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Posts from the ‘Advanced Business Solutions’ Category

6
Mar

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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25
Oct

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 insuring corporate debt, or protecting against loss from the death of a key employee, life insurance is of great value in underpinning the financial success of a corporation.

Just as life insurance needs for families change over time the same is also true for requirements of a business.  If it has been some time since you last reviewed your corporate needs then it is probably time for a corporate insurance audit. This is especially true if the company has grown in value since the time the insurance was first implemented.  The scope of the audit and the insurance related issues include the following: Read more »

16
Sep

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 the Federal Budget of March 2017, Finance expressed their concern that private corporations were being used by high income Canadians to obtain tax advantages that were not available to other Canadian tax payers.  That concern has led to the release on July 18th 2017, of a consultation paper along with draft legislation.  Finance is currently asking for input from interested parties and stakeholders and has stated that the consultation period will end on October 2, 2017.  At this point, whatever happens after that date is anyone’s guess, but speculation is high that changes will be introduced to close what the Department perceives as abusive practices relating to private corporations.

Specifically, there are three specific tax planning strategies employed by private corporations that the department is most concerned with:

Sprinkling income using a private corporation

Income tax paid on income from a private corporation can be greatly reduced by causing that income to be received in the form of dividends by individuals who would pay tax at a much lower rate or not at all.  These dividends are usually paid to adult children or other family members who are shareholders of the private corporation or to a family trust.  By “sprinkling” the income in this manner the amount of income tax paid can be greatly reduced. Read more »

16
Aug

How to Keep the Family Business Thriving For Generations to Come

Most corporate dynasties fail to make it to a second generation, making these Canadian firms thriving under the leadership of the founder’s grandkids (and great-grandkids!) truly remarkable

Izzy Asper never wanted his children to work at Canwest Global Communications, the now defunct media empire he founded. His drive and hunger for acquisitions turned Canwest into one of the most powerful firms in Canada and, for a time, earned the Aspers a spot on the Rich 100. He wanted his kids to succeed elsewhere, however.

“They were all practising lawyers and were doing very nicely on their own. It was they who got this dynastic glaze in their eyes—which I generally discouraged,” he told journalist Peter C. Newman. “I don’t believe in dynasties.” But his daughter, Gail, “slipped through the net” to become general counsel at Canwest, and brothers David and Leonard followed. It was under Leonard’s stewardship that Canwest filed for bankruptcy in 2009. Read more »