The end of 2021 is quickly approaching – which means it is time to get your finances in order, so you are ready when it comes time to file your taxes.
In this article, we cover four types of 2021 personal tax tips:
Individuals
It is essential to make sure you are not paying taxes unnecessarily.
These are the main COVID-19 benefits for individuals:
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You can apply for the Canada Recovery Benefit if you are not eligible for EI and can not work due to COVID-19 or have had your income reduced due to COVID-19. This benefit ended as of October 23, 2021, but you can still claim the last eligible period until December 22, 2021.
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You can apply for the Canada Recovery Sickness Benefit if you are sick or need to self-isolate due to COVID-19. This benefit is scheduled to end on November 21, 2021, but legislation has been proposed to extend it to next May.
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You can apply for the Canada Recovery Caregiving Benefit if you can not work because you need to supervise a child or other dependent family member because they are ill with COVID-19 or their usual school or other facility is closed. This benefit is scheduled to end on November 21, 2021, but legislation has been proposed to extend this benefit to next May.
-
A new Canada Worker Lockdown Benefit provides $300 a week if you can not work due to a government-imposed lockdown (and are not receiving EI). This benefit is proposed, and legislation for this benefit has not been passed.
You must apply for these benefits no later than 60 days after the end of the claim period. You will receive a T4A from the CRA and must report any money received from these benefits as income on your 2021 tax return.
All Canada Recovery Benefits (CRB) are subject to a 10% withholding tax. If you earned over $38,000 in net income in 2021, you might be required to reimburse the government some or all of the CRB at tax time. You can use tax deductions such as RRSP contributions to avoid either additional tax on these recovery benefits or reduced benefits.
If you have to repay any COVID-19 benefits, you can deduct the repayment amount from your income in the year you received the benefit.
For 2020, the CRA introduced a simplified process for claiming a deduction for home office expenses for employees working from home due to COVID-19. An employee can either claim using a new temporary flat rate method or use the more traditional method for claiming home office expenses. We assume a similar approach will be allowed for 2021, so be sure to track all your home office expenses.
Do you expect to have any capital losses? If you have capital losses, you must first deduct them against any capital gains you had in the current year. After that, you can carry back any excess capital losses up to three years or forward indefinitely. Trades can take up to two days to settle, so be sure to sell any investments you want to claim a capital loss on by December 29 at the latest.
You can deduct any fees you pay to manage or administer your non‑registered investments. As well, you can usually deduct interest charges paid on borrowed money if you used the money to earn income from non‑registered investments or a business. If you have non-deductible interest, like a mortgage or car loan, talk to your tax advisor to see if you can restructure your investments to make the interest on these loans tax‑deductible.
If you have eligible medical expenses that were not paid for by either a provincial or private plan, you can claim these expenses against your taxes. You can even deduct premiums you pay for private coverage. Either spouse can claim qualified medical expenses for themselves and dependent children in a 12-month period. However, it is generally better for the spouse with a lower income to claim the expense because the credit is reduced by a percentage of net income. If the lower-income spouse does not have enough tax payable to offset the medical expense tax credit, it may be beneficial to move the expenses to the higher-income spouse.
Tax credits for donations are two-tiered, with a larger credit being available for donations over $200. You and your spouse can pool your donation receipts and carry donations forward for up to five years. If you donate items like stocks or mutual funds directly to a charity, you will be eligible for a tax receipt for the fair market value, and the capital gains tax does not apply.
If you have moved to be closer to school or a place of work, you may be able to deduct moving expenses against eligible income. You must have moved a minimum of 40 km.
If you care for a dependent relative with a mental or physical impairment, you may be able to claim a non-refundable tax credit.
Will your personal tax rate be lower in 2022 than it will be for 2021? If so and have the option, you may wish to defer receiving income to 2022. And if your tax rate will be higher in 2022 than for 2021, try to accelerate income and receive it before the end of 2021.
There are a few options available to you when it comes to tax tips if you are enrolled in school:
-
If you are between the ages of 25 to 65 and enrolled in an eligible educational institution, you can claim a federal tax credit of $250 for 2021.
-
You can claim tuition paid on your taxes, carry the amount forward, or transfer an unused tuition amount to a spouse, parent, or grandparent.
