in your PROFILE if you chose that date). You may have to ask your pension administrator for the amounts if you plan on different spousal benefits than the default for your pension (usually 60%).

Annuities:

We support some simple forms of registered annuities, prescribed annuities, and structured settlement annuities.

If you bought an annuity with the commuted value of a defined benefit pension plan you should enter it in INCOMES as a defined benefit pension plan rather than an annuity, because those "copy-cat" annuities are required to offer the same benefits as the pension they replace.

The owner of the income is the annuitant. If the owner is Joint, then the annuity will be "Joint and last-survivor".

You can enter annuities you have already bought, and whose payments have already started, and you can enter annuities you are considering buying in the future with funds from an account. For the latter case you can set annuity payments to begin in the future. You can stagger planned annuity purchases by entering several future annuity incomes all drawing from the same account. The amount will be determined by the payout rate you will enter on the next screen, so you can leave it to zero here.

The end date entered for the income will determine the end of the term of the annuity. For a life annuity, just enter a date far in the future (the default is 100 years from today).

If you have a CCPC

You can add salary income from the corporation to yourself your spouse, and any DEPENDENT that is a shareholder of the CCPC. Salaries to Others should have been deducted from REVENUES, and not entered here, but salaries to yourself or spouse should be entered here since we are concerned with your finances (but not your other employees). For some CCPCs like professional corporations, salaries to shareholders that are not the owner of the CCPC can limited to market rates. We do not check those amounts, presuming you know those limits for your company. You should also add any dividends paid to yourself, spouse and any other shareholders. We need all dividend payments here because these will be considered in the tax calculation of the CCPC.
  • Optimised Dividends.
    • For the CCPC owner, optional joint with their spouse, you can select to distribute dividends optimally given the balances of the CCPC notional accounts. Since the notional accounts lose their value with inflation, it is often beneficial to use them up by distributing dividends early. The tax optimal order to distribute dividends is:
    1. Capital dividends up to the CDA balance. These are tax-free to the recipient.
    2. Eligible dividends up to the eRDTOH balance. These will release a tax refund to the corporation, and the recipient will get the eligible dividend tax credit.
    3. Non-Eligible dividends up to the nRDTOH balance. These will release a tax refund to the corporation, and the recipient will get the non-eligible dividend tax credit.
    4. Eligible dividends up to the GRIP balance. The recipient will get the eligible dividend tax credit.
    5. Non-Eligible dividends. The recipient will get the non-eligible dividend tax credit.
    If the income is entered as Joint owner, and if the spouse of the CCPC owner is allowed to receive dividends, then the dividends distributed will be split equally between the spouses.
  • Optimised Dividends and Salary.
    • It may be beneficial for the CCPC owner to receive a salary rather than just dividends from the corporation. Paying a salary to the owner reduces the taxable income of the CCPC, and reduces the retained earnings it can invest within the corporation (or its holding company). Although it increases the personal taxable income of the owner, it provides them with earned income (thus RRSP room) that can be invested to grow tax free, and it also creates CPP/QPP contributions and thus increase the amount CPP/QPP received in retirement. For this INCOME option, dividends and salary are distributed in this order:
    1. Capital dividends up to the CDA balance. These are tax-free to the recipient.
    2. Eligible dividends up to the eRDTOH balance. These will release a tax refund to the corporation, and the recipient will get the eligible dividend tax credit.
    3. Non-Eligible dividends up to the nRDTOH balance. These will release a tax refund to the corporation, and the recipient will get the non-eligible dividend tax credit.
    4. Eligible dividends up to the GRIP balance. The recipient will get the eligible dividend tax credit.
    5. Salary to the CCPC owner (there must be revenues)
    6. Non-Eligible dividends if money is still required.
    In years with no revenues, this is the same as the Optimised Dividends option above, otherwise a salary is paid rather than Non-Eligible dividends above the nRDTOH balance. Again, if the spouse of the CCPC owner is allowed to receive dividends (see \hyperref[ccpc_profile]{CCPC PROFILE}), and the income was entered as Joint owner, then the dividends distributed will be split equally between the spouses. Any salary to the spouse of the CCPC owner should be entered as a separate INCOME (salary from CCPC) to them. The amount paid as salary is what is left of the INCOME's entry amount after the optimal distribution of dividends that clears the notional accounts, but it may not be the tax optimal amount of Salary that maximizes the value of CCPC and of the CCPC owner's estate at death. Depending on the scenario, the amount paid in salary this way may be higher or lower than you want to simply maximize RRSP room, maximize CPP contributions, or equalize taxable income with a spouse for example. You can alternatively add separate salary entries to the CCPC owner, and have the rest of the total income required using the Optimised Dividends option
  • Individual Dividends or Salary from CCPC entries
    • You can add each type of dividend payment (eligible, non-eligible, and capital) and salaries, as separate INCOME entries You may also want to add separate entries with different start and end dates to control the timing of the payments. For such entries, the owner cannot be Joint, and we assume each shareholder owns a different share class. You can optimize dividend payments from the CCPC by considering that output, and making changes to the timing of payments in the INCOME input screens by changing the start and end date of payments. A CCPC also pays out only to the lawful maximum amounts, which are determined by the balance of notional accounts. This is why the timing of payments is important.

The income will only be paid if the company can pay it out from REVENUES first, and then withdrawals from the CCPC investment account if necessary.

You will be able to see the incomes received from the CCPC in output of the TIME MACHINE. It will show you a Warning if a payment cannot be made by the CCPC.

You will be also be able to see the payments made from the CCPC in the CCPC table output of the TIME MACHINE and the details.

Be very careful here, as the CRA rules for payments from a CCPC are very complicated. Confirm with your professional advisor(s), as we do not check the legitimacy of your entries.