Chris Worby and Jeremiah Worby are Trusted Regina based financial advisors and Wealth Management services providers. With over 20 years of experience, Worby Wealth Management has been committed to providing a high standard of financial service to individuals, families and business owners in Regina and area. Worby Wealth Management listens and provides a personalized financial plan. In their latest Worby Wealth Management Trusted Regina Financial Tip, they discuss corporate estate planning.
The Wealth Building Toolkit: Corporate Estate Planning
So you’ve used your corporation to build
wealth and to provide a nice, stable income. At the end of it all, we all go
the way we do and it’s time to consider the two inevitabilities in life: death
and taxes.
Upon the death of a shareholder, there is what
we call a ‘deemed disposition’ of shares. This means that on the date of death,
shareholders are considered to have sold their shares at whatever gain or loss
they would incur at that time. Those shares are passed down to a new
shareholder in accordance with a will or some corporate documents dictating who
becomes the new shareholder. But regardless of what happens after, that
shareholder has sold their shares on that date.
This can represent some problems. Let’s say
no planning was done and the accounting was sloppy. If the shares were worth,
say, $1,000,000 at the time of passing but had little to no cost base, that would
be a $1M capital gain adding $500,000 to the income line of a taxpayer’s final
tax return and a $208,000 best-case scenario tax bill.*
If the inheriting shareholder didn’t have
the means to pay the tax bill and there were no other estate assets, they may
have to take a dividend to pay the bill meaning they’d have to declare a
$310,000 dividend to pay the tax for the dividend as well as to pay the tax for
the estate - again, there are better ways to do this but it’s the least tax
efficient way to manage the tax bill.
One of the ways to manage the tax bill is
to own life insurance in the corporation yet again. There is a notional account
called a ‘Capital Dividend Account’ that certain corporate activities create -
one of which is a life insurance payout less the ACB of the policy. This
‘CDA’ allows for dividends to flow through to shareholders without attracting
taxation.
In our example above, if there was an
insurance policy in the corporation which is triggered on death which is also
when our deemed disposition occurs, there would be money made available to be
removed from the corporation with no taxation. This could be used to pay the tax bill and
provide tax-free money to remaining shareholders.
These past 3 blogs
have shown the corporation as a wonderful tool for both reducing taxes while
accumulating wealth, streamlining income for retirement purposes and then how
to reduce tax burdens on death. It’s good when we can have all the tools in
working condition!
*all personal tax calculations are
estimates based on taxtips.ca tax calculator.
If you have
questions about wealth building, contact Worby Wealth Management to get your
questions answered and start investing in an RRSP, TFSA or other investment
accounts today.
Some of the services that Worby Wealth Management can help you with:
TRUSTED REGINA FINANCIAL ADVISORs Chris & Jeremiah Worby from Worby Wealth Management help you live your dream!
The
comments contained herein are a general discussion of certain issues intended
as general information only and should not be relied upon as tax or legal
advice. Please obtain independent professional advice, in the context of your
particular circumstances. This Blog was
written, designed and produced by Jeremiah Worby and Chris Worby for the
benefit of Jeremiah Worby and Chris Worby who are Financial Advisors at Worby
Wealth Management, a registered trade name with Investia Financial Services
Inc., and does not necessarily reflect the opinion of Investia Financial
Services Inc. The information contained
in this article comes from sources we believe reliable, but we cannot guarantee
its accuracy or reliability. The
opinions expressed are based on an analysis and interpretation dating from the
date of publication and are subject to change without notice. Furthermore, they do not constitute an offer
or solicitation to buy or sell any securities.
Mutual Funds, approved exempt market products and/or exchange traded
funds are offered through Investia Financial Services Inc.
Chris Worby and Jeremiah Worby are Trusted Regina based financial advisors and Wealth Management services providers. With over 20 years of experience, Worby Wealth Management has been committed to providing a high standard of financial service to individuals, families and business owners in Regina and area. Worby Wealth Management listens and provides a personalized financial plan. In their latest Worby Wealth Management Trusted Regina Financial Tip, Jeremiah shares how corporations are a fantastic tool for building wealth.
The Wealth Building Toolkit: Corporations
There are many tools that are useful
to build wealth. Virtually everyone has
access to account types such as RRSPs and TFSAs. These are accounts which have
special tax treatments such that we can reduce our overall taxation while we
are alive and accumulating wealth. Pensions and group RRSPs are also useful and
often an employer will give additional funds to these plans which is of obvious
benefit.
For those of us who are not employees
though, we may be able to use another tool - the corporation. If someone is
self-employed and legally able to have their corporation take their income,
this can be very helpful.
