Business Continuation

Estate Freezes 101

An estate freeze is a tax planning technique that allows a small business owner to freeze the growth of their interest in their company in …

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Using Corporate Owned Life Insurance to Reduce Passive Income Taxation

Effective January 2019, new tax rules will come into effect that will have a dramatic impact on some small business owners. Starting in 2019, the Small Business Deduction Limit will be reduced by $5 for each $1 of passive income that exceeds $50,000 and will reach zero once $150,000 of passive income is earned in a year. This new tax rule may be leaving business owners wondering how they can redirect a portion of excess cash flow that would traditionally produce passive income, and subsequently some unfavorable tax consequences.

Corporate owned life insurance can offer a “two bird one stone” solution to business owners. If used appropriately, strategies such as these are a viable option for a private corporation with a substantial amount of excess income and a life insurance need. The information below provides an elementary overview of how life insurance can be used to defer tax and grow the corporation’s estate.

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Private Corporations Dodge a Bullet with the 2018 Federal Budget

The Liberal Government’s Federal Budget was delivered by Finance Minister, Bill Morneau, on February 27, 2018. There had been much concern and speculation about the direction the budget would take with respect to the taxation of private corporations. This was due to a release of the Department of Finance in July 2017 which contained private corporation tax proposals which addressed areas of concern to the government involving, among other things, business owners holding passive investments inside of their corporation. There was speculation that if these proposals were implemented the effective tax rate on investment income earned by a private corporation and distributed to its shareholders could increase astronomically. Thankfully, the concerns voiced by business and professional groups following the July proposals were effective in moderating the government’s actions.

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Are Life Insurance Premiums Ever Tax Deductible?

Considering that the proceeds of a life insurance policy are received tax free upon the death of the life insured, it is not surprising that …

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Private Corporations in the Cross Hairs

If you are the owner of a private corporation you should be concerned about the commentary that is coming from the Department of Finance.  In …

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Insurance Audit for the Business Owner

Many business owners understand the important role that life insurance plays in effective corporate planning.  Whether it is the funding of a shareholders’ agreement, life …

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Life Insurance and the Capital Dividend Account

Many business owners are unaware that corporate owned life insurance combined with the Capital Dividend Account (CDA) provides an opportunity to distribute corporate surplus on …

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The Corporate Estate Transfer

If you are the owner of a successful company it is likely that you have retained profits or surplus cash in your corporation.  If this …

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The Clock is Ticking!

Don’t Put Off Your Decision to Buy Life Insurance 2016 is an opportune year to buy life insurance.  New laws affecting the taxation of life …

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What is Key Person Insurance?

Most business owners understand that assets vital to the success of the enterprise should be insured.  Premises are routinely covered for fire and/or theft; vehicles …

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