Article Tools
Episode 16 – Talking Taxes and Retirement Planning
Ian: Welcome to the Business Coach Podcast, an advice-oriented series for Canadian entrepreneurs. I’m Ian Portsmouth, Editor of PROFIT Magazine and I’ll be your host as we tackle the hot issues and opportunities facing Canada’s small businesses.
We’ve developed this Podcast in cooperation with BMO Bank of Montreal. Over the course of this series, I’ll be drawing on experts from a number of fields including some BMO experts in order to provide the credible information and prescriptions you need to run your small business better.
In this episode of the Business Coach, we’ll talk taxes or more specifically, how you can pay less tax. We’ll also talk about how entrepreneurs can build a bigger retirement nest egg faster. And here to provide his expertise on the subject of tax and retirement planning for entrepreneurs is Peter Merrick, President of RRSPUpgrade.com in Toronto. Peter is not only a Certified Financial Planner and Financial Management Advisor but also a recipient of the Fellowship of the Canadian Securities Institute which is Canada’s highest honor in the financial services industry. He is also a professor at Ryerson University, a frequent media commentator on Wealth Management for business owners and the author of The Essential Individual Pension Plan Handbook. Peter, welcome to the Business Coach.
Peter: Thank you very much Ian.
Ian: We’ve recently heard the recent federal mini-budget. Can you point to any items of specific interest to entrepreneurs in the recent federal mini-budget?
Peter: Well, it’s pretty exciting. For one, corporate income tax rates are going down for small businesses, it’s proposed by 2012, the rates are going to go down to 15% which is phenomenal because they were in the high of 22%. Starting in 2008, January 2008, corporate business rates are going down to 19.5% in Ontario which is fantastic, it’s a percent [inaudible] of what the government had scheduled. So that’s one real benefit for business owners. Number two if you have, the personal exemption is actually going up by $500 as well, that was not expected. And one other thing, Ian, that was really great about the last budget back in March, is entrepreneurs are going to now have a lifetime capital gains exemption of $750,000, and that’s an increase of $250,000 which is used to be $500,000 lifetime capital gains exemption. So those are the things I am excited about and I know business owners across the country are excited as well.
Ian: And that last item, the capital gains exemption is very important these days because so many business owners have indicated that they want to exit their businesses up in the next five to ten years.
Peter: There’s been studies that show that 15% of business owners are with anywhere from five to 10 ten years of retiring or wanting to retire. So you’re exactly right.
Ian: That’s terrific advice. So tax planning is supposed to be a year round activity and for those of us who aren’t so good at eating our vegetables so to speak, can you name a couple of things that an entrepreneur can and maybe should pay special attention to at the end of the year?
Peter: Well, again, you hit the nail on the head. Planning begins basically when you file the last tax return. In essence, it should also be going, not just looking at today, next year, but also what is your exit strategy. And when an entrepreneur sits down with their accountant or plans, they should be addressing three questions for themselves, and so should their accountant to be asking them. One should be whatever they are doing is it for their consumption needs today, is what they are doing for their retirement needs or for estate planning because depending on what the entrepreneur’s answer is, different solutions make sense for them.
Ian: And what is your favorite tax minimization strategy for business owners?
Peter: My favorite for business owners happens to be the Health and Welfare Trust.
Ian: And what is involved in creating such a trust?
Rate this article
