Helping Business Owners Invest Tax-Efficiently

As a business owner, the tax treatment on your investments is an important important consideration.

Use the Corporate Tax-Deferral Advantage

Small business income in BC is currently taxed at 13.5%†. Business Owners can defer taxes simply by leaving their corporate surplus in their corporation or holding company rather than taking income or dividends and investing in RRSPs, RESPs, TFSAs, or open accounts. The tax deferral advantage is significant.

Avoid Taxes on Income You Don’t Need

Strategies and tools exist that can minimize unnecessary distributions and maximize the compounding of investment growth to avoid taxable income. Invest for Dividends to Extract Funds Tax-Efficiently Generate eligible dividends from investments in your corporation to fund your current lifestyle. Even though you may not need investment income now, eligible dividends from your investments provide a tax-efficient way to extract funds from your corporation.

Investment Process for Business Owners

High-Income Corporations

If your corporation’s active business income is over $500,000, there are other investment strategies that can be used to reduce income in your corporation or help offset income distributed to you as dividends or income. Contact me today to request more information about tax-efficient investing for business owners.

Client Login

Our clients with investment accounts at iA Securities view their accounts online.

iA Securities

iA Securities is a business name and trademark of Industrial Alliance Securities Inc.

Industrial Alliance Securities Inc. is a full service securities brokerage firm and a wholly owned subsidiary of Industrial Alliance Insurance and Financial Services Inc.

Industrial Alliance Securities Inc.

Industrial Alliance Securities Inc. is a member of the Investment Industry Regulatory Organization of Canada.

Industrial Alliance Securities Inc is a member of the Canadian Investor Protection Fund.

Disclosures and Disclaimers

The Client Relationship Disclosure describes the products and services Industrial Alliance Securities offers in plain language. This document is provided to clients when they open an account.

The information has been prepared by Doug Ransom, Investment Advisor for Industrial  Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS.  The information contained in this document comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. The information contained herein may not apply to all types of investors. For more information about IAS, please consult the official website at www.iasecurities.com . Doug Ransom can open accounts only in the provinces where he is registered. Doug Ransom is registered with the Investment Industry Regulatory Organization of Canada (IIROC) in Alberta, British Columbia & Quebec; investment advice is intended only for residents of those provinces.

 

Retirement Planning

There are three questions I believe are at the heart of an individual's financial security concerns:

  • How much do I need?
  • Will my money last?
  • What can I do?

I help clients retire on their own time and terms by addressing these questions. This involves:

  • Working with them to understand their current cash flow situation, retirement income needs, and retirement and estate goals.
  • Tracking and reporting on their progress, so they can see if their retirement and estate planning goals are fully funded .
  • Developing tax-efficient goals-based investment solutions that help steel clients against market fear and uncertainty.

Who Can I help

The clients I can most help have the potential through current and future planned savings to reach their goals — but not enough to make mistakes. The value I deliver includes:

  • Identifying what you need to do in terms of spending and savings to meet your definition of financial security.
  • Developing an investment solution to preserve your ability to satisfy current and future spending.
  • Monitoring your progress and changing personal circumstances so that you are not following a plan no longer reflected in your reality.

If you are are committed to a plan that will get you to and through retirement, we should consider working together.

I also help clients who have other financial or investment needs:

  • Investors who are primarily interested in investing in flow through limited partnership tax shelters.
  • Investors who are comfortable with my investment solutions.
  • Investors interested in making their mortgage interest tax deductible as part of their financial strategy.
  • Business owners who are looking for a superior solution to RRSPs for their retirement savings

Solutions Linked to Your Goals

We can work together by identifying and prioritizing your key financial objectives to putting a plan in place that will set you on the right path towards achieving these goals.

The benefits of a goals based approach are clear:

  • Focus on what really matters – staying on track to achieve your goals.
  • Less likely to be affected by and react to ups and downs in the market.
  • Success is measured against your financial goals.
  • Clearer understanding of the risks of each individual goal.

Innovative Asset Allocation.

I consider asset allocation to be the most crucial step in the investment process. Asset allocation is the precise division of each portfolio among asset classes like Canadian stocks, foreign stocks, bonds, and alternative investments. This division sets up boundaries for risk exposure and return potential. Asset allocation changes not only with your needs, goals, investment time horizon, income needs, and age, but also with changing market conditions.

Taxes

The tax-treatment of investment income makes a significant difference in total after-tax return. Foreign dividends are taxed differently than Canadian dividends in both registered and non-registered accounts. Non-registered accounts generally benefit from deferring taxation on income or gains. Interest income is best avoided within a holding company, but we are often eager to realize dividend or capital gain income within a holding company, as these provide for a tax-efficient opportunity to extract funds from the company.

There are a number of corporate class mutual funds that provide income that is treated as capital gains, return of capital (ROC), or dividends even though the underlying investments are fixed income (bonds). Investors receive a lot of value from these funds on tax-treatment alone.

Fees

An open and transparent fee model in an Industrial Alliance Securities Inc. fee based account allows you to understand how much you are paying for services. In a fee based account, investment products that pay no embedded compensation are used. In many cases ETFs Exchange Traded Funds (ETFs have performed better than mutual mutual funds with a similar mandate and typically have much lower management expense ratios.

ETF and Mutual Fund Portfolio Construction

Most investors would benefit from having a large portion of their portfolio invested in Exchange Traded Funds (ETFs) rather than mutual funds or individual stocks. ETFs have evolved to express a wide variety of investment strategies. Unless there is a compelling reason to own a mutual fund, an ETF is a likely the best choice.

There are some strategies still best expressed through mutual funds.

For non-registered accounts, there are mutual funds which have a tax structure that allow for US dividends to have Canadian tax treatment.

The fixed income portion of a portfolio is supposed to generate yield and preserve capital. However, almost all of the thousands of thousands of mutual funds and ETFs available to Canadians that invest in fixed income share the following characteristic that many investors do not understand: they will lose value when interest rates rise.

The good news is that there are a handful of funds that hedge interest rates and invest in quality bonds.

It is important to use the right tool for the job. Here is a small list of strategies of interest to many investors that I feel are best expressed with an ETF.

Investment Cowards

Do you just hate the idea of losing money so much so you can't stand the risk of participating in the stock market? Do you have some funds that you would like to invest, but need all your capital back in 3-5 years?

Market Linked GICs and a variety of structured products allow you to participate in the upside return of a basket of stocks with the comfort at least your original will be returned to you upon maturity.

Conservative Stock Portfolios

For clients who prefer to own individual securities instead of using mutual funds or separately managed accounts, my approach is to build portfolios designed to preserve and grow capital, and improve overall portfolio cash flow with covered call writing.

Aggressive Investors

Are you looking to speculate with funds that are not required to fund your savings goals?

It is important to have good trade ideas. It is also important to have a prudent cash management strategy and a discipline to risk on a certain amount on each trade.

Our clients with investment accounts at Industrial Alliance Securities Inc. can view their accounts online.