Money123: How pay transparency could affect your salary

The pros and cons of pay transparency

Ontario became the latest province this week to push for more pay transparency, announcing plans for legislation that would require job postings to come with a salary band.

Experts who spoke to Global News say there are benefits, drawbacks and limitations to the impact pay transparency can make for workers and employers alike.

Posting salary ranges can give jobseekers a better sense of whether applying to the position is worth their time, and help them direct their searches to more fruitful opportunities.

Companies, too, can benefit when they post a salary range as they’ll be more likely to attract a number of qualified candidates, according to the chief economist at online jobs site Ziprecruiter.

But Julia Pollak also tells Global News that there’s a “tradeoff” for companies that embrace pay transparency that might end up frustrating their existing employees.

Read more on what impact pay transparency could have on your workplace.

Homebuyers taking the ‘upper hand’

Canada’s housing market is continuing to slow down under the weight of higher interest rates, but an RBC report this week says that trend is giving homebuyers the “upper hand” in some cities — and a shot at better prices.

The RBC analysis of the October resale market argues higher interest rates have the fall housing market “stuck in a low gear.”

Prices declined month to month in Toronto, Vancouver and Montreal, the report noted, amid a “rebalancing” of market conditions that’s giving buyers more bargaining power.

Of course, many buyers are still limited by higher borrowing costs tied to the Bank of Canada’s interest rate hikes.

A separate report from the Canada Mortgage and Housing Corp. this week said higher rates are expected to hit existing mortgage holders hard in the coming years.

Read more about the looming “interest rate shock” here.

Christmas tree prices set to rise

Between droughts, wildfires and the soaring cost of fertilizer, it’s been another stressful year for Christmas tree farmers.

Despite those threats, it’s been a “pretty good year” for firs coast to coast, according to Shirley Brennan, the executive director of the Canadian Christmas Trees Association.

That’s a rare blessing to an industry that’s beset by a crop of farmers aging out and unprecedented demand for trees.

The rising cost of running a tree farm means consumers should expect about a five per cent increase in prices for trees this year, Brennan said. The average price last year increased roughly 10 per cent from the year prior.

Depending on where their farm is, growers have had a variety of challenges due to extreme weather this season.

Read more from Global News’ Aaron D’Andrea about what to expect in your area.

________________________

– THE QUESTION –

“I was speaking to a co-worker who is 62 and she mentioned that it is better to contribute to a TFSA instead of an RRSP at this age as the tax benefits in the future will not really be offset in the future due to tax increases. Is there any value to this, if you have room in your TFSA?”

— A Money123 reader 

“First, I think your co-worker is assuming that income taxes will rise in the future. That’s not guaranteed. The government could always raise sales taxes or cut spending to make up for budget shortfalls. So, a decision shouldn’t be based on thinking the feds would raise income taxes.

Second, the TFSA versus RRSP question is an age-old debate. Put simply, the benefit of an RRSP is that any contributions can be deducted from your taxable income in the contribution year. However, withdrawals are included in your income in the withdrawal year. Both accounts let investments grow tax-free, but a TFSA doesn’t provide an income tax deduction on contributions and won’t be included as income upon withdrawal.

Like most of personal finance, the choice depends on an individual’s personal circumstances. However, at 62, I assume that your co-worker is coming close to the end of their career and is possibly at the peak of their earnings. In this case, contributing to an RRSP may be the better choice. An RRSP would allow a 62-year-old to reduce their income tax while they’re still earning an income — when their marginal tax rate is high. Then, once retirement comes along, they can withdraw that money at a lower marginal tax rate (as they would no longer have that employment income). But if your co-worker isn’t planning to retire any time soon, TFSA contributions could be sensible as well.”

–  Adrian Zee, personal finance writer

“The assumption here is that you have the room in your RRSP as well as your TFSA at the time of the contribution. As time goes by, you may be contributing to one type of account and then another depending on your circumstance. Other reasons for making any contributions will be ignored such as withdrawing from your TFSA in an emergency or using an RRSP for a Homebuyer’s Plan.

The ideal situation for contributing to an RRSP is to contribute when your net income is higher (and your tax rate is higher), which means a larger refund. When you withdraw from your RRSP, you want the net income to be lower (and your tax rate lower). Net income means after expenses and deductions which may be less than your total income on the tax return. The difference between the tax rates when you contribute and when you withdraw will be a savings for you. If the reverse is true and your tax rate will be higher as you age, the TFSA would be the preferred account to contribute to. Note that it does matter if you do the withdrawals from your RRSP as RRSP withdrawals or if you withdraw in the form of a RRIF. The tax rate on the income will be based on your net income from all sources in the year of withdrawal.

If you do have withdrawals from your TFSA, there is no tax rate difference as there are no taxes on withdrawals and no refunds on deposits. Should the tax rate rise after you have contributed to your RRSP, the same methodology applies as above, but the difference in savings will shrink if the tax rate at the time of withdrawal is higher. The growth of your money inside of the RRSP and inside of the TFSA can be identical as the investments made in each account can be identical.”

– Joe Barbieri, fee-only financial consultant, Joe the Investor

__________________