Investment Considerations
Depending on your circumstances, there are up to three different ways you can set aside money in registered accounts to save for the future:
-
Contribute to your Tax Free Savings Account (TFSA). You can contribute up to a maximum of $6000 for 2021. You can carry forward unused contribution room indefinitely. For instance, if you have never contributed to your TFSA, the cumulative total from 2009 to 2021 is $75,500.
-
Contribute to your RRSP or a spousal RRSP. Remember, you can deduct contributions made in the year or within the first sixty days of the following calendar year from your 2021 income. You also have the option of carrying forward deductions.
-
Suppose you have an RDSP open for yourself or an eligible family member. You may be able to have both the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB) paid into the RDSP. The CDSB is based on the beneficiary’s adjusted family net income and does not require any contributions to be made. The CDSG is based on both the beneficiary’s family net income and contribution amounts. In addition, up to 10 years of unused grants and bond entitlements can be carried forward.
If you need extra money this year because your income was unusually low, you may want to consider making an RRSP withdrawal before the end of the year to boost your income. This is generally only a good idea if you are in the lowest tax bracket. Be aware that you will permanently lose that contribution room if you withdraw money from an RRSP. However, if you are concerned about whether making an RRSP withdrawal is a good strategy for you, we are happy to answer any questions you may have.
Families
If you paid someone to take care of your child so you or your spouse could attend school or work, then you can deduct these expenses. Various childcare expenses qualify for this deduction, including boarding school, camp, daycare, and even paying a relative over 18 for babysitting.
Be sure to get all your receipts and have the spouse with the lower net income claim the childcare expenses. Some provinces offer additional childcare tax credits on top of the federal ones.
A Registered Education Savings Plan (RESP) can be a great way to save for a child’s future education. However, the Canadian Education Savings Grant is only available on the first $2,500 of contributions you make each year per child (to a maximum of $500, with a lifetime maximum of $7,200.).
If you have any unused CESG amounts for the current year, you can carry them forward. If the recipient of the RESP is now 16 or 17, they can only receive the CESG if:
a) at least $2,000 has already been contributed to the RESP and
b) a minimum contribution of $100 was made to the RESP in any of the four previous years.
Retirees
Are you turning 71 this year? If so, you are required to end your RRSP by December 31. You have several choices on what to do with your RRSP, including transferring your RRSP to a Registered Retirement Income Fund (RRIF), cashing out your RSSP, or purchasing an annuity. Talk to us about the tax implications of each of these choices.
65 or older and receiving pension income? If your pension income is eligible, you can deduct a federal tax credit equal to 15% on the first $2,000 of pension income received – plus any provincial tax credits.
Do you not currently have any pension income? Then, you may want to think about withdrawing $2,000 from an RRIF each year or using RRSP funds to purchase an annuity that pays at least $2,000 per year.
If you have reached the age of 60, you may be considering applying for the Canada Pension Plan. However, keep in mind that the monthly amount you will receive will be lower if you apply at 60 versus a later age. Keep in mind, you do not have to have retired to apply for CPP.
If you are 65 or older, ensure that you are enrolled for Old Age Security (OAS) benefits. Retroactive OAS payments are only available for up to 11 months plus the month you apply for your OAS benefits. If you are running into OAS “clawback” issues, consider ways to split or reduce other sources of income to avoid this clawback.
Need some additional guidance?
We hope you have enjoyed all of our tax tips. If you have questions or want help to make sure you use all the tax deductions you are eligible for, reach out to us and set up a time to talk.
2021 Personal Year-End Tax Tips
/in Blog, individuals /by Coulas Insurance Ltd.The end of 2021 is quickly approaching – which means it is time to get your finances in order, so you are ready when it comes time to file your taxes.
In this article, we cover four types of 2021 personal tax tips:
Individuals
Investment Considerations
Families
Retirees
Individuals
It is essential to make sure you are not paying taxes unnecessarily.
These are the main COVID-19 benefits for individuals:
You can apply for the Canada Recovery Benefit if you are not eligible for EI and can not work due to COVID-19 or have had your income reduced due to COVID-19. This benefit ended as of October 23, 2021, but you can still claim the last eligible period until December 22, 2021.
You can apply for the Canada Recovery Sickness Benefit if you are sick or need to self-isolate due to COVID-19. This benefit is scheduled to end on November 21, 2021, but legislation has been proposed to extend it to next May.
