At Kevin O’Brien and Associates we offer facilitated strategies in conjunction with tax hard drive professionals and the Successcare (tm) process for our business owner clients.
Examples of strategies that we recommend which you may discuss with your tax advisor include:
- Tax Efficient Incorporated Business Investing with Holding Companies
- For building a larger, tax-deferred investment portfolio using surplus funds from a business.
- For “creditor-proofing” assets as well as optimizing family income and intergenerational planning.
- The Active Business Income (ABI) of the corporation, up to the Small Business Limit ($500,000 which in 2011), is taxed at 15.5% (in Ontario) which is considerably lower than the top personal tax rates.
- Active Business Income subject to the higher general corporate tax rate is more lightly taxed than the highest personal tax rates.
- Special treatment of dividends from private companies is an integral part of the tax integration formula.
- A holding company can be an essential tool as a tax efficient way to distribute and hold non–essential investment assets to ensure the operating business qualifies as a small-business corporation for purposes of the $750,000 capital gains exemption.
This is not intended to be specific tax advice, but rather an illustrative and general discussion of potential advantages of investing through holding companies. Determining the tax consequences of investment and distribution planning within a corporate structure is a complex undertaking. See your professional tax advisor.
In addition to the list given on the “Getting Started” page, please be prepared to provide details of your company, share structure, stake holders, buy-sell agreements and contact information for your accountant and lawyer.
Although this list looks daunting, having this material available before hand is time well spent. Furthermore, the time invested by you at these meetings will lead to great peace of mind and order.