NexGen Tax Cases The Corporate Tax Deferral and Income Program

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "NexGen Tax Cases The Corporate Tax Deferral and Income Program"

Transcription

1 2014 NexGen Tax Cases The Corporate Tax Deferral and Income Program Business owners and managers in Canada who have incorporated have two major income tax advantages available to them over those who have not incorporated. Tax Deferral the ability to delay tax bills into the future, and Income Splitting the ability to distribute income to family members in a highly tax efficient manner. These strategies require both planning and forethought, but by simply acquiring an understanding of the basic concepts enclosed within this booklet you will be one step closer to putting them into action and developing a Corporate Tax Deferral and Income Program.

2 NexGen Tax Cases NexGen Tax Managed Funds: A Comprehensive Corporate Class Mutual Fund Structure Created in 2006, NexGen Funds allow investors to make two independent choices with each investment. These are: 1 An Investment Decision: Considering goals and personal risk tolerance, select the appropriate Tax Managed Fund. NexGen Funds (CASH, BOND, BALANCED, EQUITY) 2 A Tax Decision: Considering the individual tax preferences and future needs for income, select the appropriate Tax Class. 4 Tax Classes: CAPITAL GAINS MONTHLY DIVIDEND MONTHLY ROC DISTRIBUTION COMPOUND GROWTH Money invested in NexGen s Funds and Tax Classes may be reallocated within the NexGen Tax Managed Fund family at anytime without triggering any current tax liability. This flexibility allows an investor to continually customize both their investment and tax situation in pursuit of his/her investment goals as well as tax minimization. Using NexGen s unique investment and tax structure, investors are able to finally control Tax Alpha and provide tax efficient growth and withdrawals.

3 The Corporate Tax Deferral and Income Program The owner-manager in Canada who has incorporated his/her business has two major income tax advantages available over those who have not incorporated: Tax Deferral and Income Splitting. I The Tax Deferred Advantage Active business income (the net income derived from the primary activity of the business) is taxed in a Canadian Controlled Private Corporations (CCPC) at a much lower rate than if this income was earned directly by the owner manager. Small Business (up to $500,000) Personal (highest marginal tax rate) Difference British Columbia 13.50% 45.80% 32.30% Alberta 14.00% 39.00% 25.00% Ontario 15.50% 49.53% 34.03% Quebec 19.00% 49.97% 30.97% Newfoundland 15.00% 42.30% 27.30% Northwest Territories 15.00% 43.05% 28.05% This difference is only temporary and the advantage is lost once the money is removed and placed in the hands of the individual shareholders. Therefore, for those fortunate enough to earn more in their CCPC s than they require for annual personal expenses, it makes sense to hold these extra dollars in the corporation and invest for the long term in the name of the CCPC. Annual cash flow requirements (for personal use) are best planned by your accountant. They will decide the most tax efficient method (salary needs versus dividends needs) to accomplish these withdrawals keeping in mind such matters as Canada Pension Plan and Registered Retirement Saving Plan contributions. Once the decision to invest within the corporation is made, there is definitely a right and a wrong way to proceed for the long term. Tax Alpha (the value that can be added by investing tax efficiently) is of paramount importance in determining the long term success of these corporately held investments. Distributing taxable income annually when there is no current need for cash flow creates current tax liabilities within the CCPC which reduces the amount available for future compounding. The tax rates on this passive income are punitive and extremely high (ranging from 44 to 49% depending on the province of residence) and this should be avoided.

4 NexGen Tax Cases The Corporate Tax Deferral and Income Program COMPOUND GROWTH As an example, assume a CCPC has $1,000,000 of investable after tax dollars and these will not be needed for 10 years. Let s look at two alternatives each earning 5% annually with the first distributing this income annually as interest and the second deferring all growth until liquidation and then to be taxed as a capital gain. Just to be certain we are comparing similar results lets also assume that all after corporate tax dollars are then withdrawn from the CCPC and taxed in the hands of the shareholders at the highest marginal tax rates. Although this last step is rarely done, the example can demonstrate the potential of income splitting as set out below.* Over 10 Years Tax Inefficient Interest Tax Efficient Using Deferral Deferral Advantage over Interest Invested Capital $1,000,000 $1,000,000 $0 Total Growth $565,117 $628,895 $63,778 Total Corporate Income Tax Paid $260,914 $0 $260,914 Corporate Fair Market Value After Tax $1,304,203 $1,628,895 $324,692 Personal Income Tax at Liquidation $323,150 $469,461 $146,311 Net Income After Tax $981,053 $1,159,434 $178,381 FMV in Corporation by Year Liquidation of Assets at the End of the Year $2,000,000 $1,200,000 $1,500,000 $1,100,000 $1,000,000 $1,000,000 $500,000 $900,000 $ Tax Efficient Tax Inefficient using Interest 9 10 $800,000 Tax Efficient 10 Tax Inefficient using Interest The impact of managing Tax Alpha in corporate investment planning is significant. If managed properly these dollars can grow to significant levels (often the largest asset pool in the hands of the owner-manager) and can become a significant portion of the owner-manager s retirement cash flow requirements. We call this The Corporate Tax Deferral and Income Program. * Uses 2013 Corporate and Personal income tax rates for Ontario. As you can clearly see, certain income types are far more tax advantageous than others.