The key to using a corporation efficiently
is that the earnings a taxpayer has is not all required. Active income for a
small business conducted in Saskatchewan is taxed at a low rate of 11%. If a
person’s income level is high enough that they don’t require all of it, leaving
income behind in a corporation to invest may be much more efficient than taking
it all as income and then investing.
Let’s look at an
example:
John needs $95,000/year after tax for
lifestyle but earns $250,000/yr gross. If he took all this money, paid tax and then invested the
remainder, he’d have approximately $66,760* to invest at the end of the year.
If he were able to and chose to use a
corporation, however, he’d take $130,000 gross income from the corp and pays
approximately $35,000 in tax leaving $120,000 behind. 11% tax for taxes leaves
him with $106,800 for investing.
The difference of using a corporation in
this example leaves him with an additional $39,920 or 60% more money to invest
to build his wealth.
Clearly, corporations are a fantastic tool
for building wealth. The next blog is going to look at strategies to get this
money out of the corporation on a tax-advantaged basis.
*all personal tax calculations are
estimates based on taxtips.ca tax calculator.
If you have
questions about wealth building, contact Worby Wealth Management to get your
questions answered and start investing in an RRSP, TFSA or other investment
accounts today.
Some of the services that Worby Wealth Management can help you with:
TRUSTED REGINA FINANCIAL ADVISORs Chris & Jeremiah Worby from Worby Wealth Management help you live your dream!
The
comments contained herein are a general discussion of certain issues intended
as general information only and should not be relied upon as tax or legal
advice. Please obtain independent professional advice, in the context of your
particular circumstances. This Blog was
written, designed and produced by Jeremiah Worby and Chris Worby for the
benefit of Jeremiah Worby and Chris Worby who are Financial Advisors at Worby
Wealth Management, a registered trade name with Investia Financial Services
Inc., and does not necessarily reflect the opinion of Investia Financial
Services Inc. The information contained
in this article comes from sources we believe reliable, but we cannot guarantee
its accuracy or reliability. The
opinions expressed are based on an analysis and interpretation dating from the
date of publication and are subject to change without notice. Furthermore, they do not constitute an offer
or solicitation to buy or sell any securities.
Mutual Funds, approved exempt market products and/or exchange traded
funds are offered through Investia Financial Services Inc.
Chris Worby and Jeremiah Worby are Trusted Regina based financial advisors and Wealth Management services providers. With over 20 years of experience, Worby Wealth Management has been committed to providing a high standard of financial service to individuals, families and business owners in Regina and area. Worby Wealth Management listens and provides a personalized financial plan. In their latest Worby Wealth Management Trusted Regina Financial Tip, Jeremiah shares their year end financial checklist.
Year End Financial Checklist
by Jeremiah Worby
It's near the end
of another year. You've probably been
busy planning parties, planning pranks, and soon to be attending holiday events,
but there's one thing that needs your attention – your personal finances. It's time to start reviewing how much money
you have saved up for retirement and other important costs in life.
HERE'S HOW
Do you have any RRSP room left for 2022?
If your RRSP
room is $10,000 and you have already contributed $6,000 to an RRSP this year,
then that means you have only… hold on give me a minute here – carry the 9… oh
yeah, $4,000 of available room for 2022.
If you don't have any remaining RRSP room
for 2022, then no other RRSP contributions can be made before year-end. That being said, if there are other
registered plans (e.g., a TFSA) that you haven't maxed out yet for this year,
then it may still be worthwhile contributing what is needed to fill up your
existing registered plans so long as doing so doesn't exceed their respective
contribution limits.
Are your TFSA contributions up to date?
TFSAs are a great way to save for
retirement. Straight from the Canadian government’s website,
“The TFSA program began in 2009. It is a way for
individuals who are 18 years of age or older and who have a valid social
insurance number (SIN) to set money aside tax-free throughout their lifetime. Contributions to a TFSA are not
deductible for income tax purposes. "
Unused contribution room from previous
years carries forward to future years. A
quick check with your MyCRA account (or office Dwight – he seems to know
everything) should let you know exactly how much TFSA room you currently have.
Have you funded your children's
RESPs this year?
Whether you have two children or twelve,
saving up for their education is a top priority for lots of families. The biggest benefit of RESPs is that a grant
from the Canadian government of up to $7,200 can be earned over the life of the
plan.
The money in an RESP can be used for
various education costs, not just for tuition.
There is no tax on the investment earnings as long as it remains in the
plan. Contributions are not tax
deductible, however withdrawals called educational assistance payments are
included in the student’s income.
Do you have enough life insurance
coverage in case something happens to you?
Life insurance
is an important part of financial planning.