You can apply for the Canada Recovery Caregiving Benefit if you can not work because you need to supervise a child or other dependent family member because they are ill with COVID-19 or their usual school or other facility is closed. This benefit is scheduled to end on November 21, 2021, but legislation has been proposed to extend this benefit to next May.
A new Canada Worker Lockdown Benefit provides $300 a week if you can not work due to a government-imposed lockdown (and are not receiving EI). This benefit is proposed, and legislation for this benefit has not been passed.
You must apply for these benefits no later than 60 days after the end of the claim period. You will receive a T4A from the CRA and must report any money received from these benefits as income on your 2021 tax return.
All Canada Recovery Benefits (CRB) are subject to a 10% withholding tax. If you earned over $38,000 in net income in 2021, you might be required to reimburse the government some or all of the CRB at tax time. You can use tax deductions such as RRSP contributions to avoid either additional tax on these recovery benefits or reduced benefits.
If you have to repay any COVID-19 benefits, you can deduct the repayment amount from your income in the year you received the benefit.
For 2020, the CRA introduced a simplified process for claiming a deduction for home office expenses for employees working from home due to COVID-19. An employee can either claim using a new temporary flat rate method or use the more traditional method for claiming home office expenses. We assume a similar approach will be allowed for 2021, so be sure to track all your home office expenses.
Do you expect to have any capital losses? If you have capital losses, you must first deduct them against any capital gains you had in the current year. After that, you can carry back any excess capital losses up to three years or forward indefinitely. Trades can take up to two days to settle, so be sure to sell any investments you want to claim a capital loss on by December 29 at the latest.
You can deduct any fees you pay to manage or administer your non‑registered investments. As well, you can usually deduct interest charges paid on borrowed money if you used the money to earn income from non‑registered investments or a business. If you have non-deductible interest, like a mortgage or car loan, talk to your tax advisor to see if you can restructure your investments to make the interest on these loans tax‑deductible.
If you have eligible medical expenses that were not paid for by either a provincial or private plan, you can claim these expenses against your taxes. You can even deduct premiums you pay for private coverage. Either spouse can claim qualified medical expenses for themselves and dependent children in a 12-month period. However, it is generally better for the spouse with a lower income to claim the expense because the credit is reduced by a percentage of net income. If the lower-income spouse does not have enough tax payable to offset the medical expense tax credit, it may be beneficial to move the expenses to the higher-income spouse.
Tax credits for donations are two-tiered, with a larger credit being available for donations over $200. You and your spouse can pool your donation receipts and carry donations forward for up to five years. If you donate items like stocks or mutual funds directly to a charity, you will be eligible for a tax receipt for the fair market value, and the capital gains tax does not apply.
If you have moved to be closer to school or a place of work, you may be able to deduct moving expenses against eligible income. You must have moved a minimum of 40 km.
If you care for a dependent relative with a mental or physical impairment, you may be able to claim a non-refundable tax credit.
Will your personal tax rate be lower in 2022 than it will be for 2021? If so and have the option, you may wish to defer receiving income to 2022. And if your tax rate will be higher in 2022 than for 2021, try to accelerate income and receive it before the end of 2021.
There are a few options available to you when it comes to tax tips if you are enrolled in school:
If you are between the ages of 25 to 65 and enrolled in an eligible educational institution, you can claim a federal tax credit of $250 for 2021.
You can claim tuition paid on your taxes, carry the amount forward, or transfer an unused tuition amount to a spouse, parent, or grandparent.
Investment Considerations
Depending on your circumstances, there are up to three different ways you can set aside money in registered accounts to save for the future:
Contribute to your Tax Free Savings Account (TFSA). You can contribute up to a maximum of $6000 for 2021. You can carry forward unused contribution room indefinitely. For instance, if you have never contributed to your TFSA, the cumulative total from 2009 to 2021 is $75,500.
Contribute to your RRSP or a spousal RRSP. Remember, you can deduct contributions made in the year or within the first sixty days of the following calendar year from your 2021 income. You also have the option of carrying forward deductions.
Suppose you have an RDSP open for yourself or an eligible family member. You may be able to have both the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB) paid into the RDSP. The CDSB is based on the beneficiary’s adjusted family net income and does not require any contributions to be made. The CDSG is based on both the beneficiary’s family net income and contribution amounts. In addition, up to 10 years of unused grants and bond entitlements can be carried forward.
