Pillar 1

Corporate tax planning, risk management, insured retirement plans, benefit plans and pensions

Corporate tax planning

Really, what it comes down to is this: are you willing to accept help to become as tax effective as possible, maximizing the hard work you’ve put into your business, and ensuring you don’t pay more than your fair share – that you don’t leave a tip, in other words – to CRA? This crucial planning is all too often overlooked – and all too important to put off. Let’s talk about it today.

Planning considerations

With proper planning, you can create levels of creditor protection personally, or with corporate assets. For example, thanks to the inherent benefits of the Insurance Act, a properly-structured insurance contract provides creditor protection. With comprehensive financial risk evaluations,
our team can effectively develop tailored strategies to avoid or minimize risk to your financial plans.

  • Are you a sole proprietorship or corporation?
  • How long have you been in business?
  • Is your family involved in the business?
  • Do you have a retirement plan?
  • Do you have retained earnings?
  • Do you know how a capital dividend can work to your benefit?
  • Do you understand the benefits of an individual pension plan?
  • Is there a shareholders’ agreement? What
    does it say?
  • Are you prepared for an unexpected event –
    for example, your incapacity or death or that of a business partner?
  • Are you prepared for an expected event – retirement, for example?
  • What does the business look like two, five,
    10 and more years in the future?
  • What is the exit strategy?

Tax planning strategies

Some examples of tax minimization strategies for individuals

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  • Income splitting with family members
  • Spousal RSP programs
  • Maximization of tax credits and deductions available to you at income tax time
  • Family trusts
  • Spousal loans

Business owners can also benefit from tax planning strategies

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  • Development of strategies around a shareholders agreement
  • Development of strategies around a buy-sell agreement
  • Insured Retirement Plans
  • Succession planning
  • Charitable giving
  • Philanthropic planning

Risk management

What is risk? From a financial point of view, it is seen as unnecessary exposure to financial harm. As a business owner, you take on enough risk – so knowing that your investments can be safe from litigation claims is priceless peace of mind.

Key Questions

  • How often do you review your insurance portfolio?
  • Are you aware of the advantages of certain beneficiary designations?
  • How do certain different types of coverage complement one another?

Are you covered?

With proper planning, you can create levels of creditor protection personally, or with corporate assets. For example, thanks to the inherent benefits of the Insurance Act, a properly-structured insurance contract provides creditor protection.

With comprehensive financial risk evaluations, our team can effectively develop tailored strategies
to avoid or minimize risk to your financial plans. Contact us.

Insurance and group benefits plans

If you own your own business, getting insurance for it is a must.

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Having a business insurance plan in place will help financially protect against claims like bodily injury or property damage. Another critical aspect of running a business is group benefit plans for the people who help your business run. Look after your employees with benefit plans that help cover medical and prescription costs.

The purchase of shares

If you have one or more shareholders in your business, consider insurance when it comes to your Shareholders’ Agreement.

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In the event of the death or disability of a shareholder, having insurance on their life means immediate funding will be available to purchase the shares of the deceased shareholder and allow for a smooth transition that helps the business to continue to thrive. This method is a more cost-effective and convenient way to fund a buy/sell than borrowing money, liquidating assets, creating cash reserves, or using after-tax corporate profits. Without the funding, the deceased’s spouse or child could end up becoming a shareholder – an outcome which may not be desirable for all parties involved.

A note about taxes: the life insurance benefit is received tax free by the corporation on the death of the shareholder and generates a credit to the Capital Dividend Account (CDA). The CDA can in turn be paid tax free to the estate of the shareholder. The CDA is a valuable tool that can be used in post-mortem planning to remove potential double tax on the death of the shareholder.

Collateral for a business loan

If you need a loan to grow your business, your life insurance policy can help put you in the right position.

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Lenders (banks and other financial institutions that lend money to small businesses) often ask a borrower to provide life insurance on the lives of the key shareholders or employees as a condition of lending. This means that your insurance policy will not only protect you, your family members, your corporation, and key persons to the business – it can also help enhance cash flow to your business.

Here are a few other options to think about:

Key person insurance

  • Common with small to medium businesses; this protects your business if you have one or more key people (e.g., you, another shareholder, a hired executive) whose death, disability or critical illness would harm the financial health of the business.

Charitable giving

  • Corporate-owned life insurance can be used as a tool to donate to charity: assign the policy ownership to the charity, use the policy to fund an estate gift, or use it to fund corporate gifting. Generally speaking, a $2 charitable gift results in a $1 tax credit.

