Estimated reading time: 50 seconds
Canada’s new Prime Minister was elected on the promise that high-income Canadians will soon pay more taxes.
We launched our new website WEALTHinsurance.com last week, to help high net worth taxpayers preserve their wealth, and keep more of what they have worked for.
It is too soon to predict the full extent of the tax changes ahead, but we already know enough to take some actions right now to reduce future tax liabilities from an insurance and financial planning perspective.
Business owners and professionals with annual income above $220,000 who currently pay tax at the highest marginal rates will pay even more under the proposed new tax structure that will hike the highest marginal tax rate on salary from 49.53% to 53.53%, and the rate on dividends received from a private corporation will rise from 40.13% to 45.33%.
What you can do now
1. Set up an Individual Pension Plan (IPP)
Business owners and incorporated professionals should consider the many advantages of using an Individual Pension Plan (IPP) instead of relying on a traditional RRSP.
IPP’s are fully approved by Canada Revenue Agency and can be setup for one or a group of employees.
All contributions made by the employer are fully tax deductible and a non-taxable benefit to the employee.
IPP’s can only be setup by active business corporations, not holding companies and the plan member (employee) must be a Canadian resident and pay Canadian taxes. Just for starters: You will enjoy higher contribution limits, better returns, improved creditor protection and the ability to transfer wealth to family members on a tax-free basis.
2. Set up a Health Spending Account (HSA) Now
The HSA allows you to pay medical, dental and other eligible health-related expenses with pre-tax dollars. Use your HSA to pay for health insurance premiums, Best Doctors®, dental expenses, prescriptions, medical prostheses, and any other eligible medical expenses that may not be fully covered under your base benefit plan.
3. Consider Participating Life Insurance as an alternative investment.
The tax-sheltered growth of participating whole life insurance policies will change dramatically on January 1, 2017.
Participating whole life insurance is a unique asset accumulation, estate and retirement planning tool. The funds inside the plan grow tax free.
Wealthy clients who don’t need more insurance are buying it now as a risk-free portfolio investment that will grow in value every year.
4. Review your insurance and protection portfolio now.
Read this article to understand why the insurance companies don’t want you to do that.
5. Get the free, 4 part Estate Planning Toolkit available at my website. Click here.
My team of advisors is available across Canada to answer questions and help preserve what you have worked for.
Please be in touch if we can help you.
Call me toll-free at 1-866-566-2001 or send an email to info@WEALTHinsurance.com
I look forward to helping you.