5 MONTHLY DIVIDEND CAPITAL GAINS I Income Splitting The second advantage of being incorporated is the ability to control the timing and frequency of distributions and to split income among your family to save tax dollars. With the help of accountants and lawyers, a share structure can be put in place which allows for the legal income splitting of withdrawals from the corporation amongst your family member shareholders. This share structure still allows the owner-manager to be in control of all decision making including how much and to which shareholders. Due to our graduated rate income tax system, income splitting allows you to reduce the total tax liability on withdrawals from the CCPC as opposed to having income taxed solely in the hands of the owner-manager. However, here too, it is important to manage distributions in the right way. For example, let s assume we grow $1,000 of investment income in the CCPC and distribute these dollars to a shareholder of our choice who is a resident of the province indicated. The following shows the after corporate and personal tax result to that shareholder who is in the highest marginal tax bracket. (using 2013 tax rates) Interest Eligible Dividends Capital Gains British Columbia $502 $751 $713 Alberta $575 $807 $788 Ontario $482 $662 $741 Quebec $482 $648 $741 Newfoundland $538 $775 $769 Northwest Territories $544 $772 $772 I SOLUTIONS In order to facilitate a Corporate Tax Deferral and Income Program NexGen offers a number of solutions that can be used in conjunction with NexGen Tax Managed Funds. NexGen s Compound Growth Class objective is to maximize the after-tax value of an investor s portfolio by minimizing the amount and frequency of distributions. This Tax Class objective supports the tax deferral strategy laid out in this booklet. NexGen s Dividend Tax Credit Class and it s Capital Gains Class are both designed to provide sources of income, when available, of Canadian eligible dividends (monthly) and capital gains (annually), respectively. These Tax Classes can support the income splitting strategy explained in this booklet by providing tax efficient distributions to your corporation s shareholders.

6 Personal Tax Rates Federal and Provincial Combined* Other Income Capital Gains Canadian Dividends Eligible Dividends Small Business Dividends Tax Free Eligible Dividends** ($) British Columbia *** 45.80% 22.90% 28.68% 37.98% 49,285 Alberta 39.00% 19.50% 19.29% 29.87% 49,285 Ontario **** 49.53% 24.76% 33.82% 40.13% 49,285 Quebec 49.97% 24.98% 35.22% 39.78% 35,080 Newfoundland 42.30% 21.15% 22.47% 31.01% 49,285 Northwest Territories 43.05% 21.53% 22.81% 32.40% 49,285 * Highest marginal tax bracket only in excess of $136,270 in taxable income Basic non-refundable tax credit only. ** No other income, Basic non-refundable tax credit only. May attract Alternative minimum tax. *** British Columbia established an Ultra High Tax Bracket above $150,000. From $136,270 to $150,000 Other Income 43.70%; Capital Gains 21.85%; Eligible Dividends 25.78%; Small Business Dividends 35.51%. **** As of July 1, 2012, Ontario established an Ultra High Tax Bracket above $500,000 ($514,090 in 2014). From $136,270 to $514,090 Other Income 46.41%, Capital Gains 23.20%, Eligible Dividends 29.52%, Small Business Dividends 36.45%. Old Age Security and the Clawback Old Age Security qualification is based on legal Residency in Canada. The payout begins once the individual achieves the age of 65 and the maximum is paid after 40 years of residency after the age of 17. A minimum pro-rated payment is payable after 10 years of residency. Old Age Security is Clawback in any year when the recipient s net income for tax purposes (line 234) exceeds a threshold amount. In 2014, that threshold amount is $71,953 and every dollar above that level see a clawback of 15 cents of the OAS. The entire amount is clawbacked once net income for tax purposes exceeds approximately $115,670. The OAS is adjusted quarterly to reflect the cost of living index. See the NexGen Tax Case booklet for strategies to reduce or eliminate the Clawback. Sources:

7 Corporate Tax Rates Federal and Provincial Combined, Canadian Controlled Private Corporation Small Business Income up to $500,000 General Active Passive Investment Income Taxed Deferred Advantage*** British Columbia 13.50% 26.00% 45.67% 32.30% Alberta 14.00% 25.00% 44.67% 25.00% Ontario 15.50% 26.50% 46.17% 34.03% Quebec 19.00% 26.90% 46.67% 30.97% Newfoundland 15.00% 29.00% 48.67% 27.30% Northwest Territories 15.00% 26.50% 46.17% 28.05% *** Personal tax rate (HMTR) less corporate tax rate on Small Business Income. Sources:

8 Invest Better : Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. The payment of distributions for Dividend Tax Credit Class and the Return of Capital Class should not be confused with a mutual fund s performance, rate of return or yield. If distributions paid by a mutual fund are greater than the performance of the fund, then your investment will decline. Distributions paid as a result of capital gains realized by a mutual fund and income and dividends earned by a fund are taxable in your hands in the year they are paid. For Return of Capital Class, your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, then you will have to pay capital gains tax on the amount below zero. Tax liabilities on investment income and capital gains earned by a mutual fund cannot be mitigated nor can they be fully managed in all circumstances. The risk increases the greater the investment return earned by the mutual fund. As a result, a mutual fund may be required to make taxable distributions to investors in a NexGen Tax Class for which a distribution or type of distribution is not optimal or in accordance with their tax preference. The tax efficiency of the Return of Capital Class and the Compound Growth Class is enhanced the greater the demand for the Capital Gains Class, Dividend Tax Credit Class and the Registered Fund Class. Use of Tax Cases : These cases have been established by NexGen. The contents and information contained in the Tax Cases are for informational and educational purposes only and should not be construed as legal, tax or investment advice. Information contained within this cases is believed to be accurate and reliable at the date of creation, however, NexGen cannot guarantee that such information is complete or accurate or that it will remain current. The information is subject to change without notice and NexGen cannot be held liable for the use of or reliance upon the information contained in the NexGen Tax Cases. The rates of return, annual distribution rates and income components comprising a given distribution contained in the tax cases and reflected in certain graphs and tables are for illustrative purposes only utilizing various assumptions to demonstrate the importance of compound growth and the effects of taxation on a given investment. They are not intended to reflect, nor should they be interpreted, as an indication of future values or returns on investment in respect of any NexGen Fund. NexGen Financial Limited Partnership 36 Toronto Street, Suite 1070 Toronto, Ontario M5C 2C5 Ph Fax Ph Fax

The Mechanics of Corporate Class

The Mechanics of Corporate Class The Mechanics of Corporate Class How Corporate Class works Whether your clients have investments in their corporate accounts, non-registered investments or both, the tax efficiency of their investments

More information

INCORPORATING YOUR PROFESSIONAL PRACTICE

INCORPORATING YOUR PROFESSIONAL PRACTICE INCORPORATING YOUR PROFESSIONAL PRACTICE REFERENCE GUIDE Most provinces and professional associations in Canada now permit professionals such as doctors, dentists, lawyers, and accountants to carry on

More information

INCORPORATING YOUR BUSINESS

INCORPORATING YOUR BUSINESS INCORPORATING YOUR BUSINESS REFERENCE GUIDE If you are carrying on a business through a sole proprietorship or a partnership, it may at some point be appropriate to use a corporation to carry on the business.

More information

Owner-Manager Remuneration

Owner-Manager Remuneration Introduction Owner-managers who carry on business through corporations constantly face the dilemma of deciding whether to pay themselves by way of salaries or dividends. On the one hand, a salary is a

More information

TAX, RETIREMENT & ESTATE PLANNING SERVICES. Clawback calculator user guide

TAX, RETIREMENT & ESTATE PLANNING SERVICES. Clawback calculator user guide TAX, RETIREMENT & ESTATE PLANNING SERVICES Clawback calculator user guide Table of contents Introduction... 3 Fully taxable and investment income Fully taxable income... 4 Investment income... 5 Deductions

More information

Professional Corporations An Attractive Option

Professional Corporations An Attractive Option Professional Corporations An Attractive Option Recent and planned corporate income tax rate reductions mean that now is a good time for eligible professionals to consider incorporating their practices.

More information

CIFPs 11 th Annual National Conference. Frank Di Pietro, CFA, CFP Director, Tax & Estate Planning. May 2013

CIFPs 11 th Annual National Conference. Frank Di Pietro, CFA, CFP Director, Tax & Estate Planning. May 2013 Tax & Estate Planning for Business Owners CIFPs 11 th Annual National Conference Frank Di Pietro, CFA, CFP Director, Tax & Estate Planning May 2013 DISCLAIMER The information provided is general in nature

More information

Bye-bye Bonus! Why small business owners may prefer dividends over a bonus

Bye-bye Bonus! Why small business owners may prefer dividends over a bonus Bye-bye Bonus! Why small business owners may prefer dividends over a bonus Jamie Golombek Managing Director, Tax & Estate Planning, CI Wealth Advisory Services September 2015 Traditionally, many Canadian

More information

Introducing. NexGen Financial. the better way to invest.

Introducing. NexGen Financial. the better way to invest. Introducing NexGen Financial the better way to invest. FROM THE ACORN DOES THE MIGHTY OAK TREE GROW... Canadian investors understand the power of long term growth be it in the forests or in their investment

More information

Personal Financial Plan

Personal Financial Plan Personal Financial Plan Pete and Carrie Mitchell 918 Richmond Street Toronto, Ontario M5N 1V5 Disclaimer This document has been prepared to assist in the analysis of your current financial position, thereby

More information

INVESTMENT HOLDING COMPANIES

INVESTMENT HOLDING COMPANIES INVESTMENT HOLDING COMPANIES > RBC DOMINION SECURITIES INC. FINANCIAL PLANNING PUBLICATIONS At RBC Dominion Securities Inc., we have been helping clients achieve their financial goals since 1901. Today,

More information

Sprott Flow-Through Limited Partnerships. Sprott Tax-Assisted Investments

Sprott Flow-Through Limited Partnerships. Sprott Tax-Assisted Investments Sprott Flow-Through Limited Partnerships Sprott Tax-Assisted Investments sprott asset management lp Natural resources an essential element of a well-structured investment portfolio Adding natural resource

More information

T h e R e t i r e m e n t S a v i n g s D e b a t e...

