Investment

A mutual fund is a pool of money contributed by people with similar investment objectives. Investors share the mutual fund's income and expenses, and the gains and losses the fund makes on its investments, in proportion to the mutual fund securities they own. In a mutual fund corporation, classes of mutual fund shares may have different management fees or expenses.

Starting January 2nd 2009, there's a great new way for you to save money. Insufin Inc will be offering the new Tax-Free Savings Account, which was recently announced by the Canadian government in the 2008 budget. A Tax-Free Savings Account (TFSA) is a flexible investment account that allows you to earn investment income without paying taxes and gives you access to your money whenever you want it.

A TFSA is a great way to save money for major purchases like a car, a home renovation or a family vacation, to put away more money for retirement, or just to have money available when you need it.

TAX-FREE SAVINGS ACCOUNTS (TFSA) The 2008 federal Budget introduced the Tax-Free Savings Accounts (TFSA), starting in2009. Financial institutions currently eligible to issue RRSPs will be permitted to issue TFSAs. This includes Canadian trust companies, life insurance companies, banks and credit unions.
Any individual (other than a trust) who is resident in Canada and is 18 years of age or older will be eligible to establish a TFSA. An individual will be permitted to hold more than one TFSA.

CONTRIBUTION ROOM Starting in 2009, individuals 18 years of age and older will acquire $5,000 of TFSA contribution room each year. The $5,000 limit will be indexed to inflation, and the annual additions to contribution room will be rounded to the nearest $500. Unused contribution room will be carried forward to future years. For example, if an individual contributes $2,000 to a TFSA in 2009, the individual's contribution room for 2010 will be $8,000 ($5,000 for 2010 plus $3,000 carried forward from 2009). There will be no limit on the number of years that unused contribution room can be carried forward. Any amounts withdrawn from an individual's TFSA in a year will be added to the individual's contribution room for the following year. This will give individuals who access their TFSA savings the ability to re contribute an equivalent amount in the future. Excess contributions will be subject to a tax of one per cent month.

An individual variable insurance contract, better known as a segregated fund, is an investment contract, considered insurance by law, where a specified group of assets, outside the company's general reserves, supports the contract's policy reserves. Segregate fund policies have values that vary according to the market value of their specific group of assets. Assets of segregated funds are not part of the general reserves of the insurer, so no laws prevent them from investing all their assets in equities. Depending on its contract, a segregated fund may allocate the assets to a fund of treasury bills, common shares, bonds and debentures, real estate or mortgages, like a mutual fund.
Although segregated ( or" seg ") funds have been a part of the financial services landscape since the 1960s they have recently experienced a significant increase in popularity as aging baby-boomers search for investment vehicles with greater guarantee and as mutual found companies look for ways to boost flagging sales.

REGISTERDE EDUCATION SAVINGS PLANS (RESP)
The benefit of an RESP arises through three mechanisms:

• Tax deferral, in that income earned on the (non-deductible) contributions you make to the plan is not subject to tax as it is earned; accordingly, income accumulates more rapidly in the plan that it would in the hands of the contributor;
• Income splitting, in that when amounts are paid out of the plan for the post-secondary education of a beneficiary they will be taxed to beneficiary, whose tax rate is typically lower at that time than the contributor's tax rate; and
• Incentive grants, in that the government will actually match contributions with 20% grants paid to the plan on the plan on contributions of up to $2,000 per year.

CANADA EDUCATION SAVINGS GRANTS (CESG)
The Canadian education saving grant program, announced in the 1998 federal budget, is intended to create a further incentive for taxpayer's to save trough RESPs by providing a direct federal grant to any valid PESP equal to 20% of the first $2,000 per year ($2,500 for 2007 and subsequent years ) contributed for each child under 18 years of age. Grants are limited to a specified annul amount.(There is also an overall lifetime maximum of $7,200 of grants for each beneficiary of an RPES). The grant itself is not included in calculating the lifetime RPESP contribution limit, nor in calculating annual contribution limits (before annual contribution limits were withdrawn in 2007). Thus, where a $4,000. Contribution was made in a year, the grant would provide an additional 20% of 2,000 (i.e., $400), so that the total added to the plan would be $4,400 (plus income earned in the plan), notwithstanding that (before2007) the annual contribution limit was $4,000. Similarly a contribution or series of contribution which reach the current $50,000 annual limit (for a particular beneficiary) will generate grant in addition to the $ 50,000.
To obtain the grant, the beneficiary must obtain a Canadian Social Insurance Number (SIN), which has to be used when applying for the grant, and must be resident in Canada at the time the grant is made. Obtaining a SIN for a Canadian resident child typically presents no difficulty and it enables you to open an RESP for the child. The RESP provider should provide you with details about the grants available to you and make the necessary applications on you behalf.
If contributions are withdrawn for non-educational purposes from an RESP which has received a CESG, the RESP trustee will be required to make a CESG repayment equal to %20 of the withdrawal. Where a plan contains both contributions which did and contributions which did not earn CESG (because they were before 1998 or in excess of grant contribution room), the CESG earning contributions will be considered withdrawn first; that is, the 20% repayment will be required on withdrawals until the CESG is in effect exhausted.

S I N Application
Government SDE0069E Form
Government SDE0071 Form
Government SDE0073 Form
Request for CESG & CLB-3 pages - SDE0073E form
Request for CESG & CLB-6 pages - SDE0073E form

This method of tax deferral is one of the most significant tax planning ideas available to Canadian taxpayers. By making contributions to a plan not later than 60 days after the current year end, a deduction from income can be taken in the current year for the amount within certain limitations. An immediate tax saving results and tax refund can be reinvested or used currently for personal purposes. What's more, income earned on contributions accumulates tax-free. When contributions are withdrawn, they are included in income; however, given that this will normally occur during the taxpayer's retirement years, they will typically be taxed at a lower marginal rate as retirees tend to have less income than they did during their working years.

CONTRIBUTION LIMITS
Beginning in 1991, the new tax-assisted retirement savings system is based on a Comprehensive annual limit of 18% of earned income. This uniform limit of 18% of 18% earning applies to employer-sponsored registered pension plans (RPPS), deferred profit sharing plans (DPSPs), and registered retirement saving plans (RRSPs). That is, annual aggregate contributions to these saving vehicles will generally be limited to 18% of the taxpayer's earned income (based on the previous year's income) up to a maximum dollar amount.