What Vidda does not model

Vidda understates CPP for younger workers, and the gap is not small. CPP was enhanced starting in 2019 and phases in over roughly forty years, so someone retiring in 2065 will receive materially more than someone retiring today. Vidda uses today's figures. They are right for people at or near retirement and wrong for everyone else. If you are in your thirties or forties, Vidda is understating your CPP by somewhere between $1,000 and $5,000 a year in retirement. Your position is better than the plan shows.

A spending goal you cannot afford before retirement is not flagged as a shortfall. Vidda's shortfall check looks at your retirement years. If you plan a purchase for next year and your savings will not cover it, the tool that priced it will say so, but it will not appear in the plan's shortfall diagnosis. Look at the tool's own answer for anything you have scheduled before you retire.

Spending before retirement is missing from the expenses chart. The chart starts at your retirement year. A goal you have funded for an earlier age is in the projection and in the tool's result, but you will not see it there.

If you borrow for a purchase, it is all or nothing, and the interest is not deducted. Where savings fall short, Vidda borrows the whole gap or none of it. It also does not treat any loan interest as deductible, which is correct for most personal borrowing and wrong in the cases where it is not.

Three related gaps, all stemming from the same thing: Vidda models a non-registered account as a balance that grows, rather than as specific holdings producing specific kinds of income.

Withdrawals are over-taxed. Vidda treats every dollar you take out of a non-registered account as half taxable gain. In reality part of any withdrawal is your own money coming back, which is not taxed at all. For an account that has been growing fifteen years or more this costs you roughly $1,000 to $10,000 a year of overstated tax depending on the size of the account. For an account you funded recently, from an inheritance for instance, the overstatement is much larger, because almost all of it is principal.

You can correct this on the account itself, and the arithmetic matters. The field asks what share of each withdrawal is taxable, not what share is growth. If roughly 70% of your account is growth, only half of a capital gain is taxable, so the figure to enter is 35, not 70. Entering 70 would tax you at about double the real rate. The field's own hint says the same thing. One caveat: it is a snapshot, and as the account keeps growing the true share drifts upward, so it goes stale.

Annual distributions are not taxed. Real non-registered holdings pay out interest, dividends and distributions every year, and those are taxable when received even if you reinvest them. Vidda grows the account untaxed until you withdraw. Over a twenty year build-up this understates your cumulative tax by somewhere between $5,000 and $30,000 on a portfolio over $200,000. This one makes your plan look better than reality.

Dividends are not given their special treatment. Canadian dividends are taxed more favourably than ordinary income. Vidda does not model dividend income separately, so it misses this. Combined with the two above, a retiree holding $200,000 or more in dividend-paying Canadian stocks could be out by $1,000 to $3,000 a year in either direction.

Credits do not move between you. In real life a higher earner can claim a credit for a spouse with little income, and unused age and pension credits transfer to the other return. Vidda taxes each of you with only your own credits. Where you have pension income to split, Vidda already captures most of the same benefit, so this rarely matters. Where you do not, meaning your retirement income is all CPP, OAS and non-registered savings with no RRIF or workplace pension yet, Vidda overstates your tax by roughly $1,500 to $3,500 a year. Your position is better than the plan shows.

The survivor's CPP is slightly overstated below 65. Vidda applies the same formula at every age. The real formula works differently for a survivor under 65, so Vidda is a little generous for an early widow or widower.

Vidda does not model the Allowance for the Survivor. This is a benefit for a low-income widow or widower aged 60 to 64. If it would apply to you, Vidda is showing you less income than you would have.

Beneficiary designations only affect the estate view. If you set an account to pass to your estate rather than to a named beneficiary, that changes the estate figures. It does not change the year by year projection, which assumes everything rolls to the surviving spouse at the first death.

Vidda does not model the Guaranteed Income Supplement. GIS tops up OAS for seniors with little other income, and it can be worth five to thirteen thousand dollars a year to someone who qualifies. For a single person it phases out above roughly $22,000 of other income. For a couple the test uses your combined income against couple thresholds, so the point where it disappears is different again. If your retirement income will land anywhere near those levels, Vidda is showing you materially less money than you would actually have, and this is the largest single omission on this page.

Provincial supplements are also missing. Ontario GAINS, the BC Senior's Supplement and their equivalents elsewhere are small individually, a few hundred dollars a year, but they add up over a long retirement. Same direction: your real position is better.

Vidda models a business as something you own and sell, not as a company that earns and pays you.

You can tell Vidda that a business pays you an amount each year, but that money is taxed at full ordinary rates. There is no way to say your corporation pays you $60,000 a year in eligible dividends, which are taxed considerably more lightly. There is no corporate tax, no capital dividend account, and no salary versus dividend decision.

So an incorporated owner-manager who enters their corporation and their intended draw gets a plan showing materially more tax than they would really pay, whichever way they enter it. If you are planning to leave money in the company and draw dividends through retirement, Vidda does not currently serve that pattern. We would rather say so here than have you find out from a number that looked right.