The question is, do you have enough?
Pro tip: $100 Million is probably more than what you need.
You should
consider getting life insurance coverage to protect your family from being left
with financial burdens if something happens to you.
It's important to know how much coverage
you need and what kind of coverage makes sense for your situation. You can get a free life insurance quote by contacting Worby Wealth Management.
A
review of personal finances at the end of the year makes sense
It’s a good idea
to review your personal finances at the end of the year. This way, you can
ensure that you are on track with your goals and make adjustments as needed.
You should review:
- Your financial situation – How much debt do you have? How much money do you have in savings? What are your investments doing? If there is anything that needs to be changed
or improved, now is the time for it!
- Your financial goals – What are some things that need
improving? Are there any new goals that
could be set for next year?
- Investments – Is your portfolio set up for long-term
growth or short-term gain? Are your investment goals aligned with your time
horizon and risk tolerance (e.g., saving for retirement vs. building
wealth). Have any recent market events
caused you to rethink this part of your financial plan? If yes, make sure to contact Worby Wealth Management for a free second
opinion.
- Insurance coverage – Does your current insurance cover all
important aspects of your life (e.g., health care, disability income, burial
expenses) while still being affordable? What
other types of coverage might make sense moving forward as life circumstances
change (e.g., term insurance for those years while you’re still carrying a
mortgage).
Conclusion
The end of the year is a good time to
review your finances and make sure you're on track for the new year. It's also a great opportunity to look back at
the financial decisions you've made over the past 12 months and see if there
might be room for improvement. If so,
now is the perfect time to make those changes!
Questions regarding your year end financial checklist?
If you have
questions about your year end financial checklist, then contact Worby Wealth Management to get your
questions answered and start investing in an RRSP, TFSA or other investment
accounts today.
Some of the services that Worby Wealth Management can help you with:
TRUSTED REGINA FINANCIAL ADVISORs Chris & Jeremiah Worby from Worby Wealth Management help you live your dream!
The
comments contained herein are a general discussion of certain issues intended
as general information only and should not be relied upon as tax or legal
advice. Please obtain independent professional advice, in the context of your
particular circumstances. This Blog was
written, designed and produced by Jeremiah Worby and Chris Worby for the
benefit of Jeremiah Worby and Chris Worby who are Financial Advisors at Worby
Wealth Management, a registered trade name with Investia Financial Services
Inc., and does not necessarily reflect the opinion of Investia Financial
Services Inc. The information contained
in this article comes from sources we believe reliable, but we cannot guarantee
its accuracy or reliability. The
opinions expressed are based on an analysis and interpretation dating from the
date of publication and are subject to change without notice. Furthermore, they do not constitute an offer
or solicitation to buy or sell any securities.
Mutual Funds, approved exempt market products and/or exchange traded
funds are offered through Investia Financial Services Inc.
Your first step into the beautiful Wheatland Fireplace Kitchen & Bath Regina showroom will help you understand why Wheatland Fireplace has been given the Thumbs up by Trusted Regina as your exclusive Trusted Regina fireplace store. Wheatland loves its customers and as a result, its customers love and TRUST them. In their latest fireplace tip, they share current trends for wood stoves and fireplaces.
Wood stoves and fireplaces tend to become the focal point of a room, and even of a home. And they bring people together. In the cold winter months and on chilly evenings, it is often around the fire that people gather to create lasting memories. It is therefore important that this appliance fit into the decor, while also suiting the lifestyle and meeting the needs of the home’s occupants.
Whether you’re thinking of getting a wood stove or fireplace installed in the near future or want to spruce up your existing appliance and the room it’s in, get inspired by current trends.
Wood-burning fireplaces evoke warmth and elegance
Setting up a fireplace area lets you create a focal point in the room. The goal is to fashion a cozy, comfortable and inviting atmosphere. The latest trend is natural colours and materials, like a wood beam for the mantlepiece or field stone cladding. While very popular, wood cladding is not recommended for this project, as most wood stove and fireplace manufacturers require non-combustible materials within a certain radius of the appliance. For a similar effect, you could also opt for concrete that looks like wood. Several specialized companies, like Béton Architectural Johnstone, offer products with very realistic finishes, for a safe version of the look you had in mind. You could also make attractive log holders an integral part of your decor.
The important thing is to think minimalistic. Pick one element as the main focus. It could be your fireplace, a painting, a sculpture or other. You can beautify your fireplace area with a few decorative items, preferably in understated colours that call to mind natural materials like cotton and linen. For an uncluttered haven, pare down your options to only a few key objects. As for the overall colour scheme, the current trend is tone-on-tone (different shades of the same colour).
