WEALTH COACH FOR THE HEALTH COACH

Transcription

1 WEALTH COACH FOR THE HEALTH COACH

2 Disclaimer Is provided by Investors Group Financial Services Inc. (In Quebec, a financial services firm). Is provided by Investors Group Securities Inc. (In Quebec, a firm in financial planning). Is presented as a general source of information only, and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact an Investors Group Consultant Although we have tried to ensure the accuracy of this information, tax laws change frequently so the provisions and exemptions mentioned in this presentation may change. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual Funds are not guaranteed, their values change frequently and past performance may not be repeated. A financial plan is based not only on the accuracy of the information provided by the client, but also on certain assumptions that may or may not be accurate. Accordingly, the results presented in a financial plan are based on projections that may significantly change if these assumptions are inaccurate. Therefore, it is important to monitor your financial plan and to update it frequently. Trademark owned by IGM Financial Inc. and licensed to its subsidiary corporations.

3 Needs Pyramid Open for Business Owners Presentation at BES Toronto

4 When Financial Advice is Needed

5 Goals

6 Concerns What if you didn t wake up tomorrow? What if you became disabled, unemployed, or unable to work? Who do you want to help educate? Do you have your arms around what that is going to cost you? Would your parents want to help? Are your parents still living? If so, would you be expected to contribute to their support some time in the future? And have you thought that you might need some nursing care? How and when do you plan to retire? What are you going to do when you get there and how much is it going to cost you to do it? Not just the day after, but 10, 20, or 30 years later?

7 Concerns Continued How important is it for you to interfere in the financial lives of your children? While you are still living? As a legacy? Or both? Is there a charity that you care deeply about that you would want to help? While you are still living? As a legacy? Or both? Let s assume like we have to that when you are gone half of your estate is going to be taxed away. Would you like your children to sell something that you probably didn t want them to sell just to pay for that tax?

8 Delivering your comprehensive solution

9 Survivor Philosophy What is the biggest asset you own? YOU. Protect your income while you are paying off the home. Protect your income while you are raising kids to at least age 25.

10 Risk Management What You Need DI TERM CI PERM LTC Medical & Dental Emergency Account Line of Credit Age

11 Risk Management How Much You Need Personally

12 Life Insurance Options

13 Living Benefits

14 Disability Insurance

15 Top Disability Claims Manulife Presentation

16 Disability Made Simple Manulife Presentation

17 Employee Benefits Group Plans

18 Personal Health Insurance

19 Running a Business What opportunities exist to plan more efficiently as a small business owner?

20 Running a Business Philosophy Treat yourself like a business already and you will become one.

21 Incorporate Business Pros Limited Liability Corporation is a separate legal entity from its owner Owner s personal assets are protected from creditor & legal claims against the corporation With limited exceptions (i.e. director liabilities for source deductions & HST & for professionals) Tax Incentives Low tax rate on first $500,000 of taxable income Lifetime capital gains exemption ( CGE )

22 Types of Corporations Public Corporation Private Corporation Canadian Controlled Private Corporation

23 Active Income Earned in a CCPC Three Federal and Provincial Categories Income eligible for: Small business deduction ($500,000) Manufacturing and Processing deduction (some provinces) General active tax rate

24 2018 Tax Rates Active Income

25 Investment Income Investment Income Includes: Interest Dividends from non-canadian Corporations Foreign Investment Income (non-business) Most Rent Royalties Taxable portion (1/2) of capital gains Does not include dividends from other Canadian Corporations

26 2018 Tax Rates for CCPCs Investment Income

27 2018 Federal Tax Rates for CCPCs Investment Income

28 Taxation of Canadian Dividend Income Dividends received from other Canadian corporations Subject to a federal part IV refundable tax Flat tax rate of 38 1/3% No provincial tax No tax if inter-corporate share ownership> 10% by both votes and values* Be aware of safe income rules *unless payer receives dividend tax refund

29 Integration of Corporate and Personal Tax With perfect integration, individuals should be tax indifferent between: Carrying on business through a corporation, or as a sole proprietor, or member of a partnership; Earning investment income personally or through a corporation

