The usual advice for equity/bonds allocation near retirement is usually to gradually increase the portion of bonds as one get closer to retirement.
Since bonds and other fixed incomes investments are not very tax-effective, any other recommended strategies for incorporated business owners with most of their retirement portfolio inside a CCPC?
How about using a combination of 100% equity portfolio + wholelife insurance with a personal line of credit..in case of a market crash, instead of selling equity you borrow on your insurance for a few years until your portfolio bouces back?
Search found 71 matches
- 12 May 2022 07:00
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
- 27 Feb 2018 21:47
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
http://www.advisor.ca/tax/tax-news/feds-to-tie-passive-income-threshold-to-small-business-deduction-251274 Currently, private corporations’ investment income is taxed at a higher rate, a portion of which is refunded when investment income is paid out to shareholders in dividends. In practice, though, taxable dividends can allow for a refund of taxes on investment income, whether that dividend comes from investment income or active business income (which is taxed at a lower rate), the document says. This allows CCPCs to pay out lower-taxed dividends from their active income and claim a refund on taxes paid on their investment income, which the budget calls “a significant tax advantage.” The budget will prevent CCPCs from being able “to obta...
- 27 Feb 2018 21:22
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
Once you reach the 50k/year for passive income target, how will this affect the GRIP (general rate income pool) and the ability to use eligible dividends?
- 27 Feb 2018 19:07
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
So with this new budget:
1) Maximise RRSP/TFSA every year
2) Invest the rest in the corporation in 100% equity index funds/etf with low dividend/interest (total market etf)
3) Pay off mortgage if not already done
4) If Fixed income/ obligations investments are needed , invest these in RRSP/TFSA (not in corporation)
versus non registered personnal accounts (to maximise tax-free growth of registered accountd) ?
5) Consider corporate-owned wholelife insurance If more fixed income investment is needed and wish to leave money to your children.
1) Maximise RRSP/TFSA every year
2) Invest the rest in the corporation in 100% equity index funds/etf with low dividend/interest (total market etf)
3) Pay off mortgage if not already done
4) If Fixed income/ obligations investments are needed , invest these in RRSP/TFSA (not in corporation)
versus non registered personnal accounts (to maximise tax-free growth of registered accountd) ?
5) Consider corporate-owned wholelife insurance If more fixed income investment is needed and wish to leave money to your children.
- 21 Dec 2017 15:24
- Forum: Taxing Situations
- Topic: Life Insurance As An Asset Class
- Replies: 44
- Views: 5868
Re: Life Insurance As An Asset Class
Two articles about Wholelife insurance from the "Blunt bean counter" Blog: The “Hole” in Whole Life Insurance http://www.thebluntbeancounter.com/2017/12/the-hole-in-whole-life-insurance.html The "Hole" In Life Insurance - Part Two http://www.thebluntbeancounter.com/2017/12/the-hole-in-life-insurance-part-two.html We always advise clients to consider the permanent life insurance policy in concert with their overall asset mix as an estate bound investment, whether it is UL or Par. As with any investment, it is essential to fully understand the associated risks. Mark comment: I have been told by some very astute investors, that they consider "investment" money they put into a life insurance policy as a fixed incom...
- 18 Dec 2017 16:02
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
Corporate-owned wholelife insurance also suddenly becomes a little more attractive for business owners (as an estate planning strategy)
- 11 Dec 2017 18:13
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
WHY IPPS CAN HELP MORE BUSINESS OWNERS THAN YOU’D EXPECT
http://www.advisor.ca/retirement/retire ... ect-245592
http://www.advisor.ca/retirement/retire ... ect-245592
- 09 Dec 2017 10:01
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
Anybody considering borrowing money to invest a little more inside the CCPC before december 31 2017?
Suppose you used to invest 50k/year inside the CCPC, why not borrow 50k and invest in advance for 2018?
Suppose you used to invest 50k/year inside the CCPC, why not borrow 50k and invest in advance for 2018?
- 03 Nov 2017 16:29
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
Good point about increasing the spousal RRSP contribution.
I find single income families are really disadvantaged for retirement planning.
I find single income families are really disadvantaged for retirement planning.
- 03 Nov 2017 14:55
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
Considering the current announced changes to the taxation of a CCPC, what would be the best strategy to save for retirement for a single income couple/family with a professional CCPC (ex. doctor + stay at home wife)? More specifically, how can you get the maximum income splitting once in retirement (assuming the stay at home parent will never go back to work) ? - Maximise both TFSA - Split the annual RRSP in two with a spousal RRSP contribution every year - Use CCPC a saving vehicle up to the maximum allowed (50k/year of passive income) - Then pay back the home mortage if not already done - Then invest outside of the CCPC in taxable accounts without any possibility to do income splitting? If the stay at home parent receive a small salary fo...