T h e R e t i r e m e n t S a v i n g s D e b a t e... T h e R e t i r e m e n t S a v i n g s D e b a t e............. I n s i d e o r o u t s i d e t h e R R S P s t r u c t u r e? RRSPs have traditionally been viewed as the most efficient, self-funding

More information

How Can You Reduce Your Taxes?

How Can You Reduce Your Taxes? RON GRAHAM AND ASSOCIATES LTD. 10585 111 Street NW, Edmonton, Alberta, T5M 0L7 Telephone (780) 429-6775 Facsimile (780) 424-0004 Email rgraham@rgafinancial.com How Can You Reduce Your Taxes? Tax Brackets.

More information

Registered Retirement Income Funds

Registered Retirement Income Funds Registered Retirement Income Funds The Income Tax Act states that a Registered Retirement Savings Plan (RRSP) matures by December 31 of the year in which the planholder (annuitant) reaches age 69. At the

More information

Many individuals hold investment portfolios in

Many individuals hold investment portfolios in BMO NESBITT BURNS Understanding Personal Holding Companies Many individuals hold investment portfolios in a personal holding company. It is important for these investors to understand the various tax implications

More information

Private Wealth Management

Private Wealth Management Private Wealth Management Small Business Report October 19, 2010 April 17, 2007 Rethinking RRSPs for Business Owners: Why Taking a Salary May Not Make Sense by Jamie Golombek Abstract Traditionally, many

More information

Maximizing Your Philanthropic Gift: Effective Charitable Giving Strategies Using Your Holding Company

Maximizing Your Philanthropic Gift: Effective Charitable Giving Strategies Using Your Holding Company Maximizing Your Philanthropic Gift: Effective Charitable Giving Strategies Using Your Holding Company Canadians are generous people. Every year, thousands of Canadians support the causes they believe in

More information

The Great Divide: Income splitting strategies can lower your family s taxes by Jamie Golombek

The Great Divide: Income splitting strategies can lower your family s taxes by Jamie Golombek March 2015 The Great Divide: Income splitting strategies can lower your family s taxes by Jamie Golombek While the new Family Tax Cut credit, which provides a form of income splitting, has been getting

More information

RETIREMENT COMPENSATION ARRANGEMENTS

RETIREMENT COMPENSATION ARRANGEMENTS RETIREMENT COMPENSATION ARRANGEMENTS REFERENCE GUIDE A Retirement Compensation Arrangement ( RCA ) can be a valuable planning tool that can effectively provide solutions to retirement planning and, in

More information

Tax Implications of Investing

Tax Implications of Investing GRAHAM THIESSEN BUCHANAN BARRY Tax Implications of Investing BY GRAHAM THIESSEN In the world of investing, there are many factors outside of your control that can disturb your investments and ultimately

More information

2015 Target Distribution Rates with Return of Capital

2015 Target Distribution Rates with Return of Capital 2015 Target Distribution Rates with Return of Capital 2015 Target Distribution Rates with Return of Capital TD Mutual Funds Investor H Premium K TD Income Advantage Portfolio TDB963 TDB393 TDB2005 Annual

More information

Salary vs. dividends for business owners

Salary vs. dividends for business owners Salary vs. dividends for business owners One of the most recurring questions business owners ask is - should they take salary or dividend income from their business? Some accountants suggest a bonus-down

More information

It's 2016 Do You Know What Your Tax Rate Is?

It's 2016 Do You Know What Your Tax Rate Is? It's 2016 Do You Know What Your Tax Rate Is? Jamie Golombek Managing Director, Tax & Estate Planning, CIBC Wealth Strategies Group April 2016 There s been much discussion about tax rates this year, with

More information

>Most investors spend the majority of their time thinking and planning

>Most investors spend the majority of their time thinking and planning Generating Retirement Income using a Systematic Withdrawal Plan SPECIAL REPORT >Most investors spend the majority of their time thinking and planning around how best to save for retirement. But once you

More information

Corporate asset efficiency

Corporate asset efficiency Life insurance solutions Corporate asset efficiency Manage. Access. Preserve. A smart solution for professionals permanent life insurance, a unique asset that can offer tax-advantaged growth. Consider

More information

INCORPORATING YOUR BUSINESS

INCORPORATING YOUR BUSINESS November 2014 CONTENTS Advantages of incorporation Advantages of an SBC Summary INCORPORATING YOUR BUSINESS If you carry on a business, there are many tax planning opportunities which become available

More information

Choose the right investment. Segregated fund policies versus mutual funds

Choose the right investment. Segregated fund policies versus mutual funds Choose the right investment Segregated fund policies versus mutual funds Choose the best option for your clients investment needs Segregated fund policies and mutual funds provide clients: Professional

More information

The Compensation Conundrum: Will it be salary or dividends? by Jamie Golombek

The Compensation Conundrum: Will it be salary or dividends? by Jamie Golombek December 2013 The Compensation Conundrum: Will it be salary or dividends? by Jamie Golombek With the year-end for most businesses fast approaching, owner-managers once again will begin to ponder the age-old