30 2018 Investment Income - Ontario

31 2018 Investment Income Ontario Example Invest Personally $71,330 Earned - $38,183 Personal Tax $33,147 To invest 15 years at 6% Invest Corporately $71,330 Earned - $10,700 Corporate Tax $60,631 To invest 15 years at 6% $771,530 A 83% Increase $1,411,234 Corporate tax rate = 15%* personal tax rate = 53.53% ** *marginal tax rate on active income up to $500,000 **marginal tax rate on personal income greater than $220,000

32 2018 Investment Income Ontario Example Continued Paid as Income and Invested Corporate Investment $25,000 - $11,602 personal tax $13,397 to invest 15 years 6% $330,538 Invested=$200,955 A 42% Increase $25,000 - $3,875 corp tax $21,125 to invest 15 years 6% $521,207 Invested=$316, year payout 6% 25 year payout 6% $21,970 annual after tax income $31,299 annual after tax income

33 2018 Life Insurance Premium Ontario Example How to Pay Life Insurance Premiums Life insurance premiums of $10,000/yr Pay Premiums personally vs Corporately? Fund Personally $21,519 Salary - $11,519 Income Tax $10,000 Premium paid Fund Corporately $11,765 Business Income - $1,765 Corporate Tax $10,000 Premium paid $9,755 Savings/year 45% Difference Corporate tax rate = 15%* personal tax rate = 53.53% ** *marginal tax rate on active income up to $500,000 **marginal tax rate on personal income greater than $220,000

34 2018 Cost/Benefit Incorporation

35 Tax Savings (Cost) of Incorporation

36 Tax Deferral (Prepayment) from Incorporation

37 Corporate Taxation Used to be so Simple

38 And Then Came July 18, 2017 and October 2017

39 And Then Came July 18, 2017 and October 2017

40 And Then Came July 18, 2017 and October 2017

41 Passive Income What Was the Issue? Government concerned that funds taxed at preferential rates and retained by corporation were not being reinvested in active business Small business rate not intended to allow for more passive investment accumulation Measures introduced reflect this as the two are now linked Passive Income earned over threshold affects small business deduction limit

42 Passive Income - New Measures Measures passed into law on June 21, 2018 New small business deduction limit reduction Every $1 of passive income > $50,000 threshold = $5 loss of SBD limit Current year passive income affects following year s SBD limit $50,000 threshold is shared amongst associated corporations SBD limit fully eliminated once passive income exceeds $150,000 ($150,000 - $50,000) X 5 - $500,000

43 What is Considered Passive Income? New measure defines passive income as adjusted aggregate investment income (Aaii) Aggregate investment income (Aii) Existing concept Defined as taxable capital gains net of taxable capital losses plus income for the year from a source that is a property: interest, rents, royalties, and foreign income. Also includes policy gains on life insurance policies. Aaii = Aii + additions - exclusions

44 Aggregate Investment Income

45 Adjusted Aggregate Investment Income

46 Adjusted Aggregate Investment Income Continued

47 Effect of Passive Income Earned Above Threshold

48 Is It Beneficial to Pay Salary or Dividends to Avoid the SBD Grind?

49 If I Need More Money for Personal Consumption Once I ve Paid Enough Salary to Maximize RRSP Room, Do I Pay Salary or Dividends?

50 So Should the Corporation Pay Salary or Dividends?

51 So Should the Corporation Pay Salary or Dividends? Continued

52 Insurance for Business Owners

53 Risk Management How Much You Need Corporately Risk Management of Human Capital Temporary or Permanent Risk Matching Principle Types of Risk Buy-sell Key Person Debt Retention Risk Employee Benefits

54 Risk Management Corporately What to Consider?

55 Risk Management Corporate Human Capital and Third Party Solutions

56 Buy-Sell Provisions of Shareholder Agreement 3 keys to success Agreement to bind the shareholder to action Valuation method Funding source What is the advior s role? Discuss the trigger events such as Death, Disability or Critical Illness Valuation method Terms

