Retained Earnings Tax Bomb

If you are a savvy business owner, you most likely have a Holdco setup that owns part of your Opco and all profits are being pushed up from the Opco to the Holdco on a tax-free basis.  

As the Holdco accumulates large sums of money over the years the profits can be used to buy your investments and real estate on the corporate side. 

Inevitably CRA will come knocking, which in this structure happens when you die. 

For example if you accumulated $2,000,000 of retained earnings through active business income, your tax bill on death, if you pay it out as a dividend to your estate, will be: 

$933,393

That's 46.7% in tax.  It's massive.  

Most business owners don't even realize that this CRA Tax grab is looming in their future.  

So how do we set ourselves up to reduce this CRA tax grab?

1. Accounting/legal structures
2. Life Insurance structures
3. Planning the above 2 ways in advance

Here is a tax calculator to input your numbers.  Use Canadian non-eligible dividends for active small business income. 

https://www.taxtips.ca/calculators/basic/basic-tax-calculator.htm

My business partner Robert has a team that can map out the solution.  

Feel free to set a time to chat: https://calendly.com/robertkleinmeeting/60min

Enjoy :-)

Rick G.