More information

TAXES AND INVESTING IN MUTUAL FUNDS

TAXES AND INVESTING IN MUTUAL FUNDS TAXES AND INVESTING IN MUTUAL FUNDS Contents Why Understanding Taxes Is Important 1 What Is a Mutual Fund? 2 When Do I Pay Taxes on My Mutual Fund Investment? 2 Principles Related to Taxes and Investing

More information

Responsible leveraging. A wealth creation strategy

Responsible leveraging. A wealth creation strategy Responsible leveraging A wealth creation strategy What is leveraging? Borrowing to invest is a wealth-building strategy that has been used for thousands of years. The financial term for borrowing to invest

More information

Advisor Guide. The BMO. Insurance Insured Retirement Plan

Advisor Guide. The BMO. Insurance Insured Retirement Plan Advisor Guide The BMO Insurance Insured Retirement Plan Table of Contents Introduction to The BMO Insurance Insured Retirement Plan 2 The Opportunity 3 The Solution 4 The BMO Insurance Insured Retirement

More information

A client s guide to world-class money management

A client s guide to world-class money management A client s guide to world-class money management A sophisticated, comprehensive investment program as unique as you are. CI Private Investment Management Managing your wealth effectively means more than

More information

Solut!ons for financial planning

Solut!ons for financial planning Understanding your options this RRSP season 16 Solut!ons for financial planning Consider mutual funds and segregated fund contracts You ve likely heard it before: you should regularly contribute to a Registered

More information

Practice. Theory. Letter from the Editor. In this Issue:

Practice. Theory. Letter from the Editor. In this Issue: Theory Transamerica s Tax & Estate Planning Team & Transforming Needs into Meaningful Solutions ISSUE 1 FALL 2007 Practice Letter from the Editor by Dina Stigas Welcome to the premier issue of Theory &

More information

THE TAX-FREE SAVINGS ACCOUNT

THE TAX-FREE SAVINGS ACCOUNT THE TAX-FREE SAVINGS ACCOUNT The 2008 federal budget introduced the Tax-Free Savings Account (TFSA) for individuals beginning in 2009. The TFSA allows you to set money aside without paying tax on the income

More information

This strategy gives a person the ability to take advantage of the tax-sheltering ability of a life insurance policy.

This strategy gives a person the ability to take advantage of the tax-sheltering ability of a life insurance policy. Insuring the Future In this Newsletter: Supplementing Retirement Income Who should be looking at this strategy? The Registered Savings Problem John Jordan, CFP CERTIFIED FINANCIAL PLANNER Phone: (519)

More information

CANADIAN CORPORATE TAXATION. A General Guide January 31, 2011 TABLE OF CONTENTS INCORPORATION OF A BUSINESS 1 POTENTIAL ADVANTAGES OF INCORPORATION 1

CANADIAN CORPORATE TAXATION. A General Guide January 31, 2011 TABLE OF CONTENTS INCORPORATION OF A BUSINESS 1 POTENTIAL ADVANTAGES OF INCORPORATION 1 CANADIAN CORPORATE TAXATION A General Guide January 31, 2011 TABLE OF CONTENTS PART A PAGE INCORPORATION OF A BUSINESS 1 POTENTIAL ADVANTAGES OF INCORPORATION 1 POTENTIAL DISADVANTAGES OF INCORPORATION

More information

Charitable Donations of Securities

Charitable Donations of Securities The Navigator RBC WEALTH MANAGEMENT SERVICES Charitable Donations of Securities Gifting shares instead of cash could enhance your tax benefit To encourage individuals to increase their charitable giving,

More information

December 2014. Tax-Efficient Investing Through Asset Location. John Wyckoff, CPA/PFS, CFP

December 2014. Tax-Efficient Investing Through Asset Location. John Wyckoff, CPA/PFS, CFP John Wyckoff, CPA/PFS, CFP Your investment priorities are likely to evolve over time, but one goal will remain constant: to maximize your investment returns. Not all returns are created equal, however.

More information

The single source for all your executive benefit needs. A Primer on. Nonqualified Deferred

The single source for all your executive benefit needs. A Primer on. Nonqualified Deferred M Benefit Solutions The single source for all your executive benefit needs A Primer on Nonqualified Deferred Compensation Plans DISCLOSURE INFORMATION This material is intended for informational purposes

More information

Group Financial Services. Participant s Guide to Deferred Profit Sharing Plans

Group Financial Services. Participant s Guide to Deferred Profit Sharing Plans Group Financial Services Participant s Guide to Deferred Profit Sharing Plans 1 Group Financial Services RBC Deferred Profit Sharing Plan Your employer has established a Deferred Profit Sharing Plan (DPSP)

More information

EMPLOYEE STOCK OPTIONS

EMPLOYEE STOCK OPTIONS TAX LETTER May 2015 EMPLOYEE STOCK OPTIONS FOREIGN EXCHANGE GAINS AND LOSSES CAREGIVER AND INFIRM DEPENDENT CREDITS MAKING TAX INSTALMENTS EARNED INCOME FOR RRSP PURPOSES AROUND THE COURTS EMPLOYEE STOCK

More information

Financial Planning Relationship Disclosure

Financial Planning Relationship Disclosure Financial Planning Relationship Disclosure Thank you for choosing TD Wealth Financial Planning as your wealth management provider. At TD Wealth we are committed to helping our clients meet their financial

More information

The Benefit of an RRSP, TFSA or Debt Repayment

The Benefit of an RRSP, TFSA or Debt Repayment February 2013 The RRSP, the TFSA and the Mortgage: Making the best choice Jamie Golombek It s important to save. Saving allows us to set aside some of our current earnings for enjoyment at a later time.