If you need extra money this year because your income was unusually low, you may want to consider making an RRSP withdrawal before the end of the year to boost your income. This is generally only a good idea if you are in the lowest tax bracket. Be aware that you will permanently lose that contribution room if you withdraw money from an RRSP. However, if you are concerned about whether making an RRSP withdrawal is a good strategy for you, we are happy to answer any questions you may have.
Families
If you paid someone to take care of your child so you or your spouse could attend school or work, then you can deduct these expenses. Various childcare expenses qualify for this deduction, including boarding school, camp, daycare, and even paying a relative over 18 for babysitting.
Be sure to get all your receipts and have the spouse with the lower net income claim the childcare expenses. Some provinces offer additional childcare tax credits on top of the federal ones.
A Registered Education Savings Plan (RESP) can be a great way to save for a child’s future education. However, the Canadian Education Savings Grant is only available on the first $2,500 of contributions you make each year per child (to a maximum of $500, with a lifetime maximum of $7,200.).
If you have any unused CESG amounts for the current year, you can carry them forward. If the recipient of the RESP is now 16 or 17, they can only receive the CESG if:
a) at least $2,000 has already been contributed to the RESP and
b) a minimum contribution of $100 was made to the RESP in any of the four previous years.
Retirees
Are you turning 71 this year? If so, you are required to end your RRSP by December 31. You have several choices on what to do with your RRSP, including transferring your RRSP to a Registered Retirement Income Fund (RRIF), cashing out your RSSP, or purchasing an annuity. Talk to us about the tax implications of each of these choices.
65 or older and receiving pension income? If your pension income is eligible, you can deduct a federal tax credit equal to 15% on the first $2,000 of pension income received – plus any provincial tax credits.
Do you not currently have any pension income? Then, you may want to think about withdrawing $2,000 from an RRIF each year or using RRSP funds to purchase an annuity that pays at least $2,000 per year.
If you have reached the age of 60, you may be considering applying for the Canada Pension Plan. However, keep in mind that the monthly amount you will receive will be lower if you apply at 60 versus a later age. Keep in mind, you do not have to have retired to apply for CPP.
If you are 65 or older, ensure that you are enrolled for Old Age Security (OAS) benefits. Retroactive OAS payments are only available for up to 11 months plus the month you apply for your OAS benefits. If you are running into OAS “clawback” issues, consider ways to split or reduce other sources of income to avoid this clawback.
Need some additional guidance?
We hope you have enjoyed all of our tax tips. If you have questions or want help to make sure you use all the tax deductions you are eligible for, reach out to us and set up a time to talk.
2021 Year-End Tax Tips for Business Owners
/in 2021, Blog, Business Owners, corporate /by Coulas Insurance Ltd.2021 Year-End Tax Tips for Business Owners
Now that we’re approaching the end of the year, it’s time to review your business finances. We’ve highlighted the most critical tax-planning tips you need to know as a business owner.
Salary and Dividend Mix
As a business owner, one essential part of tax planning is determining the right mix of salary and dividends for both yourself and your family members.
The following are the main options you can consider when determining how to distribute money from your business:
Pay a salary to family members who work for your business and are in a lower tax bracket – This enables them to declare an income so that they can contribute to the Canada Pension Plan (CPP) and a Registered Retirement Savings Plan (RRSP). You must be able to prove the family members have provided services in line with the amount of compensation provided.
Pay dividends to family members who are shareholders in your company – The amount of dividends someone can receive without paying income tax on them will vary depending on the province or territory they live in.
Distribute money from your business via income sprinkling – This is shifting income from a high-tax rate individual to a low-rate tax individual. However, this strategy can cause issues due to Tax On Split Income (TOSI) rules. A tax professional can help you determine the best way to “income sprinkle” so none of your family members are subject to TOSI.
Keep money in the corporation if neither you nor your family members need cash – Taxes can be deferred if your corporation retains income and the corporation’s tax rate is lower than your personal tax rate.
No matter what strategy you take to distribute money from your business, keep in mind the following:
Your marginal tax rate as the owner-manager.
The corporation’s tax rate.
Health and payroll taxes.
How much RRSP contribution room do you have.
