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Proposed Changes to RIF & LIF

As you may have heard, the Minister of Finance has proposed changes to the calculation of RIF minimums for the 2008 calendar year. Although the proposed changes have not been enacted by Parliament, we wanted to make you aware of what your options will be when they are in fact enacted:

i) The minimum amount that must be withdrawn from RIF/LIF's for 2008 will be reduced by 25%. (i.e. a $10,000 minimum will be reduced to $7,500)

ii) Individuals who have already withdrawn more than the reduced minimum will be permitted to re-contribute to their RIF/LIF up to the 25%. The re-contribution will be deductible for the 2008 taxation year.

iii) Anyone opting to make a re-contribution can do this up to March 1, 2009, or 30 days after the proposed changes are enacted by Parliament (whichever is later).

It is Canada Revenue's longstanding practice to allow taxpayers to act upon proposed tax measures on the assumption that the legislation for these measures will be enacted. As such, many of the Fund companies we deal with have already implemented policies to enable clients to re-contribute the 25%. Please note this is merely an initiative that the Canadian Government is offering in light of the decline in the markets and is therefore completely optional. For those of you that don’t wish to re-contribute, you simply do nothing.

If your intention is to take advantage of this initiative, please let us know so that we can prepare the paperwork required to proceed.

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