The lifetime capital gains exemption limit is not tracked. If you mark a business sale as exempt, Vidda exempts the whole gain no matter how large. The real exemption is capped at roughly $1.25 million per person. Above that, your plan is showing you more after-tax money than you would keep.

The amount for a person living alone is not modelled. This is worth about $304 a year in credit to a Quebec resident who qualifies. Vidda does not ask whether you live alone, so it cannot apply it.

Several smaller Quebec credits are also missing, including the senior assistance amount, the solidarity tax credit, and the credit for home support services for seniors. Most are worth a few hundred dollars a year. The home support credit can be larger if you actually buy those services, which Vidda does not model at all.

QPP is treated as CPP. The contribution rules and benefits differ slightly. The effect on a long-range projection is negligible.

All of these run the same direction: Vidda shows you slightly less than you would have.

The disability tax credit is not modelled at all. It is worth roughly $1,600 a year or more once federal and provincial amounts are counted, and it transfers to a supporting spouse when unused.

This one is worth flagging harder than its size suggests, because Vidda does model RDSPs, and qualifying for the disability tax credit is a precondition of having an RDSP. So the households using that part of the app are exactly the households being overtaxed by this gap. Your real position is better than the plan shows.

If you are single, a defined benefit pension pays nothing until you retire. Even if you set its start age earlier, Vidda will not pay it while you are still working. In a couple's plan it does pay from the start age you set. The two behave differently and this is on the list to reconcile.

CPP and EI are not deducted from that income. Vidda reports the income gross. At $20,000 a year of part-time work, CPP contributions would be around $1,000 you never actually take home, so the after-tax cash Vidda reports is high by about that much. That $20,000 figure is the default on the part-time work tool, so this is roughly the size of the overstatement most people using that screen will see.

A plan that starts after age 71 will not convert an RRSP. Vidda converts RRSPs to RRIFs exactly at 71. If your plan begins later than that and you enter an account as an RRSP, it stays an RRSP and never pays forced minimums. Enter it as a RRIF instead.

A RRIF held while you are still working may not pay minimums. For a single person's plan, Vidda does not apply forced RRIF minimums before retirement, though in reality they apply from the year after the account opens regardless of whether you are working. For a couple's plan it does apply them. The two differ, and this is on the list to reconcile.

Inheriting an unconverted RRSP converts on the wrong schedule. If a spouse dies before their own 71st birthday, Vidda converts their RRSP in the year they would have turned 71 rather than in the year the survivor turns 71. When there is an age gap between you, the timing is off.

A deduction bigger than that year's income is lost. If you route a windfall, a sale, or a downsizing gain into an RRSP and the resulting deduction exceeds what you earned that year, the excess simply disappears. In reality it would carry forward. Vidda does not model the carry-forward, so it shows more tax than you would pay.

Vidda models policies in a deliberately simple way.

Cash value grows at a rate you enter rather than following an insurer's actual schedule, and premiums do not build it. The death benefit is a flat face amount with no riders, paid tax free. Premiums are level, never indexed, and are only charged against the plan in retirement, on the assumption that working-year premiums come out of wages.

Not modelled at all: policy loans, using cash value as collateral, premium offset, universal life investment accounts, and term renewal or conversion. For a renewal, add a second policy at the new premium.

The survivor coverage tool sizes a policy by whether the survivor's money lasts. It does not target a legacy amount or a multiple of income, and the number it gives you excludes the premiums a real policy would cost.

Land transfer tax uses documented approximations. Toronto's municipal tax is modelled. Montreal's upper tiers are not. Nova Scotia uses the Halifax rate. Alberta and Saskatchewan are registration-fee estimates. First-time buyer rebates are ignored, which does not affect downsizers.

The sale and the purchase settle in the same year. No bridge financing, no gap between homes.

The replacement home grows at the same rate as the one you sold.

A province move is modelled from the move year onward for income tax, probate and land transfer tax. Partial-year moves, moving expenses, provincial health plan waiting periods, and Quebec filing details beyond the modelled brackets and credits are not.

One edge case worth naming. If you sell a property for less than the mortgage on it, and every account you nominated for the proceeds is empty, the shortfall is forgiven rather than taken from your other accounts, which overstates your net worth by that amount. Taking it correctly from another account requires knowing the tax consequence of the withdrawal, and guessing would be a worse answer than this one.

Rental property. Vidda uses one growth rate covering both appreciation and rent, where in reality they differ. Most people enter a sensible combined figure and the effect is modest.

Withholding tax on RRSP withdrawals. Vidda accounts for tax annually rather than modelling when it is withheld. Withholding changes when the government gets the money, not how much you owe, so the annual result is correct.

Pension income splitting. Vidda models this and searches for the best split. One wrinkle: the tax it saves shows up as a slightly higher account balance rather than as a smaller withdrawal. The money is there either way.

Joint accounts split evenly. A jointly held account is treated as half yours and half your partner's for income and tax, which is the usual case but not every case.