Green Benefits Group specializes in the areas of tax, estate, financial and investment planning.
Through our experience, we have found that business owners are faced with very unique opportunities and responsibilities. The success and failure of a business is often placed on the shoulders of owners. Most of our clients have not had the time to take a step back and examine their changing/growing business over the years.
Unfortunately, because of your business’s growth and success you are no longer protected by the basic coverages of a group benefits plan. We have seen how improper planning can cause tax inefficiencies, income loss, failed family income protection, failed business protection and much more. We want to help you with these challenges.
Since there is a strong incentive for business owners to accumulate profits inside their corporation, owners accumulate investment assets within their corporations.
The Challenge
While active business income receives favorable tax treatment, the same cannot be said for investment income. As shown on the chart below, interest income and the taxable portion of capital gains earned within a corporation will be generally taxed at an average rate of 47%.
|
Federal Tax Rate (A) |
Average Provincial Tax Rate (B) |
Average Combined Tax Rate (A+B) |
| Tax Rate on Investment Income Earned inside a Corporation |
34.67% |
12.34% |
47.01% |
If you buy property or an asset that doesn’t generate income, you will be taxed as a capital gain on the sale. In other words, 50% flows through the CDA to you (the shareholder), while the other 50% is taxed at 47% to the corporation; and then once again to you the shareholder while you are alive–or to the estate–upon death.
Tax and estate planning is not a particularly popular topic, but having a comprehensive plan in place is important for not only you, but your beneficiaries.