- 01 Oct 2017 08:14
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
Anybody else will be looking at Individual Pensions Plans after the Morneau's fiscal reform?
Catch the IPP wave
https://retirehappy.ca/catch-the-ipp-wave/
IPP vs RRSP
https://www.integris-mgt.com/publish/Ta ... RRSP.pdf
Catch the IPP wave
https://retirehappy.ca/catch-the-ipp-wave/
IPP vs RRSP
https://www.integris-mgt.com/publish/Ta ... RRSP.pdf
- 09 Feb 2017 19:43
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
New article from Jamie Golombek (february 2017)
RRSPs: A Smart Choice for Business Owners
http://www.jamiegolombek.com/media/RRSP ... owners.pdf
RRSPs: A Smart Choice for Business Owners
http://www.jamiegolombek.com/media/RRSP ... owners.pdf
- 15 Aug 2016 23:53
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
Interesting article about the taxation for foreign income inside a CCPC:
Taxation of Foreign Income in a Corporate Account
http://www.canadianportfoliomanagerblog ... e-account/
Taxation of Foreign Income in a Corporate Account
http://www.canadianportfoliomanagerblog ... e-account/
- 15 Aug 2016 23:52
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
Another article about RRSP vs TFSA vs CCPC for investments:
https://www.pwlcapital.com/pwl/media/pw ... f?ext=.pdf
https://www.pwlcapital.com/pwl/media/pw ... f?ext=.pdf
- 05 Jul 2016 20:03
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
The enhanced CPP comes with a tax change — and that’s a good thing
http://business.financialpost.com/perso ... good-thing
Interesting article about recent CPP changes. It makes CPP (and salary instead of dividends) a little more interesting for high income business owners.
Interesting article about recent CPP changes. It makes CPP (and salary instead of dividends) a little more interesting for high income business owners.
As part of CPP enhancement, the government announced a surprising, but welcome, tax change. Beginning in 2019, employee contributions associated with the enhanced portion of CPP will be eligible for a tax deduction instead of the current tax credit. This is being done “in order to avoid increasing the after-tax cost of saving for Canadians.”
- 05 Jul 2016 19:58
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Income splitting with minor kids
While it’s generally problematic to lend funds directly to minor kids, investors who want to take advantage of this strategy will often use a discretionary family trust, naming their minor kids as beneficiaries. In this case, a loan is made to the family trust at the one per cent prescribed rate, and the trust invests the funds. Anything the trust earns above the one per cent interest it pays on the loan can be distributed to the minor kids, either directly, or to pay their expenses. In most cases, the kids will likely have no or minimal tax to pay on this income http://business.financialpost.com/personal-finance/taxes/how-to-take-advantage-of-the-cras-1-prescribed-interest-rate-for-decades-to-come Does anybody have heard of this income sp...
- 09 Feb 2016 20:53
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
Why business owners shouldn’t bother with an RRSP
http://business.financialpost.com/perso ... th-an-rrsp
I'm surprised to see another article about avoiding RRSP for business owners, especially since the liberals are planning to change the benefits for business owners in the next budget..
According to my accountant, his firm expect that the new budget will eliminate the small business tax rate for incorporated professionals with only a few employees, just like they did in Quebec last year.
http://business.financialpost.com/perso ... th-an-rrsp
I'm surprised to see another article about avoiding RRSP for business owners, especially since the liberals are planning to change the benefits for business owners in the next budget..
According to my accountant, his firm expect that the new budget will eliminate the small business tax rate for incorporated professionals with only a few employees, just like they did in Quebec last year.
- 17 Oct 2015 18:35
- Forum: Taxing Situations
- Topic: Investment income in a CCPC
- Replies: 1102
- Views: 152231
Re: Investment income in a CCPC
Food for thoughts before October 19th.
Is Trudeau challenging small business tax benefits?
http://achenhenderson.ca/is-trudeau-cha ... -benefits/
Is Trudeau challenging small business tax benefits?
http://achenhenderson.ca/is-trudeau-cha ... -benefits/
- 24 Aug 2015 06:37
- Forum: Financial Planning and Building Portfolios
- Topic: Easy portfolio solution for young widow
- Replies: 32
- Views: 2764
Re: Easy portfolio solution for young widow
Concerning ACB calculations for ETFs, I've found that very few accountant/financial advisors know how to correctly keep track of the ACB for Canadian ETFs. They almost all forget to adjust for "Re-invested Capital Gain distributions" . This is also a problem with many "robot-advisor" services. http://cawidgets.morningstar.ca/ArticleTemplate/ArticleGL.aspx?id=579455 Another problem with "all-in-one" balanced ETFs or mutual funds is that they use tax inefficient bonds ETF/Funds, unlike a DIY portfolio with carefully chosen ETFs. http://canadiancouchpotato.com/2013/06/07/why-use-a-strip-bond-etf/ About fee-only financial planners, there are many limitations. First, it might not be easy to find one depending where ...