More information

Reducing tax at source Tax refunds: Why less is more

Reducing tax at source Tax refunds: Why less is more Reducing tax at source Looking forward to an income tax refund? If you re like most people, you probably are. And who can blame you. It s free money, right? Well, not exactly. The money that comes off

More information

LIQUIDATING RETIREMENT ASSETS

LIQUIDATING RETIREMENT ASSETS LIQUIDATING RETIREMENT ASSETS IN A TAX-EFFICIENT MANNER By William A. Raabe and Richard B. Toolson When you enter retirement, you retire from work, not from decision-making. Among the more important decisions

More information

Blinded by the Refund : Why TFSAs may beat RRSPs as better retirement savings vehicle for some Canadians by Jamie Golombek

Blinded by the Refund : Why TFSAs may beat RRSPs as better retirement savings vehicle for some Canadians by Jamie Golombek January 2011 Blinded by the Refund : Why TFSAs may beat RRSPs as better retirement savings vehicle for some Canadians by Jamie Golombek With the introduction of Tax Free Savings Accounts (TFSAs) in 2009,

More information

Total Financial Solutions. Practical Perspectives on Tax Planning

Total Financial Solutions. Practical Perspectives on Tax Planning TM Trademark used under authorization and control of The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF. All insurance products are sold through ScotiaMcLeod Financial

More information

Professional Corporations Is One Right for You?

Professional Corporations Is One Right for You? Professional Corporations Is One Right for You? Recent and planned corporate income tax rate reductions mean that now is a good time for professionals to consider incorporating their practices. The low

More information

Tax-Free Savings Account

Tax-Free Savings Account Investing Tax-Free Savings Account Helping you reach your goals sooner 2 Investing For short-term and long-term goals, consider a Tax-Free Savings Account Everyone has different reasons for saving and

More information

FUND FACTS RIDGEWOOD CANADIAN BOND FUND. March 16, 2015

FUND FACTS RIDGEWOOD CANADIAN BOND FUND. March 16, 2015 FUND FACTS RIDGEWOOD CANADIAN BOND FUND March 16, 2015 This document contains key information you should know about Ridgewood Canadian Bond Fund. You can find more details in the fund s simplified prospectus.

More information

Introducing. Tax-Free Savings Accounts

Introducing. Tax-Free Savings Accounts Introducing Tax-Free Savings Accounts Tax-Free Savings Accounts A new way to save Tax-free savings accounts were introduced by the federal government in the 2008 budget as an incentive for Canadians to

More information

Corporate Estate Transfer Strategy

Corporate Estate Transfer Strategy Transamerica s Monarch Series Client Guide Corporate Estate Transfer Strategy Monarch Series The logic behind the solution Monarch Series The logic behind the solution The logic behind the solution Transamerica

More information

The Estate Preserver Plan. Advisor Guide

The Estate Preserver Plan. Advisor Guide The Estate Preserver Plan Advisor Guide Table of Contents Introduction to the Estate Preserver Plan 2 The Opportunity 3 The Solution 4 Tax Considerations 5 Probate and Executor Fees 7 Case Study 8 Underwriting

More information

The Corporate Asset Transfer Plan. Someone is going to profit from all of your client s hard work. Shouldn t it be their family?

The Corporate Asset Transfer Plan. Someone is going to profit from all of your client s hard work. Shouldn t it be their family? The Corporate Asset Transfer Plan Someone is going to profit from all of your client s hard work. Shouldn t it be their family? Target Market Owners of privately controlled Canadian corporations who are

More information

The Professional s Option Professional Incorporation

The Professional s Option Professional Incorporation The Professional s Option Professional Incorporation Many professionals now have the opportunity to run their business as a professional corporation 1. The ability to incorporate raises a number of planning

More information

Taxation of Retirement Income

Taxation of Retirement Income Taxation of Retirement Income TAXATION OF RETIREMENT INCOME As our population ages, the need to fund a comfortable retirement becomes a priority for more and more Canadians. Many Canadians planning for

More information

Professional Corporations. Presented by Raza Husain, CA

Professional Corporations. Presented by Raza Husain, CA Professional Corporations Presented by Raza Husain, CA Should I Incorporate? Questions: Does the professional practice generate more net income than is needed to meet the lifestyle expenses of the professional?