What you’ll have to pay in CPP contributions.
Other deductions and credits you’ll be eligible for (e.g., charitable donations or childcare or medical expenses).
Compensation
An important part of year-end tax planning is determining appropriate ways to handle compensation. The following are the main things to consider:
Can you benefit from a shareholder loan? A shareholder loan is an agreement to borrow funds from your corporation for a specific purpose. The interest from the loan may be deductible if the proceeds of the shareholder loan were used to produce income from business or property.
Do you need to repay a shareholder loan to avoid paying personal income tax on the amount you borrowed?
Is setting up an employee profit-sharing plan a better way to disburse business profits than simply paying out a bonus?
Keep in mind that when an employee cashes out a stock option, only one party (the employee OR the employer) can claim a tax deduction on the cashed-out stock option.
Think about setting up a Retirement Compensation Arrangement (RCA) to help fund you or your employee’s retirement.
Passive Investments
One of the most common tax advantages available to Canadian-Controlled Private Corporations (CCPC) is the Small Business Deduction (SBD).
For qualifying businesses, the SBD reduces your corporate tax rate. Keep in mind that the SBD will be reduced by five dollars for every dollar of passive investment income over $50,000 your CCPC earned the previous year.
The best way to avoid losing any of the SBD is to make sure that the passive investment income within your associated corporation group does not exceed $50,000.
These are some of the ways you can make sure you preserve your access to the SBD:
Defer the sale of portfolio investments as necessary.
Adjust your investment mix to be more tax efficient. For example, you could choose to hold more equity investments than fixed-income investments. Only 50% of the gains realized on shares sold is taxable, but investment income earned on bonds is fully taxable.
Invest excess funds in an exempt life insurance policy. Any investment income earned on an exempt life insurance policy is not included in your passive investment income total.
Set up an individual pension plan (IPP). An IPP is like a defined benefit pension plan and is not subject to the passive investment income rules.
Depreciable Assets
Another tactic you should consider for year-end tax planning is to hasten your purchase of any depreciable assets. A depreciable asset is a type of capital property that you can claim the Capital Cost Allowance (CCA) on.
These are two of the best ways to make the most of tax planning with depreciable assets:
Make use of the Accelerated Investment Incentive. With this incentive, some depreciable assets are eligible for an enhanced first-year allowance.
Purchase equipment such as zero-emissions vehicles and clean energy equipment eligible for a 100 percent tax write-off.
Donations
Another essential part of tax planning is to make all of your donations before year-end. This applies to both charitable donations and political contributions.
For charitable donations, you need to consider the best way to make your donations and the different tax advantages of each type of donation. For example, you can:
Donate securities.
Give a direct cash gift to a registered charity.
Use a donor-advised fund account at a public foundation. A donor-advised fund is like a charitable investment account.
Set up a private foundation to solely represent your interests.
We can help walk you through the tax implications of each of these types of charitable donations.
Make the Most of Covid-19 Relief Programs
While some COVID-19 relief programs, such as the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) have ended, others are still available. See if your business can benefit from any of the following relief programs:
Canada Recovery Hiring Program (CRHP). This program will continue to run until May 2022. If your business is eligible and continues to experience a decline in revenues as compared to pre-pandemic levels. In that case, the CRHP will provide support to assist in hiring new staff or increasing the wages of your existing staff.
Tourism and Hospitality Recovery Program. This new program provides wage and rent support to eligible businesses such as hotels and restaurants with an average monthly revenue reduction of at least 40% over the first 13 qualifying periods for the CEWS and a current month revenue loss of at least 40%.
Hardest Hit Business Recovery Program. This provides rent and wage support of up to 50% for eligible entities. Eligible entities must meet two conditions – an average monthly revenue reduction of at least 50% over the first 13 qualifying periods for the CEWS and a current month revenue loss of at least 50%.
General support in the event of a public health lockdown. If there is a public health lockdown and your business loses sufficient revenue, your business would be eligible for support at the same subsidy rates as the Tourism and Hospitality Recovery Program.
Know what’s included as taxable income. If you received assistance from the government assistance programs, including the CEWS, CERS, and CRHP, this assistance is taxable as income.
Get year-end tax planning help from someone you can trust!
We’re here to help you with your year-end tax planning. Book some time with us today to learn how you can benefit from these tax tips and strategies.
