In this episode of Financial Planning for Canadian Business Owners, Jason Pereira, award-winning financial planner, university lecturer, and writer, switches roles for this episode. Instead of conducting the interview he gets interviewed by his colleague Guy Anderson, Full-Licensed Investment and Financial Planner with Aligned Capital. They go over some of the fundamentals of investing within your corporate structure.
Episode Highlights:
● 01:14 – What should business owners know before they start investing?
● 03:48 – Passive business tax rates start at 50% for interest and half of that is for capital gains.
● 04:37 – What does it take in order to sell your small business corporation?
● 09:00 – What is the formula for investment returns that is taxable?
● 13:59 – What is the status of corporations and income splitting?
● 14:56 – What are the limits for interest income?
● 18:58 – Jason Pereira explains the tax rates for investment returns?
● 22:25 – What types of advantages does insurance offer?
● 25:25 – Get the right team behind you to keep your accounting solidified.
3 Key Points
1. Only people can qualify for tax saving exemptions, not businesses.
2. Tax rates within a company on the owner's earnings could be between 10%-12%.
3. You are allowed to earn up to $50,000 in investment returns within your corporate structure a year at the normal 50% tax rate.
Tweetable Quotes:
● “One of the key reasons people incorporate is to have creditor protection, protect your assets from creditors, assuming you haven’t signed a personal guarantee.” – Jason Pereira
● “Seek advice on re-organizing your corporation and make sure that it is optimized for protecting assets and for the capital gains exemption.” – Jason Pereira
● “By leaving money in your pirate struction, you actually have more money to invest than if you took it out personally.” – Jason Pereira
Resources Mentioned:
● Facebook – Jason Pereira’s Facebook
● LinkedIn – Jason Pereira’s LinkedIn
● FintechImpact.co – Website for Fintech Impact
● jasonpereira.ca – Website
● Linkedin – Guy Anderson’s Linkedin
● KindWealth.ca – Website for Kind Wealth - Pro-Bono COVID-19 services.