57 Life Insurance, Disability Insurance, and Critical Illness Trigger events with third party solutions Life, Disability, and Critical Illness Life is straightforward easier sale +$50 Million DI ($2 Million max per shareholder exception may get $4M ) No CDA for share repurchase Personally Owned Personally paid Corporate Owned Corporate paid CI ($2 Million max per shareholder) Is a CI event a proper trigger event for sale? No CDA Corporate Owned? Taxable repurchase

58 Key Person Insurance Life Easy to underwrite, Easy to quantify Cost for Temporary protection is inexpensive Disability Difficult to underwrite Mission Critical Max 10% ownership of company Consider Business Overhead instead Tax deductible premiums Critical Illness Easier to write Smaller amounts

59 Debt Protection Life Premium deductibility by owner under the ITA 20(1)(e.2) Lesser of Premiums or NCPI Deduction is limited to loan face amount to coverage ratio Interest expense must be tax deductible and insurance requested by restricted financial institution Disability Only covers payments for max period 2 years Maximum payment amount, Elimination period Not tax deductible Critical Illness Maximum coverage per person Not tax deductible

60 Employee Benefits Life Taxable benefit for premiums Death Benefit is tax-free Disability Wage loss replacement program benefit is taxable Premium deductable by corporation and no taxable benefit to ee Min 2, Employees Create a class of employees must include future hires if in class Critical Illness Grouped Arrangements December 2012 Taxable benefit for premiums Benefit is tax-free

61 Health Care Spending Account Carve Out HCSA Carve out plan requires the following: Life AD&D Prescription Drugs Out Of Country Private Duty Nursing The following can be removed from a the more traditional insured plan Vision Hospital Professional Services Dental Please note in the Plan Advisor Feature sheet, the allocations per member and admin fees are the old amounts. They are now $500/employee and 8% admin fees. To find out what more could be covered under an HCSA you can go to and search Medical Expense Tax Credits.

62 Insurance for Estate Planning

63 Insurance for Estate Planning Total Tax Pensioner Base Plan (2008) (Mr & Mrs) $250,000 $225,000 Total Tax $200,000 $175,000 $150,000 Amount $125,000 $100,000 $75,000 $50,000 $25,000 $ Year

64 Estate Bond Financial planning strategy that allows you to provide a larger legacy Funds earmarked for heirs are invested in an exempt life insurance policy Funds Grow in a tax sheltered environment Upon death, heirs receive estate proceeds Tax-free Benefits Large, immediate estate value Tax sheltered growth of cash values Tax-free maturity value at death

65 Net Estate Comparison Pensioner

66 Estate Analysis

67 Insurance for Retirement Planning

68 Income from an Insured Retirement Program (IRP) How It Works Client purchases an exempt life insurance policy single or JLTD and deposits excess funds above the policy charges At retirement the policy is used to secure a loan, structured as a line of credit Client receives borrowed funds tax-free to supplement income At death, the insurance proceeds repay the line of credit and excess insurance proceeds are paid to the client s beneficiary(s)

69 Who is the Ideal Candidate for an IRP and/or Estate Bond? Clients ages in good health Need for permanent insurance protection (estate taxes, legacy) Have excess funds available to invest employment income or non-registered investments Want to supplement their retirement income and/or preserve estate Have maximized other tax shelters TFSA, RRSP/pension Receptive to long-term planning strategies & not adverse to debt

70 Inspiring confidence for over 90 years

71 Uniquely positioned

72 World-class partners

73 IGM leadership in the community * *As of August 2018.

74 Delivering You Comprehensive Solution *

75 Our Wealth Advisory Team Strategic, client-centric and ready to help REGIONALLY LOCATED CORPORATE SPECIALISTS Patrick Buscar BA,CFP Division Director and Financial Consultant IG Wealth Management Juliet Morris BA, CPA, CMA Consultant IG Wealth Management Sue Yi Associate IG Wealth Management David Seo Associate IG Wealth Management Olena Beshley Division Assistant TJ Deihl Insurance Planning Specialist I.G. Insurance Services Inc. Sam Marchio BA, CIM Wealth Planning Specialist IG Wealth Management Securities Inc. Lena Tran Mortgage Planning I.G. Investment Management, Ltd. IG Wealth Management