Financial Planning
/in Blog, Estate Planning, Family, Financial Planning, individuals, Retirees /by Coulas Insurance Ltd.A financial plan looks at where you are today and where you want to go. It determines your short, medium and long term financial goals and how you can reach them.
Why do you need a Financial Plan?
Worry less about money and gain control.
Organize your finances.
Prioritize your goals.
Focus on the big picture.
Save money to reach your goals.
What does a Financial Plan include?
There are 2 main sides your financial plan should address: Accumulation and Protection
Accumulation:
Cash Management – Savings and Debt
Tax Planning
Investments
Protection:
Insurance Planning
Health Insurance
Estate Planning
What’s the Financial Planning Process?
Establish and define the financial planner-client relationship.
Gather information about current financial situation and goals including lifestyle goals.
Analyze and evaluate current financial status.
Develop and present strategies and solutions to achieve goals.
Implement recommendations.
Monitor and review recommendations. Adjust if necessary.
Next steps…
Talk to us about helping you get your finances in order so you can achieve your lifestyle and financial goals.
Feel confident in knowing you have a plan to get to your goals.
“Final Pivot” – COVID-19 Emergency Benefits expire October 23rd, replaced by targeted supports
/in Blog, Coronavirus /by Coulas Insurance Ltd.On Thursday, October 22nd, 2021 Deputy Prime Minister and Finance Minister Chrystia Freeland announced the “final pivot in delivering the support needed to deliver a robust recovery.” This “Final Pivot” means several existing pandemic support programs for individuals and businesses will expire on October 23rd, 2021:
Canada Recovery Benefit (CRB)
Canada Emergency Rent Subsidy (CERS)
Canada Emergency Wage Subsidy (CEWS)
In their place, the Federal Government announced:
The Tourism and Hospitality Recovery Program – provides support through the wage and rent subsidy programs, to hotels, tour operators, travel agencies, and restaurants, with a subsidy rate of up to 75%.
The Hardest-Hit Recovery Program – provides support through the wage and rent subsidy programs, would support other businesses that have faced deep losses, with a subsidy rate of up to 50%.
Canada Worker Lockdown Benefit – provides $300 a week to workers facing local lockdowns, including those not eligible for Employment Insurance. Anyone whose loss of income is due to their refusal to follow vaccination mandates will be excluded from accessing the aid.
Full details are in the links below:
Insurance Planning for Business Owners
/in Blog, Business Owners, buy sell, corporate, disability insurance, Group Benefits, health benefits, Insurance, life insurance, travel insurance /by Coulas Insurance Ltd.For business owners, making sure your business is financially protected can be overwhelming. Business owners face a unique set of challenges when it comes to managing risk. Insurance can play an important role when it comes to reducing the financial impact on your business in the case of uncontrollable events such as disability, critical illness or loss of a key shareholder or employee.
This infographic addresses the importance of corporate insurance.
The 4 areas of insurance a business owner should take care of are:
Health
Disability
Critical Illness
Life
Health: We are fortunate in Canada, where the healthcare system pays for basic healthcare services for Canadian citizens and permanent residents. However, not everything healthcare related is covered, in reality, 30% of our health costs* are paid for out of pocket or through private insurance such as prescription medication, dental, prescription glasses, physiotherapy, etc.
For business owners, offering employee health benefits make smart business sense because health benefits can form part of a compensation package and can help retain key employees and attract new talent.
For business owners that are looking to provide alternative health plans in a cost effective manner, you may want to consider a health spending account.
Disability: Most people spend money on protecting their home and car, but many overlook protecting their greatest asset: their ability to earn income. Unfortunately one in three people on average will be disabled for 90 days or more at least once before the age of 65.
Consider the financial impact this would have on your business if you, a key employee or shareholder were to suffer from an injury or illness. Disability insurance can provide a monthly income to help keep your business running.
Business overhead expense insurance can provide monthly reimbursement of expenses during total disability such as rent for commercial space, utilities, employee salaries and benefits, equipment leasing costs, accounting fees, insurance premiums for property and liability, etc.
Key person disability insurance can be used to provide monthly funds for the key employee while they’re disabled and protect the business from lost revenue while your business finds and trains an appropriate replacement.
