Corporate Asset Transfer - Tax Planning Strategy

By: Chuck & Matt Grossholz, and modified for use here by David McCallum

As a Business Owner, you understand that there are many factors involved in keeping your business running smoothly and efficiently.  These can range from the tiniest details to the big picture; your business is unique and you know your business better than anyone.  What you may not know however, is that there is a tax planning strategy specifically available to business owners that - when used effectively - can add significant value to your family net worth, and the resiliency of your business.

Corporate Asset Transfer – Tax Planning Strategy:

Rather than holding a taxable investment in your company (such as a corporate investment account), where it attracts the highest tax rates, why not transfer a portion of this money into a pool of assets that is tax sheltered?  This pool of funds can grow in value, reduce your taxes payable on an annual basis, and protect the future of your company at the same time.  

Why would a Business Owner be Interested in this Solution?

This strategy utilizes your accumulated wealth (usually in your Hold-Co) to:

·       Reduce personal T5 tax during your lifetime

·       Provide tax-advantaged access to cash for retirement or other investment opportunities

·       Significantly increase your estate for your family

·       Increase rate of return on the fixed income element of your portfolio

·       Eliminate estate tax

·       Promote family harmony through estate equalization

·       Increase community and charity gifting

How do we accomplish this for Business Owners?

·       Re-position a portion of your existing investable assets by re-allocating to an ‘insured deposit’ held within a Corporately-owned whole life insurance contract.

When should a successful Business Owner consider this strategy?

·       When you have a consistently income stream and are accumulating money within your Corp.

·       When you anticipate accumulating more money than you will use during your lifetime.

·       When you have a high net worth and a secure financial future.

·       When you hold taxable investments (maxed out personal RRSP and TFSA accounts).

·       When you are looking for ways to minimize tax on annual income from investments.

While the Corporate Asset Transfer strategy does not suit all individuals, most successful business owners should at least consider whether or not this would be a benefit to their situation.  If this is a concept that you’d like to discuss how it may fit for you, let’s have a conversation.  I’d love to learn more about your business.