Financial Solutions
Business Solutions
With over 65 years of history in protecting second and third generations of clients and our innovative TEAM approach to developing financial solutions, we are proud of our reputation as the leader in customer satisfaction in the Greater Northumberland Area.
Buy & Sell Funding
The Situation
If you are a shareholder of a Canadian controlled private corporation you want to ensure business continuity if one of the other shareholders dies. You also want to make sure that your family will receive full value for the shares they inherit. Reducing the capital gains liability at death to the maximum extent possible is also a major consideration.
The Strategy
One of several used strategies is to establish a Buy-Sell Agreement with the other major shareholders and purchase a tax-exempt life insurance policy to fund the redemption of shares, with the corporation as the owner and beneficiary of the policy. If one of the shareholders dies, the corporation will receive a tax-free death benefit. This benefit is credited to the corporation's Capital Dividend Account. Subject to the terms of the Buy-Sell agreement, before the corporation pays out the balance of the CDA, it purchases the deceased's shares.
Note: This strategy is based on current tax legislation. Future tax changes and market conditions may affect this program.
Individual Pension Plans
The situation:
Business owners and key executives with incomes beyond registered retirement savings plan (RRSP) limits want to be provided with periodic retirement income and build retirement assets large enough to maintain a desired lifestyle, but minimize risks in accumulating those assets.
The solution:
An individual pension plan (IPP).
What is it?
An IPP is a personal defined benefit pension plan. The primary purpose of an IPP is to provide periodic retirement income to the member of the plan. The plan allows the potential to accumulate a greater amount of assets than in an RRSP.
Note: This strategy is based on current tax legislation. Future tax changes and market conditions may affect this program.
Retirement Compensation Arrangements (RCA’s)
The Situation
You are a major shareholder of a Canadian controlled private corporation. There is significant surplus capital locked inside the corporation and at retirement, you want to be bought out by the other shareholders. If the surplus capital is taken out of the corporation, it will be subject to tax. If the surplus is left in the corporation the income it generates will be taxed at the highest corporate tax rate.
The Strategy
One strategy used would be to purchase a tax-exempt life insurance policy with the corporation as the owner and beneficiary of the policy with each shareholder insured for the current fair market value of his or her interest in the corporation. Transfer the company's surplus funds into the policy where they can grow tax-free. When a living shareholder wishes to trigger a buyout, the corporation uses the policy as collateral for a bank loan and the borrowed funds can be used to buy out the shareholder. When the shareholder dies, the death benefit is used to pay off the loan, with any excess going to the corporation.
Note: This strategy is based on current tax legislation. Future tax changes and market conditions may affect this program.
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