There are several combinations you can choose from to create a cozy cocoon. Select an original mantlepiece and decorative items that will showcase the play of the flames, exuding warmth and relaxation in the spirit of this year’s trends.
Wood-burning stoves create a relaxed and refined mood
Sleek, modern-looking wood stoves are very in and their minimalism complements all styles of decor. Select an appliance model and decor that best reflect your personality to add a one-of-a-kind touch to your home. With 80s furniture back in fashion, rattan chairs or an angular sofa will create a bold look. If you prefer more classic decor, featuring noble, natural materials like leather or marble, a contemporary wood stove will fit in beautifully.
One thing is certain, wood-burning stoves have become a design element, holding pride of place in a home’s gathering spaces. Beautiful, functional and timeless, modern wood stoves adapt to the activities of the house or cottage’s occupants. Some offer a variety of fire views while others are marvels of architectural design. There are even freestanding fireplaces that can become part of the furniture. They can be installed just as quickly and easily as a traditional wood stove, while offering a polished look that will turn heads.
Adding accessories around the stove will also enhance your decor while clearly defining the area. The portable log holders and floor-protecting hearth pads seen on the market over the last several years are as beautiful as they are practical. These two must-have elements reinvent the space while making your stove more commanding and giving it prestige.
Finally, whether you’re setting up a nook for your fireplace or your wood stove, the important thing is that it be inviting. Achieving harmony between your appliance, finishes and accessories will make you want to spend hours by the fire.
Wheatland Fireplace, Kitchen & Bath are successful for a reason! This really is where your outdoor living and indoor fireplace, bathroom & kitchen dreams meet in spectacular surroundings! Wheatland services and installs high-quality fireplaces, Visit their website or stop by their showroom to feel the warmth and comfort of their amazing selection.
"Better Living Begins Here... At Wheatland, it is ALL ABOUT YOU!"
Your first step into the beautiful Wheatland Fireplace Kitchen & Bath Regina showroom will help you understand why Wheatland Fireplace has been given the Thumbs up by Trusted Regina as your exclusive Trusted Regina fireplace store. Wheatland loves its customers and as a result, its customers love and TRUST them. In their latest fireplace tip, they share how to find the right sized gas fireplace for your home.
Typically, gas fireplaces are classified into four sizes – small, medium, large, and extra-large. As a basic benchmark, a small gas fireplace will heat less than 500 sq. ft., a medium gas fireplace will heat between 500 – 1,000 sq. ft, a large gas fireplace will heat between 1,000 – 2,200 sq. ft., and an extra-large gas fireplace will heat over 2,200+ sq. ft. These figures are based on an average size, single-story home in a moderate climate, and an open floor plan.
Pro Tip: Quickly measure the size of the space you are looking to heat to quickly and easily categorize the size of your fireplace needs by measuring the Length (L) and Width (W). L x W = Sq. Ft.
Standard Gas Fireplace Square Foot Heating Capacity
- Small Gas Fireplace: less than 500 sq. ft.
- Medium Gas Fireplace: 500 - 1,000 sq. ft.
- Large Gas Fireplace: 1,000 - 2,200 sq. ft.
- Extra-Large Gas Fireplace: 2,200+ sq. ft.
Note: this is simply a benchmark. A fireplace’s actual heating capacity will vary dramatically based on a high number of factors, see below for more details, and always discuss sizing and installation with an
Authorized Regency dealer.
Factors Affecting Gas Fireplace Heating Capacity?
There is a wide variety of factors that can influence the heating capacity of your gas fireplace, insert or stove, some of these include:
- Ceiling Height
- The total volume of the room can drastically change the heating capacity of a gas fireplace
- Insulation
- Older poorly insulated homes will decrease the heating capacity of a fireplace, whereas new highly insulated homes may increase the capacity of the fireplace
- Number of Windows
- Windows (even dual-pane) are a source of cooler air, and the more windows in a home/room, the greater the obstacle to the fireplaces heating capacity
- Room/Wall Layout
- Open rooms vs. homes with lots of walls will affect how effective the fireplace is at heating an area
- Other Vented Appliances
- Is there a hood vent in the same room as the fireplace? A dryer? Other appliances that require external venting can affect the draft and efficiency of your gas fireplace.
Wheatland Fireplace, Kitchen & Bath are successful for a reason! This really is where your outdoor living and indoor fireplace, bathroom & kitchen dreams meet in spectacular surroundings! Wheatland services and installs high-quality fireplaces, Visit their website or stop by their showroom to feel the warmth and comfort of their amazing selection.
"Better Living Begins Here... At Wheatland, it is ALL ABOUT YOU!"