76 Wealth Advisory Team - Biography Patrick Buscar Financial Consultant and Division Director As a family man with a child in post secondary, child in high school, and child at home Patrick finds time to manage his career as a financial consultant with his love of dancing, watching movies, and basketball. He received his honors economics and financial management degree with minor of geography from Wilfrid Laurier university in He has lent his time as a Halton Women s Place volunteer and sponsor. He has increased his knowledge by earning his CFP in 2007 and gives back to his profession by mentoring and coaching new consultants beginning in 2009 in Brampton and again in 2014 in the Burlington office. He is motivated by exceeding the expectations of his clients and cares deeply about building relationships in the Burlington community and in the surrounding GTA. He is in this business to help people, to educate, pursue his Wealth Management interest, the lifestyle it provides for his family, and his belief in comprehensive Wealth Management. He works with high net worth, families and professionals, and business owners. He is competent, compliant, in a convenient, comprehensive way. People want to work with him because he and his team are timely, get stuff done, believe in his planning philosophies like providing clarity about whether they can at least live their current lifestyle in retirement, protect them from the unknown, and help them get through life without worrying about money.

77 Wealth Advisory Team - Biography Juliet Morris, CPA, CMA Consultant Juliet joined IG Wealth Management with a wealth of business experience. As a CPA, CMA her expertise as a financial professional lends itself to helping small business owners and professionals navigate the complexities of managing their finances. Juliet takes a comprehensive approach to financial planning which incorporates analysis of tax, retirement, investment, cash flow, insurance and estate planning. She works with each individual client to uncover their unique goals and concerns to bring about a customized financial plan.

78 Your Team of Professionals We are supported by a team of professionals with specialized expertise in tax and estate planning, securities, insurance protection, investment lending, business succession planning and more. Often we will involve your own personal advisors to ensure a coordinated approach. Patrick Buscar, BA, CFP & Juliet Morris CPA, CMA Financial Consultant IG Wealth Management

79 Our Process: Creating a Living Plan We deliver personalized advice that goes beyond numbers. We take time to understand what truly matters to you.

80 A Moment of Truth (yes / no)

81 Our Commitment to You We commit to putting your best interests and financial needs at the heart of everything we do, every day. We are one of Canada s largest wealth managers. Our clients have exclusive access to the leadership and expertise they ve come to expect. Our team based structure allows us to provide the focus and vision of a small firm, while leveraging the strength and breadth of a global company.

82 Questions?

83 Contact Patrick Buscar, BA, CFP Division Director and Financial Consultant Juliet Morris, CPA, CMA Consultant

84 Thank you This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. (Insert name of Consultant) is solely responsible for its content. For more information on this topic or any other financial matter, please contact an IG Wealth Management Consultant. Insurance products and services distributed through I.G. Insurance Services Inc. (in Québec, a Financial Services Firm). Insurance license sponsored by The Great-West Life Assurance Company (outside of Québec). IG Wealth Management Trust Co. Ltd. is a federally regulated trust company and is the mortgagee. Mortgages are offered through I.G. Investment Management, Ltd.* Inquiries will be referred to a Mortgage Planning Specialist (in Ontario, a Mortgage Agent, and in Quebec, a Mortgage Broker). *In NB & ON, registered as a Mortgage Brokerage (ON-License #10809) and Mortgage Administrator (ON-License #11256), and in QC, registered as a Mortgage Brokerage Agency (QC-License #H1336). Trademarks, including IG Wealth Management, are owned by IGM Financial Inc. and licensed to its subsidiary corporations. Brokerage offered through IG Wealth Management Securities Inc. (in Québec, a firm in financial planning) Banking products and services are distributed through Solutions Banking TM. Solutions Banking products and services are provided by National Bank of Canada. TM Solutions Banking is a trademark of Power Financial Corporation. IG Wealth Management and design are trademarks owned by IGM Financial Inc. and licensed to its subsidiary corporations. National Bank of Canada is a licensed user of these trademarks. GICs issued by IG Wealth Management Trust Co Ltd., and/or other non-affiliated GIC issuers.