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Posts from the ‘Tax Planning’ Category

12
Dec

Does your Business Qualify for the Small Business Gains Exemption?

As a business owner, you may be aware that when you dispose of shares in your business you could receive an exemption on all or a portion of the capital gains that ordinarily would be taxable. This is due to the Lifetime Capital Gains Exemption which says that, for 2016, up to $824,176* of capital gains is exempt from taxation.

The Lifetime Capital Gains Exemption (LCGE) is available to individuals who are disposing of or deemed to have disposed of:

  1. Qualified Small Business Corporation (QSBC) shares;
  2. Qualified farm property; or
  3. Qualified fishing property **.

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22
Aug

The Single Premium Insured Annuity

Available until January 1, 2017

A New Approach

 A new method of structuring an insured annuity has restored its favourable results.  The new approach involves combining the prescribed annuity with a Universal Life policy.

  • The UL policy is funded with a single deposit to provide lifetime coverage.
  • The remaining capital is then used to purchase the prescribed life annuity.
  • On the death of the insured/annuitant, the annuity income ceases
  • The Universal Life policy now returns the full amount of the capital to the intended beneficiaries.

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21
Jun

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 insurance come into effect on January 1, 2017. After this date new policies will not perform as well as they do currently.

The good news is that the proceeds of life insurance policies paid at death still remain tax free.  What has been affected is the amount of cash value that may accrue in a policy and the tax-free distribution of death proceeds from a life insurance policy owned in a corporation.

How will this impact your existing and future policies?

Adjustment to the Maximum Tax Actuarial Reserve

Whole Life and Universal Life policies are valuable vehicles in which to accumulate cash value. The limit of how much can be invested is governed by the Maximum Tax Actuarial Reserve (MTAR).  If the cash value ever exceeds the MTAR limit, the policy is deemed to be “offside” and will be subject to accrual taxation. Read more »

11
Apr

9 Ways the 2016 Federal Budget Could Affect Your Business

The Trudeau government’s first budget contained a shock on the small business tax rate, and some smaller let-offs

by Murad Hemmadi for ProfitGuide

When Bill Morneau rose to deliver his first budget speech as Finance Minister in Justin Trudeau’s new federal government, entrepreneurs and the owners of Canada’s small- and medium-sized businesses held their breath.

Concerns over the small business tax deduction, stock options for startup employees and capital gains exemptions made this a crucial policy document for SMBs. Here’s what the 2016 federal budget will do and change, and what that means for you and your business.

1. Small Business Tax Rate Frozen

Companies that meet the criteria for a Canadian-Controlled Private Corporation (CPCC) pay a reduced effective rate on their first $500,000 of active business income. In last year’s budget, the then-Conservative government proposed to drop that rate in increments from 11% at the time to 9% by 2019.

As of January 1, 2016, the small business rate was 10.5%, and the 2016 budget “proposes that further reductions in the small business income tax rate be deferred.” In effect, that means the rate will stay where it is today until the government decides otherwise.

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