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 income.
The Wealth Building Toolkit: Corporate Income
Here you are, ready to retire, and you’re
getting all your ducks in a row: assessing your RRSP to RRIF options, seeing
how you can maintain OAS through the household, and you have spent your career
building wealth in a corporation so that’s a major tool in your kit.
The first and most interesting thing is
that, by definition, assets built in your corporate investment account are
going to be retained earnings which means you’ll be paying yourself dividends.
The upside of dividends is that you also get a dividend tax credit.
The benefit of dividends is this: let’s say
you were targeting this $95,000/yr of net income. From my last blog, we know
you’d need to take approximately $130,000 of gross income to provide that net
of taxes. A non-eligible dividend to make the same $95,000 net income needs to
only be $120,000 - dividends allow for more tax-advantaged income for sure and
the saving of $10,000 in this case.*
Another option is to use a life insurance
policy. If a corporation were to own a policy with the shareholder as life
insured, there could be a cash value built up in the policy against which a
loan could be set up to be settled upon the passing of the shareholder. As the
insurance policy is not required to declare gains for tax purposes year over year,
this tax deferral can lead to larger amounts within the policy and more money
available for a loan.
You’ve noticed I keep referencing ‘tools’
throughout this series. That’s because you can’t screw a screw with a hammer, and
you can’t drive a nail with a saw. I mean, I suppose you could do those things
but let’s attempt a little efficiency here! I think of retirement planning as
exactly this, pulling out the right tool for the job. And in this example of
having a high level of corporate assets, insurance is a great tool to help
build that wealth to do the job of providing security of income in retirement.
In the next blog, we’re going to talk about
insurance in corporations again but from more of an estate planning perspective
- no surprise but insurance is very helpful in dealing with taxes in an
estate.
*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
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