Tax Series: Structuring Universal Life

This week, our focus is on passive investment income and limiting access to the small business tax rate.

For an advisor if you’re discussing this with a business owner or incorporated professional, here are the key points you should include:

The government is limiting access to the small business tax rate effective January 1, 2019, therefore it’s time to act now and review your situation.
Let’s review the type of assets your corporation currently holds and the treatment of these assets under the new measures.
Look at possible solutions including: Corporately-held life/critical illness insurance, Salary/Dividend payout, Individual pension plans and Deferred capital gains.

New Tax, New Insurance Opportunity: The Passive Investment Income Limit

This week, our focus is on passive investment income and limiting access to the small business tax rate.

For an advisor if you’re discussing this with a business owner or incorporated professional, here are the key points you should include:

The government is limiting access to the small business tax rate effective January 1, 2019, therefore it’s time to act now and review your situation.
Let’s review the type of assets your corporation currently holds and the treatment of these assets under the new measures.
Look at possible solutions including: Corporately-held life/critical illness insurance, Salary/Dividend payout, Individual pension plans and Deferred capital gains.

Insurance planning opportunities considering the new small business tax changes

Since the small business tax changes will be effective January 1, 2019, a discussion and plan should be prioritized now, since 2018 will be the “prior year”  of 2019. This is a good opportunity to talk to your business owner clients, incorporated professionals and accountant centres of influence about how life insurance could be a possible solution to “solve” these potential problems.

Saskatchewan Budget 2018

The 2018 budget for Saskatchewan was announced by Donna Harpauer, Finance Minister, giving details of an anticipated deficit of $365 million for 2018-19 but surpluses for subsequent years. Learn about the details.

Nova Scotia Budget 2018

The 2018 budget for Nova Scotia was announced on March 20, 2018 and has a particular focus on the province’s continuing investment in healthcare and education.

Alberta Budget 2018

The 2018 budget for Alberta focuses on the diversification of its post-recession economy, with the aim of creating more stability and less vulnerability to future fluctuations in oil prices.

Ontario Budget 2018

The 2018 Ontario budget features a number of new measures and billions of dollars of enhanced spending across the spectrum, as announced by the province’s Finance Minister, Charles Sousa.

Newfoundland Budget 2018

The 2018 budget for Newfoundland and Labrador was announced by its Finance Minister Tom Osborne and features very few new spending commitments, taxes or cuts, with the focus being balancing the books and managing and coping with what Obsorne refers to as a “tough phase” in its finances.

The Manitoba Budget

Manitoba Finance Minister Cameron Friesen delivered the province’s 2018 budget update on March 12, 2018. The budget anticipates a surplus of $521 million for 2018 to 2019.
Corporate and personal tax rates remain unchanged.
The biggest changes are: The increase in the amount of income eligible for the small business deduction; The increase in Basic Personal Amount; Carbon tax

BC Budget Update

BC Finance Minister Carole James delivered the province’s 2017 budget update on Sept. 11, 2017. The budget anticipates a surplus of $46 million for the current year, $228 million in 2018-2019 and $257 million in 2019-2020. As a result of the provincial election on April 11, 2017, the measures previously announced were not fully enacted.

Here’s the new budget proposals: 

Corporate Income Tax Measures

  • Effective January 1, 2018, there will be an increase to the general corporate income tax rate from 11% to 12%.

Personal Income Tax Measures

  • Effective for 2017, there is an introduction of a new top personal tax bracket set at $150,000 for 2018. Taxable income exceeding $150,000 will be taxed at 16.8%.

Medical Services Plan Premiums

  • Effective Jan 1, 2018: 50% MSP premium reduction for households with annual net incomes up to $120,000.

Firefighter & Search & Rescue Volunteer Tax Credit

  • Introduce a new- non refundable volunteer firefighter and search and rescue volunteer tax credit.

Electricity- Provincial Sales Tax Act

  • Phase out provincial sales tax on taxable electricity.

Property transfer tax

For first time home buyers to save property transfer tax on the purchase of their property the partial exemption has been increased to $500,000 from $475,000.

To learn how these changes will affect you, please don’t hesitate to contact us.