- 21 Aug 2015 19:08
- Forum: Financial Planning and Building Portfolios
- Topic: Easy portfolio solution for young widow
- Replies: 32
- Views: 2764
Re: Easy portfolio solution for young widow
wow, thanks a lot for all the advices!
I must insist this is a hypothetical scenario. It is however a a possible scenario for any DIY investor with spouse/kids.
I agree that in this scenario, there is no rush for the widow to make a decision about how to invest all the money received from life insurance.
I agree that a simple index funds could be good answer to the problem if the person is willing/able to manage the portfolio own her own +\- help from an independent fee only financial planner.
How about using a single balanced index fund ETF like CBD with reasonable management fees?
http://ca.ishares.com/content/en_ca/rep ... _EN_CA.PDF
I must insist this is a hypothetical scenario. It is however a a possible scenario for any DIY investor with spouse/kids.
I agree that in this scenario, there is no rush for the widow to make a decision about how to invest all the money received from life insurance.
I agree that a simple index funds could be good answer to the problem if the person is willing/able to manage the portfolio own her own +\- help from an independent fee only financial planner.
How about using a single balanced index fund ETF like CBD with reasonable management fees?
http://ca.ishares.com/content/en_ca/rep ... _EN_CA.PDF
- 20 Aug 2015 13:25
- Forum: Financial Planning and Building Portfolios
- Topic: Easy portfolio solution for young widow
- Replies: 32
- Views: 2764
Re: Easy portfolio solution for young widow
Very good point, indeeddwarren wrote: Now that I think about it, her first investment should be in learning to manage/invest her portfolio. She would save a lot more than the 30K she would earn going back to work via reduced management fees.
- 19 Aug 2015 18:35
- Forum: Financial Planning and Building Portfolios
- Topic: Easy portfolio solution for young widow
- Replies: 32
- Views: 2764
Easy portfolio solution for young widow
Hello, How would you suggest a hypothetical young widow (35 y/o) , stay at home mother with young children, invest a 4 million portfolio? Also, let suppose she goes back to work and earn 30k/year. Do you think something like Mawer Tax Effective Balanced mutual fund (60% Equity, 40% Fixed income) could be a reasonable solution? What would be a safe withdrawal rate? 2%/year? Less than 2%? Thanks As requested, here is some complimentary information for this hypothetical scenario: - Approximate annual income need : 60-80k/year (after tax) - Emergency funds: None at the moment, but she just received 4 millions from her husband's life insurance - Debt : Mortgage is already paid (450k), No active car loan - Tax filing Status : Widowed, Single - Pr...
- 30 May 2015 14:30
- Forum: Taxing Situations
- Topic: Life Insurance As An Asset Class
- Replies: 44
- Views: 5868
Re: Life Insurance As An Asset Class
Another article about using Life insurance as an alternative for fixed income:
http://seekingalpha.com/article/964141- ... allocation
http://seekingalpha.com/article/973731- ... cle-part-2
http://seekingalpha.com/article/981891- ... cle-part-3
http://seekingalpha.com/article/997441- ... cle-part-4
http://seekingalpha.com/article/1002461 ... art-5-of-5
http://seekingalpha.com/article/964141- ... allocation
http://seekingalpha.com/article/973731- ... cle-part-2
http://seekingalpha.com/article/981891- ... cle-part-3
http://seekingalpha.com/article/997441- ... cle-part-4
http://seekingalpha.com/article/1002461 ... art-5-of-5
- 11 May 2015 21:52
- Forum: Taxing Situations
- Topic: Life Insurance As An Asset Class
- Replies: 44
- Views: 5868
Re: Life Insurance As An Asset Class
@Park: Do you have a link for this article from M. Milevsky and A. Gottesman?Park wrote:Insurance Logic by Moshe Milevsky and Aron Gottesman 2002
(...).
- 06 May 2015 20:20
- Forum: Taxing Situations
- Topic: Life Insurance As An Asset Class
- Replies: 44
- Views: 5868
Re: Life Insurance As An Asset Class
Borrowing against the policy’s cash value is an alternative to taking cash withdrawals. The corporation could take a policy loan or borrow money from a financial institution using the policy to secure the loan. Alternatively, the shareholder could borrow the money personally, and have the corporation pledge the policy as security for the loan. But these alternatives all create tax issues. Some or all of a policy loan will be taxable if the loan amount exceeds the policy’s adjusted cost basis, and the entire proceeds will be taxed as a dividend when paid to the shareholder. Third party loans are not treated as income to the borrower, but still raise tax issues. If the corporation borrows the money from a financial institution, the borrowed ...