Dean-Sinclair Chartered Professional Accountants - Current Topics, 27 Jun 2019 1:29:03 -0700en-usAward Winner!, 14 Jun 2017 1:34:40 -0700Business Succession Planning, 19 Jul 2016 11:57:34 -0700Business succession is a big concern for entrepreneurs that have built successful companies as they get older.

A business succession plan can help you make important decisions about ownership, maximizing your company's value and tax strategies.

Ownership options

There are a number of options available:

-Transfer to a family member

-Sell to a partner, management team or employees

-Sell to a third party

Maximizing company's value

Focusing on key financial indicators and non-financial indicators will drive up the value of your company.

Tax strategies

A proper business succession plan could involve an estate freeze, the use of trusts and utilization of your lifetime capital gains exemption to reduce this tax burden.

In addition to assisting with preparing the succession plan, we can assist in preparing a valuation of the business and will work closely with legal counsel to implement the plan and assist in any tax filings that may be required.

2016 Tax Changes, 19 Jul 2016 11:31:52 -0700

Personal Tax Rate Changes

Effective January 1, 2016, the federal tax rate for income between $45,283 and $90,563 will be reduced to 20.5% (from 22%).

However, the federal tax rate for income over $200,000 will increase by 4% to 33% (from 29%).

In Ontario, this means that the top combined marginal tax rate for income over $220,000 is 53.53%.

Impact on Corporate Tax Rates

Corporate investment income for Canadian controlled private corporations is subject to a refundable tax. The purpose of this additional tax is to reduce the personal income tax deferral possibilities that individuals earning investment income directly might obtain by earning this income through a corporation.

The following changes have been implemented for tax years that end after 2015. For tax years beginning before 2016, the rate increase is prorated for the number of days in the tax year that are after 2015.

-Refundable tax on investment income - increased to 10 2/3% (from 6 2/3%)

-Refundable dividend tax on hand (RDTOH) - the percentage of aggregate investment income that can be included in RDTOH will be increased to 30 2/3% (from 26 2/3%)

-Dividend refund - the dividend refund rate will increase to 38 1/3% (from 33%)

-Part IV tax - this tax is imposed on certain taxable dividends received that are otherwise deductible in computing taxable income and will increase to 38 1/3% (from 33 1/3%)

Tax-Free Savings Accounts

The annual contribution limit for Tax-Free Savings Accounts (TFSAs) has been reduced to $5,500 (from $10,000) for 2016 and later years. This limit will be indexed to inflation and rounded to the nearest $500.

You can contribute to a TFSA as long as you are 18 or older and resident of Canada. Unused contribution room can be carried forward indefinitely. TFSA contributions are not tax-deductible but contributions as well as accumulated income can be withdrawn tax-free at any time.

If you have made no contributions to date and are 25 or older in 2016, you can contribute a total of $46,500 to you TFSA before the end of 2016.

Testamentary Trusts

In addition, some tax legislation originating from the 2014 Federal Budget took effect on January 1, 2016 regarding testamentary trusts.

A common estate planning strategy involves the use of a "testamentary trust" which is created at death (typically in the deceased's Will) to achieve various non-tax and tax benefits. One tax benefit was the ability to take advantage of the marginal tax rates available to individuals, allowing tax savings to be achieved on income that is retained in the testamentary trust.

Due to the government's concern regarding the growth in tax-motivated use of testamentary trusts, a change was made to tax these trusts at the top marginal rate. The change takes effect for 2016 and subsequent tax years.

However, two exceptions to the imposition of the top tax rate will apply:

1. During the first 36 months following death if designated as a Graduated Rate Estate;

2. Certain testamentary trusts whose beneficiaries are eligible for the federal Disability Tax Credit.

The new legislation will also eliminate some of the other special tax treatments accorded to testamentary trusts. For example, the trusts must have a December 31 tax year end and will be required to make quarterly instalments.

Estate Planning, 19 Jul 2016 11:23:07 -0700Estate planning is essentially deciding how property should be distributed at death but also involves having an updated will, minimizing tax on death and building your retirement assets.

Why you need estate planning?

A good estate plan allows you to choose your beneficiaries, maximize your assets while minimizing your taxes and costs.  Without an estate plan, your property could pass to unintended beneficiaries and cause unnecessary taxes and costs as well as additional stress on your loved ones.

Do you have an updated will?

An updated will is an essential part of any estate plan as it is the legally recognized document that allows you to choose how your estate is to be distributed.

Minimizing taxes

Minimizing taxes should be a key aspect of your estate plan.  While taxes cannot be avoided entirely, there are a number of ways to lessen your tax burden with planning techniques such as setting up a family trust, performing an estate freeze and utilizing your lifetime capital gains exemption.

Building your retirement assets

For many entrepreneurs, their business is their main retirement asset.  Since that is the case it is important that you maximize the value of your business through strategic planning.  We can help analyze your current situation, work with you to determine what your business needs, and help implement a plan that enables you to get maximum value from your business.

It might also be pragmatic to diversify your portfolio by investing in other assets such as RRSP’s to ensure that you have ample retirement assets.

Every estate plan will be unique so feel free to give us a call if you would like to discuss your personalized estate plan today!

Changes to Canada Pension Plan, 13 Jan 2012 12:00:18 -0700

Commencing in January 2012 there were some changes to the Canada Pension Plan (CPP) regime.


All employees aged 60 to 65 (and employers) will be required to make CPP contributions even if they are already receiving a CPP retirement pension.  Prior to these changes, employees receiving a CPP pension did not have to continue making CPP contributions.

Employees aged 65 to 70 who are receiving a CPP retirement pension will be required to contribute to CPP unless they elect to stop their CPP contributions.  This election can be done by completing Form CPT30, giving a copy to their employer and sending the original copy to CRA.  The election will take effect on the first day of the month after the employee gives the Form to their employer.

Employees cannot contribute to CPP after the month in which they turn 70 years of age.

Retirement Pension

An individual who delays receiving their CPP retirement pension until after age 65 will receive a larger increase in their pension than under the old rules.

Previously, the CPP pension would increase 0.5% per month it is delayed resulting in a 30% increase for individuals who wait until age 70 to receive their pension.  From 2011 to 2013, the CPP pension will increase from 0.5% to 0.7% per month it is delayed resulting in a 42% increase for individuals who wait until age 70 to receive their pension.

Conversely, individuals who elect to start receiving their CPP pension before age 65 will have a larger reduction.

Previously, the CPP pension would decrease 0.5% per month before age 65 it is taken resulting in a 30% decrease for individuals who take their CPP pension at age 60.  From 2012 to 2016, the CPP pension will decrease from 0.5 to 0.6% per month if it is taken early resulting in a 36% decrease for individuals who take their pension at age 60.

In addition, the requirement for individuals to stop working for two months before applying to receive their CPP retirement pension has been removed.  Therefore, once an individual reaches age 60 they may start collecting CPP even if they are still working.

Current Topics, 08 Nov 2011 8:23:00 -0700