More information

The Personal and Corporate Asset Transfer Plans

The Personal and Corporate Asset Transfer Plans Advisor Guide The Personal and Corporate Asset Transfer Plans Someone is going to profit from your client s hard work. Shouldn t it be their family? Table of Contents Introduction to Personal and Corporate

More information

Income Taxes module. After covering the topics in the module booklets or web pages and this workshop, learners will be able to:

Income Taxes module. After covering the topics in the module booklets or web pages and this workshop, learners will be able to: Income Taxes module Trainer s Introduction Most people are aware that they must file an income tax return in Canada, if only to claim back any excess taxes that were withheld from their income. Filing

More information

CORPORATE RETIREMENT STRATEGY ADVISOR GUIDE. *Advisor USE ONLY

CORPORATE RETIREMENT STRATEGY ADVISOR GUIDE. *Advisor USE ONLY CORPORATE RETIREMENT STRATEGY ADVISOR GUIDE *Advisor USE ONLY TABLE OF CONTENTS Introduction to the corporate retirement strategy...2 Identify the opportunity - target markets... 3 Policy ownership: corporate

More information

TAX PLANNING FOR THE SALE OF YOUR BUSINESS

TAX PLANNING FOR THE SALE OF YOUR BUSINESS TAX PLANNING FOR THE SALE OF YOUR BUSINESS REFERENCE GUIDE If you own a corporation that carries on an active business, you may be in a position at some point to consider the sale of your business. This

More information

Income Splitting CONTENTS

Income Splitting CONTENTS June 2012 CONTENTS The attribution rules Family income splitting Business income splitting Income splitting through corporations Income splitting in retirement Summary Income Splitting With Canada s high

More information

private client managed portfolios

private client managed portfolios private client managed portfolios Simplify, preserve and enhance. Your wealth is the cumulative result of your hard work, discipline, and astute management. Yet the opportunities it affords may also come

More information

LEAVING YOUR EMPLOYER SHOULD YOU COMMUTE YOUR PENSION PLAN?

LEAVING YOUR EMPLOYER SHOULD YOU COMMUTE YOUR PENSION PLAN? LEAVING YOUR EMPLOYER SHOULD YOU COMMUTE YOUR PENSION PLAN? Mackenzie Tax & Estate Planning In past years when an individual changed employers, it was pretty much an accepted practice to leave their defined

More information

Early Retirement Strategies

Early Retirement Strategies If you or a member of your family is facing a permanent lay-off, voluntary early retirement or forced early retirement, there are many important decisions to be made decisions that can have a significant

More information

2014 Year-End Tax Planning Tips for Seniors, Employees, Families and Students

2014 Year-End Tax Planning Tips for Seniors, Employees, Families and Students 2014 Year-End Tax Planning Tips for Seniors, Employees, Families and Students While the end of 2014 is approaching, there is still an opportunity for individuals to review their financial situation with

More information

Year End Tax Update Fall 2015

Year End Tax Update Fall 2015 Year End Tax Update Fall 2015 Kevin Tran Director, Tax Advisory Services October 2015 August 2015 Agenda 1 Proposed Tax Changes Liberal Platform 2 Year-End Tax Planning - Simple Ideas 3 Distribution Planning

More information

Registered Retirement Income Funds

Registered Retirement Income Funds Registered Retirement Income Funds Registered Retirement Income Funds Most Canadians are familiar with registered retirement savings plans (RSPs). Many spend decades accumulating wealth in these tax deferred

More information

Income tax rates for Canadian-controlled private corporations (CCPCs) 2012-2013

Income tax rates for Canadian-controlled private corporations (CCPCs) 2012-2013 Income tax rates for Canadian-controlled private corporations (CCPCs) 2012-2013 Federal income tax rates for income earned by a CCPC 1 Small Active Income between $400,000 and General Active General corporate

More information

YEAR-END TAX PLANNER November 2014

YEAR-END TAX PLANNER November 2014 YEAR-END TAX PLANNER November 2014 Inside this issue: Dear Clients and Friends, as we approach the end of another year, now would be a good time to consider some tax planning measures that could help reduce

More information

Annuity Policy. issued by Transamerica Life Canada

Annuity Policy. issued by Transamerica Life Canada issued by Transamerica Life Canada Annuity Policy ANY AMOUNT THAT IS ALLOCATED TO A SEGREGATED FUND IS INVESTED AT THE RISK OF THE OWNER AND MAY INCREASE OR DECREASE IN VALUE. TRANSAMERICA LIFE CANADA

More information

Retirement Compensation Arrangement

Retirement Compensation Arrangement tax efficient retirement planning tool business GUIDELINES Retirement Compensation Arrangement Supplement Retirement Income while providing Tax Deductible contributions RRSPs and Pension Plans provide

More information

Incorporating your farm. Is it right for you?

Incorporating your farm. Is it right for you? Incorporating your farm Is it right for you? RBC Royal Bank Incorporating your farm 2 The following article was written by RBC Wealth Management Services If you have considered incorporating your farm,

More information

READING 11: TAXES AND PRIVATE WEALTH MANAGEMENT IN A GLOBAL CONTEXT

READING 11: TAXES AND PRIVATE WEALTH MANAGEMENT IN A GLOBAL CONTEXT READING 11: TAXES AND PRIVATE WEALTH MANAGEMENT IN A GLOBAL CONTEXT Introduction Taxes have a significant impact on net performance and affect an adviser s understanding of risk for the taxable investor.

