Now that you have been successful at building your business, it is critical to ensure that you are able to protect and grow your wealth for your future financial preservation. As a business owner, the complexities of managing your personal wealth and managing your business are closely connected. It is important that you are well informed and take advantage of the potential opportunities that are available to you.
What do the recent Federal Budget changes mean for Corporations?
On October 18, 2017, the government announced its plan to move ahead to limit the deferral benefits of earning passive income in private corporations. However, the changes would apply on a go-forward basis only.
The government proposes two new, simplified measures that are designed to curb the deferral advantage that could be obtained from earning passive income in a private corporation. The first proposal targets the ability of small businesses to benefit from the small business deduction by reducing the business limit (i.e., the income eligible for the small business tax rate) for Canadian controlled private corporations (CCPCs) that have significant income from passive investments. The second proposal limits the refundable taxes that private corporations receive on the payment of certain dividends.
These changes are meant to discourage business owners from using their Canadian controlled private corporation to save for retirement and invest passively.
Corporate Advisors offer solutions to maximize business wealth
Increasing the taxation of passive corporate investments will require a rethink of how to save for retirement. Corporate Advisors can help offer solutions that can maximize capital withdrawal from the corporation in a tax-effective manner.
Depending on your situation we can work with you to explore a variety of potential solutions that can best meet your needs including:
- Pre-tax savings plans like private pension plans (PPPs) or retirement compensation arrangements (RCAs).
- Life insurance solutions that include whole life, universal life, split dollar critical illness and executive health plans.