This is an exciting integrated strategy that combines intriguing tax opportunities; tax free accumulation of retained earnings, access for tax free income in retirement years, as well as terrific additional tax benefits for estate planning. For those interested in maximizing the benefits of incorporation and minimizing taxes, this plan should be of primary consideration. Once incorporated and operating your business such that you are in a position to accumulate retained earnings, it can become frustrating to find you pay the same taxes- or higher- on growth of investments within the company as you would in your own hands. This prompted our development of this program, which has been reviewed by the tax departments of the largest national accounting firms. The integration of tax benefits is the key to success.
First of all are the deposits. For an individual to accumulate savings or $100K, they need to earn 185K before tax. For their company to save the same money, it needs only earn $120K. In other words, for every $100K saved, you are ahead by $65K in tax savings. This significantly impacts the speed at which one can save for retirement. Then there's the growth.
The second aspect is being able to grow those funds without incurring tax. We designed our program to minimize every cost involved, such that annual expenses are generally no more than one percent more than a regular portfolio, yet we can shelter hundreds of thousands a year within the company, prompting Canada's largest accounting firm to describe our program as being ".like an RRSP for your company". Then there's the question of access to the funds.
The third aspect is having plans in place ahead of time to access the money when you need it, whether that's when you see a new home you have to have, you become disabled or, like most of our clients, you retire. We can arrange for a non-taxable income stream to reduce the income subject to tax when you retire. Essentially, if half your income is taxable and half is not, it's like cutting your average tax rate in half. In most cases, a third of non-taxable income results in an average tax rate of 25% for the rest of your life. That's when you'll care about your estate.
One of the perks of our program is that the remaining assets can flow to the people you care about with virtually no tax. In fact, the only tax ever really paid was when it was earned by the company, and even then, only at the corporate tax rate.
We are pleased to work in conjunction with your accountants or we would be pleased to provide referrals if you wish.