**Solution for Canadian Residents**

Situation 1: For Nadine and Francois

Francois and Nadine bought their home in Winnipeg, Manitoba 12 years ago for $350,000.

On July 1, 2021 they moved to Toronto, Ontario with their children, Sharon and Bobby, so that Nadine could take a new job (after getting laid-off from her previous job as a manager) that included a $50,000 increase to her previous $100,000 salary.

Coincidentally, Nadines new job enabled the couple to be closer to Sharon, age 18, who will be attending university of Humber-Guelph full-time in September.

The couple sold their home in Winnipeg for $515,000 on June 30, incurring realtor fees of $12,600 and legal expenses of $4,400. Nadines employer agreed to reimburse her $10,000 for moving expenses.

The couple have also sold their cottage in Manitoba. They purchased the cottage for $100,000 five years ago and they received net proceeds of $400,000 from the sale. The proceeds from both properties were used to purchase their new home in Toronto and top up their emergency savings account.

They now have $2,500 per month in surplus cash flow which they can apply toward their goals.

Upon leaving her previous employer, Nadine sold shares held in her employee share plan. The shares were sold for $150,000 and had an adjusted cost base of $60,000. Nadine would like advice on how she might use these funds to save for retirement.

Nadine and Francois have personal Registered Retirement Savings Plans (RRSPs) valued at $90,000 and $25,000, respectively. Nadine also has $60,000 in unused RRSP contribution room.

Both of them expect their incomes to be lower in retirement, although Nadine expects to have a higher marginal tax rate than Francois. If the couple can contribute $20,000 per year to their RRSPs, they will be able to meet their retirement goals.

Prior to the move, Francois had been a stay-at-home father. He has recently established a landscaping business as a sole proprietor. This year (2021), he expects gross revenues of $45,000 and operating expenses of $15,000. Francois is currently using one of the rooms in the house as an office, and a portion of the basement and garage for storage.

As a new small business owner, Francois wants to know what he may be eligible to deduct from his business income.

Should he incorporate, and if so, what would happen if he decides to team up with a business associate who does fencing and another associate who designs and install pools and hot tubs. He heard a lot about buy-sell agreements and small business corporation to limit his liabilities.

But what are the medium- and long-term advantages to this? For sure there must be drawbacks as well. He hopes you can shed some light on this path, should he choose to act on it. His average personal income tax rate is expected to be 12 percent but would like you to verify if this is too low.

The couple would like their children to have some responsibility for funding their education. Francois and Nadine will fund $5,000 of Sharons total tuition fees, in each of the next four years, from surplus cash flows.

They would like to begin saving for the four-year, post-secondary education of their son Bobby, who is nine. To kickstart this savings plan, Francois gifted shares of a public corporation to his Bobby. Francois had paid $1,000 for the shares. They were worth $15,000 at the time of the gift. After receiving the gift, his son received dividends of $800 on the shares.

Also, in the current year, Francois sold shares of another public corporation to Nadine. These shares, which had a value of $10,000 at the time of the sale, originally cost $2,000. Francois sold them to Nadine for $7,000. Nadine received dividends of $500 on these shares.

He is not sure if there would be any tax consequences for passing on these shares.

What would you and your team recommend using the 6 Step Financial Planning Process? What recommendations and strategies would you prescribe to be implemented?