More information

Everything you need to know about Tax-Free Savings Accounts (TFSAs)

Everything you need to know about Tax-Free Savings Accounts (TFSAs) Tax, Retirement & Estate Planning Services TAX-FREE SAVINGS ACCOUNT THE FACTS Everything you need to know about Tax-Free Savings Accounts (TFSAs) Until 2009, many Canadians held their savings in Registered

More information

CICA National Conference on Income Taxes. Professional Corporations

CICA National Conference on Income Taxes. Professional Corporations CICA National Conference on Income Taxes Professional Corporations James A. Hutchinson Miller Thomson LLP 416.597.4381 jhutchinson@millerthomson.com October 14, 2010 Metro Toronto Convention Centre 1 Overview

More information

Your guide to the Tax-Free Savings Account

Your guide to the Tax-Free Savings Account INVESTMENTS Tax-Free Savings Account Your guide to the Tax-Free Savings Account An important part of any financial plan is savings. Short-term goals such as a vacation or long-term goals like retirement

More information

Tax Benefits of SR&ED CONTENTS

Tax Benefits of SR&ED CONTENTS June 2011 CONTENTS What is? What are the Tax Incentives? How Much Does Cost You? How Do You Apply for Incentives? Will Your Claim be Reviewed by the CRA? Other Matters Planning to Maximize Your Claim Provincial

More information

RETIREMENT CHECKLIST MAKING THE MOST OF YOUR RETIREMENT

RETIREMENT CHECKLIST MAKING THE MOST OF YOUR RETIREMENT RETIREMENT CHECKLIST MAKING THE MOST OF YOUR RETIREMENT This document has been prepared for use by RBC Dominion Securities Inc.* and RBC DS Financial Services Inc., (collectively, the Companies ). The

More information

AND IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS AND IN THE MATTER OF TD ASSET MANAGEMENT INC.

AND IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS AND IN THE MATTER OF TD ASSET MANAGEMENT INC. July 28, 2005 IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO, QUEBEC, NEW BRUNSWICK, NOVA SCOTIA, PRINCE EDWARD ISLAND, NEWFOUNDLAND AND LABRADOR,

More information

ADVISOR USE ONLY PAYOUT ANNUITY. Overcoming objections. Life s brighter under the sun

ADVISOR USE ONLY PAYOUT ANNUITY. Overcoming objections. Life s brighter under the sun ADVISOR USE ONLY PAYOUT ANNUITY Overcoming objections Life s brighter under the sun Overview Payout annuities are a powerful retirement tool and have been an important product for many years. They re sometimes

More information

BEING FINANCIALLY PREPARED FOR RETIREMENT The Scary Facts! $1.00 item in 1972, costs $3.78 today At the average rate of inflation, the price you pay for an item today will be double in 20 years almost

More information

TAX PLANNING FOR CANADIAN FARMERS

TAX PLANNING FOR CANADIAN FARMERS April 2014 CONTENTS Annual tax planning issues Income tax deferral Incorporating your farming business Long-term planning issues Taxation of capital gains Maximizing your capital gains exemption claims

More information

2015 Gen Canadian Known Tax Rates / Credits / Limits Update. Functional Change Specification. Present ed by Advicent Solut ions

2015 Gen Canadian Known Tax Rates / Credits / Limits Update. Functional Change Specification. Present ed by Advicent Solut ions 2015 Gen Canadian Known s / Credits / Limits Update Present ed by Advicent Solut ions Revision 1.4 Created: January 30, 2015 Revision Hist ory Date Revision Author(s) Description January 30, 2015 1.0 Advicent:

More information

Variable Annuity Overview

Variable Annuity Overview Variable Annuity Overview CAC.1162 (04.12) Protect Tomorrow. Embrace Today.TM When planning for your retirement, you ll find there are a variety of products, investments and strategies that can be utilized

More information

GUIDE TO TAX-EFFICIENT INVESTING

GUIDE TO TAX-EFFICIENT INVESTING LONGEVITY INCOME VOLATILITY ESTATE INFLATION TAXES GUIDE TO TAX-EFFICIENT INVESTING CORPORATE CLASS FUNDS SERIES T SHARES Tax efficiency is an important consideration when building wealth outside of registered

More information

Segregated funds or mutual funds

Segregated funds or mutual funds Segregated funds or mutual funds Do you know the differences? Although there are many similarities between these two investment products, there are also some important ways in which they differ. One important

More information

The Tax-Free Savings Account (TFSA) Frequently Asked Questions

The Tax-Free Savings Account (TFSA) Frequently Asked Questions TAX MANAGEMENT The Tax-Free Savings Account (TFSA) Frequently Asked Questions The Tax-Free Savings Account (TFSA) is a savings vehicle that started in 2009 and allows Canadian residents to earn investment

More information

taxation Current to June 20, 2013 What s Inside www.bdo.ca

taxation Current to June 20, 2013 What s Inside www.bdo.ca www.bdo.ca taxation Tax Facts 2013 Current to June 20, 2013 Tax Facts 2013 provides you with a summary of 2013 personal income tax rates and amounts, as well as corporate tax rates (as at July 1, 2013),

More information