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.

CLU Comment: Tax Assessments & Reassessments

The Canadian tax system is based on a self-assessment or honour system, requiring every taxpayer to file an
annual income tax return with the Canada Revenue Agency (CRA), which sets out income earned, eligible expenses, deductions and credits

CLU Comment: Canada Pension Plan and Quebec Pension Plan

CLU Comment: Contributions under the Canada/Quebec Pension Plan (C/QPP) and Employment Insurance (EI) change annually.

CLU Comment: Principal Residence Exemption: Tax Free Growth Worth Understanding

CLU Comment: Canadian residents generally enjoy tax-free growth in the capital value of their home through a tax measure referred to as the principal residence exemption. This means that many Canadians can sell their home tax-free, however, there are details to observe and criteria to be met for those who want to benefit from this opportunity.


Capital Gains Exemption