Tax Planning

1. Most companies are eligible to claim the $500,000 Capital Gains Deduction when passing a company to the next generation. If your company is worth more than $500,000, or if you are not eligible for the deduction, your family will end up with a hefty tax bill upon your death.

For Example:
A company started by you is worth $1,000,000
Minus your $500,000 deduction
On your final tax return, you will have a bill for taxes on 50% of the remaining $500,000. [Roughly $120,000]

For a fraction of the cost of the tax bill, you can buy the necessary insurance so your family does not need to liquidate assets, or dip into your savings.

2. If you have passive investments earning interest, your interest is taxed at the top tax rate. CCRA allows you to purchase a life insurance policy where you can deposit this extra money. Once inside the policy, your investment earnings will do four things;

a. Pay for the life insurance with pre-tax dollars
b. Your investment will grow tax free
c. Your investment income will not attract tax
d. Should you pass away, the insurance amount and all your cash and earnings will roll back to a tax free dividend account.

There are many other ways to make money from insurance. The above ideas and others can be verified by an accountant to ensure they will work with your business & personal plans.