Staff at FSNA National Office has reviewed the fall 2008 Economic and Fiscal Statement announced yesterday by Finance Minister Flaherty and has identified the following issues relevant to our members.
(The statement is posted on the department's site: http://www.fin.gc.ca/ec2008/
1. Pension Indexation
Mr. Flaherty's Economic and Fiscal Statement does not include any provisions that affect the previously announced pension indexing (2.5%) that will be applied effective 1 January 2009, nor is there anything in the statement that would change future indexation of superannuation payments to pensioners.
2. Reduction by 25% of required minimum withdrawal amount for RRIFs for 2008.
RRIF holders who withdraw more than the reduced 2008 minimum will be permitted to re-contribute the excess to their RRIFs until the later of March 1, 2009 and 30 days after this proposal is enacted. Re-contributions will be deductible for the 2008 taxation year.
3. Liquidation of RRIF assets in order to satisfy minimum withdrawal requirement
There is no obligation to liquidate assets in order to satisfy the RRIF minimum withdrawal requirement. The income tax rules permit "in-kind" asset transfers to meet the requirements – they do not require the sale of assets. The Government has asked all financial institutions to accommodate the in-kind distribution of assets from a RRIF, as permitted under the tax rules, at no cost to clients, or to offer another solution that achieves the same result.
(The Minister's letter to financial institutions is also posted on the department's site: http://www.fin.gc.ca/news08/
