Tax Planning – Randy Reynolds FAB Planning

Does your Business Qualify for the Small Business Gains Exemption?

import Dec 12, 2016

As a business owner, you may be aware that when you dispose of shares in your business you could receive an exemption on all or a portion of the capital gains that ordinarily would be taxable. This is due to the Lifetime Capital Gains Exemption which says that, for 2016, up to $824,176* of capital gains is exempt from taxation.

The Lifetime Capital Gains Exemption (LCGE) is available to individuals who are disposing of or deemed to have disposed of:

Qualified Small Business Corporation (QSBC) shares;
Qualified farm property; or
Qualified fishing property **.

The Single Premium Insured Annuity

import Aug 22, 2016

Available until January 1, 2017

A New Approach

A new method of structuring an insured annuity has restored its favourable results. The new approach involves combining the prescribed annuity with a Universal Life policy.

The UL policy is funded with a single deposit to provide lifetime coverage.
The remaining capital is then used to purchase the prescribed life annuity.
On the death of the insured/annuitant, the annuity income ceases
The Universal Life policy now returns the full amount of the capital to the intended beneficiaries.

9 Ways the 2016 Federal Budget Could Affect Your Business

import Apr 11, 2016

The Trudeau government’s first budget contained a shock on the small business tax rate, and some smaller let-offs

by Murad Hemmadi for ProfitGuide

When Bill Morneau rose to deliver his first budget speech as Finance Minister in Justin Trudeau’s new federal government, entrepreneurs and the owners of Canada’s small- and medium-sized businesses held their breath.

Concerns over the small business tax deduction, stock options for startup employees and capital gains exemptions made this a crucial policy document for SMBs. Here’s what the 2016 federal budget will do and change, and what that means for you and your business.

1. Small Business Tax Rate Frozen

Companies that meet the criteria for a Canadian-Controlled Private Corporation (CPCC) pay a reduced effective rate on their first $500,000 of active business income. In last year’s budget, the then-Conservative government proposed to drop that rate in increments from 11% at the time to 9% by 2019.

As of January 1, 2016, the small business rate was 10.5%, and the 2016 budget “proposes that further reductions in the small business income tax rate be deferred.” In effect, that means the rate will stay where it is today until the government decides otherwise.

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Taxation of Life Insurance – New Rules Offer a Window of Opportunity

import Mar 21, 2016

Permanent life insurance, such as Whole Life or Universal Life, has long been accepted as a tax efficient way of accumulating cash for future needs. Soon the amount of funds that can be tax sheltered within a life insurance policy will be reduced by new tax rules which take effect January 1, 2017. These changes may make 2016 the best year to buy cash value life insurance.

The changes to the tax rules regarding life insurance have resulted in an update to the “exempt test” which measures how much cash value can accumulate in a policy before it becomes subject to income tax.

Highlights of the new rules and their effect

For Cash Value Life Insurance:

Changes to the Taxation of Estates

import Nov 16, 2015

Estate, trust and tax planners have long favoured testamentary trusts as vehicles to pass along assets to beneficiaries or heirs. A testamentary trust is generally a trust or estate that is created the day a person dies. Commonly, these trusts are established in a testator’s will.

A significant benefit to testamentary trusts had been that income earned and retained in the trust received the same graduated rate of income tax as an individual tax payer. Unfortunately, under the terms of Bill C-43, after January 1, 2016, all income retained in the trust will now be taxed at the highest rate of tax applicable in the province in which the trust is resident.

There will be two exceptions to this new rule – The Graduated Rate Estate (GRE) and a Qualified Disability Trust (QDT).

Budget 2015 Highlights

import May 18, 2015

On April 21, 2015, Finance Minister Joe Oliver tabled his first federal budget. The provisions of the budget will be of particular interest to owners of small and medium sized businesses, seniors and families with children. As well, those looking to make certain charitable donations will be encouraged by Oliver’s budget.

Below is a brief commentary on each of the key budget proposals.

For Seniors and Savers

Increase in Tax Free Savings Account (TFSA) Limit

Effective January 1, 2015 the annual contribution limit has been increased from $5,500 to $10,000;
As a consequence, the automatic indexing of the annual contribution limit has been eliminated;
On April 24, the CRA announced that even though this provision is not law as yet, they will allow increased deposits to a TFSA effective immediately.

5 Recent Tax Changes for the 2015 Tax Season

import Apr 20, 2015

Tax time is almost upon us and there are some recent changes which will affect many Canadian residents. The important changes to keep in mind are as follows:

The Family Tax Cut

This is the watered down version of income splitting plan that was introduced by the Harper government in 2011. The provisions allow couples with children under the age of 18 living with them to shift income from a higher income spouse to a lower income spouse so that the combined taxes payable will be reduced. The most that can be taxed in the lower-income spouse’s hands is $50,000 resulting in a federal non-refundable tax credit which will provide maximum savings of $2,000.

Do You Fly South for the Winter?

import Dec 15, 2014

What Snowbirds Need to Know About Residency Rules

After another harsh winter, many Canadians dream of joining the large number of Snowbirds who make their way to the dry warmth of California, Arizona and Florida each winter season. If you are contemplating, or already are, becoming a Snowbird and whiling away the winter months in warmer climes south of the border it is important to understand how the new U.S. Tax laws apply under these circumstances. The last thing you would want is to find that the Internal Revenue Service considers you a US resident making you liable for U.S. income tax or subject to U.S. penalties or both.

The benefits of year-end charitable donations

import Dec 15, 2014

By Anne Levy-Ward, BrighterLife.ca

If you’re like many Canadians, your mailbox is jammed in the holiday season with greeting cards, mail-order catalogues, promotional calendars, sale flyers — and requests for charitable donations. While you probably enjoy catching up with faraway friends and relatives and maybe even flipping through gift guides, you might not appreciate the flood of requests for money.

But, according to Statistics Canada’s Survey of Giving, Volunteering and Participating, 84% of Canadians age 15 and older gave money to charities in 2010. And many people do respond to year-end appeals — that’s why so many charities make them.

Don’t Let the Government Take Your Cottage

import Sep 17, 2014

Over the years you’ve acquired assets that have grown in value, and through strategic financial planning, the value of your estate has risen dramatically. Perhaps you purchased a summer cottage at a time when real estate was relatively inexpensive. As the demand for real estate has increased, the value of your cottage has risen immensely.

Click here to read more.