Buy sell disability insurance can provide you with a lump sum payment if your business partner were to become totally disabled. These funds can be used to purchase the shares of the disabled partner, fund a buy sell agreement and reassure creditors and suppliers.
Critical Illness: For a lot of us, the idea of experiencing a critical illness such as a heart attack, stroke or cancer can seem unlikely, but almost 3 in 4 (73%) working Canadians know someone who experience a serious illness. Sadly, this can have serious consequences on you, your family and business, with Critical Illness insurance, it provides a lump sum payment so you can focus on your recovery.
Key person critical illness insurance can be used to provide funds to the company so it can supplement income during time away, cover debt repayment, salary for key employees or fixed overhead expenses.
Buy sell critical illness insurance can provide you with a lump sum payment if your business partner or shareholder were to suffer from a critical illness. These funds can be used to purchase the shares of the partner, fund a buy sell agreement and reassure creditors and suppliers.
Life: For a business owner, not only do your employees depend on you for financial support but your loved ones do too. Life insurance is important because it can protect your business and also be another form of investment for excess company funds.
Key person life insurance can be used to provide a lump sum payment to the company on death of the insured so it can keep the business going until you an appropriate replacement is found. It can also be used to retain loyal employees by supplying a retirement fund inside the insurance policy.
Buy sell life insurance can provide you with a lump sum payment if your business partner or shareholder were to pass away. These funds can be used to purchase the shares of the deceased partner, fund a buy sell agreement and reassure creditors and suppliers.
Loan coverage life insurance can help cover off any outstanding business loans and debts.
Reduce taxes & diversify your portfolio, often life insurance is viewed only as protection, however with permanent life insurance, there is an option to deposit excess company funds not needed for operations to provide for tax-free growth (within government limits) to diversify your portfolio and reduce taxes on passive investments.
Talk to us about helping making sure you and your business are protected.
10 Essential Decisions for Business Owners
/in Blog, Business Owners, Estate Planning, financial advice, Financial Planning, Group Benefits, health benefits, Insurance, Investment, tax /by Coulas Insurance Ltd.10 Essential Decisions for Business Owners
Business owners are busy… they are busy running a successful business, wearing lots of hats and making a ton of decisions. We’ve put together a list of 10 essential decisions for every business owner to consider; from corporate structure to retirement and succession planning:
Best structure for your business (ex. Sole Proprietor, Corporation, Partnership)
Reduce taxes
What to do with surplus cash
Build employee loyalty
Reduce risk
Deal with the unexpected
Retire from your business
Sell your business
Keep your business in the family
What to do when you’re retired
As a financial advisor, we are uniquely positioned to help business owners, talk to us about your situation and we can provide the guidance you need.
Paying for Education
/in Blog, Debt, Family, life insurance /by Coulas Insurance Ltd.Post-secondary education can be expensive, however having the opportunity to plan for it helps with making sure that you’re capable to meet the costs of education. In addition, when you have a plan, it’s easier to make financial decisions that align with your goals and provide peace of mind. In the infographic, we outline 7 sources of funds for paying for post-secondary education:
Registered Education Savings Plan
Tax Free Savings Account
Life Insurance
Scholarships, grants, bursaries
Personal Loans, Lines of Credit
Government Student Loan
Personal Savings
If you need help planning to save for your child’s post-secondary education, contact us!
The Need for Personal Life Insurance
/in Blog, individuals, Insurance, life insurance /by Coulas Insurance Ltd.At different stages of life, the need for life insurance will vary, here’s a list of reasons for life insurance:
Young Singles/Young Couples- cover off any debt including debts with co-signers, final expenses, does your family history have significant health issues?
Young Family – debts, mortgage, final expenses, ongoing income needs, education fund
Maturing Family- debts, mortgage, final expenses, ongoing income needs, education fund
Pre-Retirees- debts, mortgage, final expenses, ongoing income needs, final taxes
Retirees – debts, final expenses, leave a legacy, final taxes
Why You Should Consider Critical Illness Insurance
/in Blog, disability, Family /by Coulas Insurance Ltd.If I did a straw poll, I’m sure I’d find that the majority of those asked have some form of life insurance. The reasoning behind taking out this cover is usually centered around the desire to provide protection and security to their family and loved ones in the event of their death, which is clearly an admirable objective. But, if I asked the same group of people who of them had critical illness insurance – essentially, a policy that pays out if you become too ill to work – in all likelihood the number would be much smaller.
