Tax Saving Tips for Business, Professional Corporation

Income taxes are the biggest expense for most Canadian. If you have your own business or professional corporation, your company can help generate tax savings to accelerate your mortgage repayment or boost your retirement savings.

Use Capital Gains Instead of Dividends

If you are planning large cash withdrawals from your company, consider taking the cash as capital gains rather than dividends. Only one half of the capital gains is subject to tax.

Set Up Corporate Health Plan

You can get 45% discount on your medical expenses by setting up your own Private Health Services Plan. It allows your corporation to deduct dental and medical expenses for yourself and family members without any corresponding taxable benefit to you.

Split Income With Family Members

The corporate tax rate is around 10% (depending on your province), compared to the highest personal tax bracket of around 40%. Tax saving can be enormous by channelling corporate income to family members in a lower tax bracket, instead of paying all the income to you alone.

Maximize Deductible Pension Contributions

Consider swithing your retirement savings to an Individual Pension Plan (IPP), instead of the RRSP. You can make larger contributions to an IPP than to the RRSP, especially if you are over 50 and you are also entitled to a large tax deduction for past service contribution.

Deduct Mortgage Interest

If you have a sizable house mortgage, you should look for creative ways to write off the mortgage interest.

Five Year Freeze on Expected Tax Cuts

Ontario Finance Minister Dwight Duncan announced on Tuesday that plans for corporate tax cuts will be put on hiatus until the province can get back on track with its debt.

Businesses were looking forward to a drop from the current corporate rate of 11.5% down to 10%. They will now have to wait at least five years for any chance at seeing those cuts take shape.

As the Liberals look to balance the ledgers by 2018, businesses that were counting on a tax break need to find other ways to save cash for the near future.

Will this news cause significant hardship for your business?

See below for an excerpt from the article.

* * * * *

By Romina Maurino, The Canadian Press, thecanadianpress.com, Updated: March 27, 2012 8:08 PM

Ontario delays cut to corporate tax rates

It's a move Finance Minister Dwight Duncan called necessary, and one he said will put $1.5 billion in government coffers over three years.

The budget also promised to save $250 million by merging many business support programs into a Jobs and Prosperity Fund, as well as freeze scheduled decreases in business education taxes, again until the budget is balanced, for an additional $300 million in savings.

Duncan said he spoke with various business leaders and they "recognize that the business community has to make its contribution."

"We have made Ontario a more attractive place for businesses to invest and create new jobs," Duncan told the legislature while delivering his budget.

"So we are asking business to do its part to help Ontario balance its budget."

View the full article here at MSN Money Canada

Source URL: http://money.ca.msn.com/investing/news/business-news/ontario-delays-cut-to-corporate-tax-rates

Insurance for the Uninsurable

Life insurance is generally used to cover an insurance need that arises at the death of an individual immediately we think of insurance to pay a debt like credit cards or a line of credit or a mortgage. We also think of using insurance to replace one’s income so the family can maintain a specific standard of living.

But what happens if you are permanently uninsurable due to your health as many people are? Don’t stop looking for coverage we advise clients. While it is preferable to receive a death benefit at the time of your death, it is also possible to buy a JOINT and LAST survivor policy. In this case we join two people into one policy and in this J&L (Joint and Last) policy, a death benefit is paid following the second death, not the first. As such we combine the ages of the two lives, and come up with an Estimated Single Age.  For example, your father is 74 years old and your mother is 69 years old. Combine the two ages and we come up with an estimated single age of 62. Even if one of the two people are uninsurable, there is potential that a policy can be issued. The death benefit is paid following the death of the second person, and can be used for financial needs of the family, or the pay tax on unused RRSP funds.

This concept can be used in business, in families, and for parents, young and old. 

Longer term, term.

Term insurance has a solid place as part of most Canadians' financial portfolio. The amount of protection that can be offered at reasonable premiums for short periods of time should not be overlooked. Specific needs can be covered with the various types of term offered. Mortgages for example tend to run for 20 or 25 years, and when the mortgage is over, that particular need is also gone.

Common to Canadians is the popular 10 year term insurance. Premiums are usually guaranteed level for the first 10 years, then if the need continues and the client wishes to renew, the insurance is offered for a second 10 year period at a predetermined price. Older term policies however renew with the OLD rates books which were in effect several years ago.

Since the cost of “term” has come down in recent years, if one is “insurable” and willing to undergo common insurance related questions and testing, NEW term insurance rates can save you a lot of cash.

A typical 40 year old with an older 10 year term policy can save up to 30 or 40% by switching to a NEW 20 year term policy.

This is only an example, yet in most cases, clients can save lots of hard earned cash, and the savings can be used anywhere you want.

You can define your path

The Un-Sale

You won't find people lining up outside the offices of financial planners on Boxing Day. Likewise, Canadians won't be heading south of the border on Black Tuesday for a bargain on premiums. Insurance products never go on sale, and its due to their nature. It's not a consumer market of goods that needs clearance to make way for next season's merchandise.

It's about continuity, consistency and security.

That being said, there exists favourable times where one can take advantage of an opportunity. It is my personal ethics that define my approach to selling. I don't convince people of anything. I simply give them the facts, and if they are interested, I can sell it to them.

Currently the facts point to a window of opportunity in Critical Illness and Universal Life Insurance.

Insurance companies have to be very secure, and with low rates of return in markets worldwide, insurance funds have not achieved their projected targets over the last few years. Deductively, premiums will have  to rise between 15-17% next month, and thus are currently underpriced. This knowledge creates a "sale" of sorts, and we are happy to share this information with our clients.

Contact me for more at 1.902.444.7000 or visit my website here.

For more info, see this Financial Times article:

http://www.financialpost.com/opinion/columnists/time+insurance/5503230/story.html

Corry Collins - Inspirational Speaker & Financial Planner

Insurance and investment advisors are not created equal. I am a Chartered Life Underwriter, Chartered Financial Consultant, and a Certified Health Specialist with over 25 years experience. I am recognized as a world leading expert in the field of living benefits.I am a sought after speaker around the world, and work with my client in Nova Scotia.

Maritime Wealth Management Limited is a Nova Scotia based financial planning firm with offices in Halifax, Dartmouth, Bridgewater and Yarmouth. We are a devoted group of professionals who help clients navigate life's financial decisions by sharing ideas and creating solutions. We believe in long term relationships, effective communications, and simplicity of solutions.

Visit my websites to find out more at www.corrycollins.com or www.livingbenefitsatlantic.com

MDRT 2010 Speaker Request

For those MDRT friends of mine who would like to make a suggestion for the main platform 2010, here is a short window of opprotunity. While planning is well underway, if you have a suggestion, please act quickly.

I am looking for ONE suggestion from you.

"Of all the people that you have ever seen in the world..., if you were given the responsibility to pick ONE speaker only, who would you stake your reputation on? Who is that one person that MDRT needs to hear? I need a name, topic and contact info.