October 2024
As we get near the end of October, we see the fall colours on the trees. In many places, leaves are falling, and in some the snow has started to fall. It is also the season when many business owners and incorporated professionals are sitting down with their tax professionals to finalize their fiscal and corporate year ends.
During these reviews, there is often a better handle on company revenues and excess profits, and a key question that comes up is about the best manner to tax efficiently structure these amounts.
With the changes in recent years to the taxation of passive assets, coupled with the recent increases to the capital gains inclusion rate, alternative savings strategies have come to the forefront of tax planning.
Individual Pension Plans (IPPs) have become even more of an effective tool, with legislative changes in most provinces making them more flexible, less red tape, and more cost effective. Outside of Newfoundland and Saskatchewan, IPPs for business owners and incorporated professionals are now exempt from registration with the provincial regulators, making contributions and top ups not required in lean years, but with significantly higher funding amounts than RRSPs for more profitable ones.
The key with the IPP though is having it established by the corporate year end to take full advantage of the funding available. Fortunately, the corporation can fund the IPP up to 120 days past the corporate year, but to fully utilize the room, the IPP must be filed with CRA in the same calendar year as the corporate year end. Our deadline for 2024 IPP applications is December 13th, and our team is standing by to assist advisors, clients, and their tax experts to assess if an IPP is a good fit.
Founded in 1995, GBL is a leading provider of retirement and health solutions for business owners across Canada. For more information on our services and strategies contact: [email protected] or 403.249.1820 and follow us to learn how we can help Build Your Future.
