Beat the Federal & Provincial tax increases with an Insured Deposit FundSubmitted by Future Values on December 8th, 2015
The Federal Liberal government confirmed their election platform regarding Income Taxes in the December 7, 2015 Notice of Ways & Means Motion.
These changes are expected to take effect for January 1, 2016.
Several important changes were:
- Reduction in federal tax rate for income between $45,283 and $90,563 to 20.5% (from 22%).
- An increase of 4% in the federal tax rate for income over $200,000 to 33% (from 29%).
- Top marginal personal tax rate for Albertans will be 48% on income above $300,000.
- Reduction in the contribution limit for Tax-Free Savings Accounts to $5,500 per year (from $10,000 per year), starting in 2016.
- The $10,000 TFSA contribution limit for 2015 will be preserved.
- Old Age Security eligibility returned to age 65, from 67.
- Increase in corporate investment income, to 50.67% (from 44.67% in 2014, 46.67% in 2015).
It’s more important than ever to look for opportunities to:
- Defer tax as much as possible.
- Pay tax at the lowest possible rate.
An Insured Deposit Fund (IDF) may be a valuable tool to accomplish these tax objectives.
An IDF uses permanent, whole life insurance with investment-grade cash values to offer a number of unique advantages:
- Guaranteed + growing cash and estate values
- Tax-advantaged accumulation and growth
- Annual vesting of increased values
- Once vested, the cash and estate values never decline
- Higher potential yield than other assets
- Lower potential volatility than other assets
- Leverage opportunities for additional retirement income
- Access to values while living on tax-preferred method
- Privacy through probate bypass
- Tax-free capital multiplication for your heirs, charity or surviving shareholders
- Tax-free inter-generational wealth transfer
- Freedom to use retirement capital for lifestyle or philanthropy, knowing that the capital will be replaced in your estate.
- Cost-effective funding through corporate ownership & funding
Who can benefit from an IDF?
- Individuals can transfer non-registered assets / fixed income investments to an IDF, owned individually or jointly with their spouse.
- Business owners & Professional Corporations can re-allocate corporate surplus & accumulated wealth to a Corporate Insured Deposit Fund.
Note: Important tax changes for the IDF approach will be implemented effective January 1, 2017.
IDFs put into effect in 2016 are expected to receive grandfathered, favorable tax treatment.
Contact us today to investigate whether an Insured Deposit Fund is appropriate for you.