Estate protection

  • Life insurance can be used to pay taxes due upon death, thereby protecting the value of your estate / providing a tax-efficient way to enhance or create your estate.

Estate equalization

  • It is common with family businesses that not all of the children want to, or are suited to, work in the business – and the parents want all children to be dealt with fairly. Corporate-owned life insurance can provide liquidity to achieve this fairness.

Benefits of corporate life insurance

You own your own business, and you have incorporated.

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A smart decision, since corporate structures have significant benefits such as:

  • Limited liability
  • Continuity of the business
  • Easier access to capital
  • Lower income tax rates with the small business tax deduction
  • Potential tax deferral

Now that your business is incorporated, have you considered corporate-owned life insurance? Not to be confused with insurance purchased for your business operations (also a must), this is a life insurance policy purchased by a corporation on the life of a shareholder to protect the business on the death of the shareholder.

Let us consider the advantages of corporate-owned life insurance:

Corporate vs personal dollars
In today’s tax environment, it is more economical to purchase life insurance using corporate dollars as opposed to using your personal income. Here’s a simple example. If your corporation is a Canadian-controlled private corporation that qualifies for the small-business tax deduction, it could potentially pay a tax rate of only 11% depending on the province in which your business operates. This means that for every $100 of income, $89 would be available after tax inside your corporation to go towards paying the insurance premiums. Now let’s compare this to an individual who has an assumed marginal tax rate of 50%. The individual would only net $50 from the same $100. Therefore, the corporation has more after-tax dollars available to pay for the life insurance premiums. In most cases, the insurance premiums are not deductible to either the corporation or the individual.

Alternative investment
Corporate life insurance can create enhanced asset values in comparison to investing the same amount in a corporate investment account, because of the preferential tax treatment of life insurance policies. The Income Tax Act allows for funds (subject to a maximum) to be invested and grow on a tax-deferred basis within an insurance policy, which effectively creates a TFSA-like mechanism within your corporation. However, withdrawals could be subject to tax.

Like any other asset, a life insurance policy can be used as collateral with a financial institution to obtain a loan, the proceeds of which could be used in the business or could be used by yourself for investing or to provide retirement income. We work with your accountant or tax specialist to ensure that the steps to put this type of plan in place are properly completed.

Added value
Life insurance purchased within your corporation allows you to put other unique business strategies in place, including the funding of buy-sell agreements, key-person coverage, and more.

Insured retirement plans

Something we know from more than three decades as corporate financial planners is that business owners are busy running their business. They don’t have time to think through the intricacies of corporate tax planning, pensions, benefits – or insured retirement plans, which magnify the equity in an insurance contract.

But this is the stuff that we live and breathe.

But this is the stuff that we live and breathe. We know it backwards and forwards, inside and out. So if you want to make the most of your time – and the most of your money – just let us know.

Benefit plans

Due to the pandemic and its aftereffects, employees are more selective than ever – and therefore, benefit plans have never been a more important tool to attract and retain the best team for your business.

The benefits

What’s in it for you, how it will help and why your employees will love it!

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What’s in it for you:

  • Tax effective form of employee compensation
  • Access to multiple vendors and modern solutions
  • Peace of mind

Which will help you:

  • ATTRACT new talent and grow your business
  • RETAIN valuable employees
  • REWARD your dedicated team with benefits they value
  • ENGAGE your workforce

Your employees will love it!
  • Employees receive an excellent benefits program that helps to protect the health, financial security, and lifestyle of themselves and their families
  • Employees have access to fast and fair claims payments
  • Easy online access to plan and claims information

The options are many

We work through them with you, create a seamless package and help you implement cleanly – and then we are by your side, available to meet with you throughout the year, to ensure things run smoothly. Get started.


Pensions, in their many different forms, are another key dimension of our suite of services to business owners. At some point in their infancy, companies usually begin to offer a retirement savings plan for employees.

Growing with you

The business owner can decide whether to enact a matching program for all staff, for key employees only, or solely for the owner themselves. The next step is a retirement pension plan in which both employer and employee contribute. Here there are provincial and federal guidelines to navigate. 

We have deep experience in setting up retirement plans for business owners and then ensuring their smooth operation. Ready to learn more?

Further reading and resources

The Value of Advice: History clearly shows that the longer you work with an investment advisor, the better your results will be. RRSP vs TFSA: What are the pros and cons of these tax-free savings tools?

Downloadable PDF

The Value of Advice


Downloadable PDF



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