There are a number of opportunities for tax reduction many business owners overlook. A few examples are highlighted on this page.

Invest at the Corporate Level

Most business owners who are able to save and invest will have the best after-tax results by investing any funds available within a holding company, rather than taking income in person and investing in an RRSP or other registered account .

Income from an active business is taxed at a low rate for businesses earning $500,000 or less. In 2014, this rate was 12.5% in BC. Compared to an approximately 43% tax rate on the highest tax bracket, this results in a 31% tax deferral opportunity.

Passive income in corporations is attractive, and provides a mechanism for eventually distributing funds to the shareholders (i.e. in retirement) in a tax-efficient manner, more attractive than income from a RRIF. Generating dividends and capital gains from investments within a corporation actually provides an opportunity to extract funds from the corporation while attracting less tax.

Reduced Payroll Taxes

By taking dividends rather than income a business owner can reduce payroll taxes like CPP and Employment Insurance


Reducing Corporate or Personal Taxable Income

If a business owner is receiving taxable income rather than dividends, or their corporation is earning more than the $500,000 Small Business Deduction, Flow-Through Limited Partnerships can provide tax deductions for either the business or the business owner.

If the business owner buys the Flow-Through Limited Partnerships, they can transfer them to their corporation and retain the cost base. This would be advantageous if there were an opportunity for income splitting with lower-income members of the family, such as adult children attending university or a spouse in a lower tax bracket.

Income Splitting

A business owner can split income with spouses or adult children if their corporations are set up correctly.

Savings funds in a corporation while children are minors can be an effective strategy, as the children can take income while they are low-income adults (i.e. while attending university).

Are you an investment coward? Do you just hate the idea of losing money so much so you can't stand the risk of participating in the stock market?

Frustrated with GIC returns?

Do you have some funds that you would like to invest, but need all your capital back in 3-5 years?

For clients like you, there are a number of investment products that will provide you upside exposure to an investment based on the the stock market, but promise to return to you at least your principal at maturity.

Solutions Linked to Your Goals

We can work together by identifying and prioritizing your key financial objectives to putting a strategy 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.


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.


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.

I have developed a number of ETFs and mutual fund model portfolios that are designed to preserve and grow capital and/or generate cash flow depending on your risk tolerance and income needs.

The benefits of these portfolios include:

  • Low fees relative to what most investors experience owning a portfolio of individual stocks or high MER mutual funds.
  • Intelligent portfolio design using a combination of ETFs and mutual funds.
  • Selecting tax managed income for non-registered investments.

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 rather than ETFs.

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 fixed income portion of your portfolio or your balanced fund is supposed to preserve capital and generate yield. In a rising rate interest environment it is more likely they will lose money.

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

Most of my clients invest to preserve and grow their capital with ETF and mutual fund portfolios, to fund a future lifestyle goal. Some are Investment Cowards.

A small number of my clients are Bold Investors

I have a select number of clients who make shorter term trades using stocks, ETFs, and options. We will hold a position for relatively short period of time (typically at least a day and less than a year).

Aggressive Investing requires not only good trade ideas, but also control over how much capital is at risk on any trade. Not every trade is a winner, and if you are in the habit of risking 20% of your capital on a trade, your capital is not likely to last long.

If you have funds in excess of those required to meet your financial goals and would like to trade actively, call me today for a chat.