Why is this? It makes sense on paper that people would want to sustain their level of income in the event that they become disabled or too ill to work, yet some of the most common objections include the price, a preference to save themselves for such an event (often known as being self-insured) or simply a sense of denial that this could ever happen to them.
Critical illness insurance varies from policy to policy but typical conditions that it covers in Canada includes heart attack, stroke and cancer. Unlike other types of insurance that provide income replacement, if you are seriously ill, critical illness insurance provides a lump sum benefit that can be used in any way you choose.
The benefits of critical illness insurance
Whilst taking out any kind of insurance policy comes down to personal choice and one’s own individual circumstances, many independent financial experts recognize the benefits that critical illness insurance can offer. Here are some of them:
Whilst saving and self-insuring can seem like an attractive alternative, it simply isn’t an option for many. Even if you are fortunate enough to have the means to save for such an eventuality, you would need to be able to guarantee a solid and consistent return on your investment for it to outweigh the financial benefit of critical illness insurance – some estimates put this at a rate of around 10% return for 20 years.
Whilst some employers do offer company disability plans, they typically do not pay out the full amount of your pay cheque on an ongoing basis, which can have the potential to have a serious impact on your personal finances, just when you need such a worry the least. What’s more, one of the major advantages of a critical illness policy is that, if you are able to return to work and therefore begin earning again, you still have the benefit of the lump sum that has been paid out under the policy – offering you an incomparable measure of financial freedom to potentially pay off your mortgage or put your kids through university. Essentially, offering you much more financial freedom.
In short, there are no perfect answers in the area of your personal finances, but if you are looking for an option that has the potential to offer you a real sense of peace of mind to secure the financial future of you and your family, critical illness insurance is certainly an interesting avenue to explore.
Estate Planning for Young Families
/in Blog, Estate Planning, Family, life insurance /by Coulas Insurance Ltd.Having a family is a blessing and can also bring a lot of worry. A lot of this worry can stem from not being prepared for a disaster like if something were to happen to you or your spouse.
We’ve put together an infographic checklist that can help you get started on this. We know this can be a difficult conversation so we’re here to help and provide guidance.
The Children
What will happen to the children if both parents were to pass away?
Who would take care of them and until what age?
What would happen if only parent were to pass away?
Make sure you have a will that:
Assigns a guardian for your children
If there’s an inheritance for the children, who will take care of this? Make sure you assign a trustee for the inheritance.
Always choose 2 qualified people for each position and communicate your intentions with them to ensure they’re up for the responsibility.
Assets and Liabilities
What are your assets? Create a detailed list of your assets such as: Home, Family Business Interest, Investments- Non registered, TFSA, RRSP, RDSP, RESP, Company Pension Plan, Insurance Policy, Property, Additional revenue sources, etc…
What are your liabilities? Create a detailed list of your liabilities such as: Mortgage, Loans (personal, student, car), Line of Credit, Credit card, Other loans (payday, store credit card, utility etc.)
Understand your assets-the ownership type (joint, tenants in common, sole etc.), list who are the beneficiaries are for your assets
Understand your liabilities- who’s on the hook for paying back the loan?
Make sure you have a will that:
Assigns an executor
Provide specific instructions for distribution of assets
Always choose 2 qualified people for each position and communicate your intentions with them to ensure they’re up for the responsibility.
Ongoing Needs
What are your family’s ongoing needs?
List out the living expenses
List out income needs
Do you still need to pay for school?
Determine if you have enough (assets minus liabilities) to take care of the family.
Make sure you review your insurance.
Once you determine how much need there is, review your life insurance coverage to see if it meets your needs or if there’s a shortfall.
Execution: It’s good to go through this but you need to do this. Besides doing it yourself, here’s a list of the individuals that can help:
Financial Planner/Advisor (CFP)
Estate Planning Specialist
Insurance Specialist
Lawyer
Accountant/Tax Specialist
Chartered Life Underwriter (CLU)
Certified Executor Advisor (CEA)
There are definitely unique situations in many families and things can get complicated so please use this when you feel it’s applicable.
Next steps…
Contact us about helping you get your estate planning in order so you can gain peace of mind that your family is taken care of.