Category: Blog

Death, Tax and Probate

July 2019: It’s often said that nothing in life is certain but death and taxes. Probate fees on an estate can be added to this common saying. Probate fees are paid on the fair market value of the assets held in the deceased’s estate. While obtaining a grant of probate is not mandatory, in order for certain assets (land, financial accounts, publically traded securities) to be transferred to beneficiaries and to protect the Executor and others from liability, most estates…

Critical illness insurance 101

A critical illness policy is designed to create a tax-free lump sum payment soon after the onset of a critical medical problem such as a heart attack, life threatening cancer, stroke etc. A critical illness policy pays you regardless of your ability to return to work and is paid independent of your disability coverage. One of the most common problems our clients experience upon the diagnosis of a critical illness is that they require financial flexibility over and above their…

Death Tax

DEATH TAX Death taxes are assessed by the government on your estate. Without proper planning, your heirs may lose up to  70% of your assets.  When you pass away, your estate needs to file a terminal return (final tax return). This will tax your income and the gains on your investments. Below is an overview to help you understand how tax works when you pass away and what you can do about reducing the potentially massive tax bill. 1. Income At…

What is Participating Whole Life Insurance?

WHAT IS PARTICIPATING WHOLE LIFE INSURANCE? A participating whole life insurance policy is an asset accumulation, estate, and retirement planning vehicle. It is designed to enhance the cash value in a long-term dividend interest rate earning asset class while providing guaranteed cash value and permanent life insurance. This policy is currently classified by the Canada Revenue Agency (CRA) as a tax-exempt life insurance policy for taxation purposes and we assume that the current Income Tax rules regarding life insurance will…

Changes at MD Management bothering you?

As the new year starts, some clients have been asking about the changes at MD Management, market volatility, their RSPs and corporate investments. Levine Financial Group is focused on saving physicians money on insurance. Clients often ask where do I invest my money? I have been a client of Nicola Wealth Management since 2007 with my corporate and personal investments. My returns are conservative and have far lower volatility than the market. Nicola Wealth manages nearly $6 Billion on behalf of…

OMA Insurance SLASHES its’ Annual Premium Refund

For the past 10 years OMA Insurance has been advertising its non for profit status and the Annual Premium refund on various insurance products. The OMA provides an annual premium refunds on OMA Group term 75 life insurance, group disability and office overhead insurance. Refunds are paid in December of each year. There is no refund on OMA critical illness insurance.  In December 2018, OMA Insurance quietly announced the OMA Group term to 75 life insurance refund had dropped from 58%…

How Much Life Insurance is Enough?

We have had five physicians under the age of 55 pass away in the past 12-18 months. Each owned what they thought was enough life insurance. Often, I’m asked how much life insurance is enough. Do you own enough life insurance? Clients buy life insurance for many reasons, to replace income, provide for dependents, to pay off tax liabilities, as a retirement and estate planning tool.  To answer the question of how much is enough, let’s first focus on the…

Income Splitting for Incorporated Professionals – Summary

On June 25th 2018 the government passed Bill C-74. This legislation brings new rules on income splitting and limits access to the small business deduction where passive investment income exceeds $50,000 a year. Below is a summary on the proposed income splitting tax rules (TOSI rules) for illustration and discussion purposes. For most incorporated physicians, there are two parts to what they refer to as “income”; salary and dividends. Salary. The general rule is the salary you pay an employee…

What Happens to Your Medicine Professional Corporation When You Retire?

As Physicians start to plan for retirement many ask what happens to their corporation and the assets they have accumulated inside the corporation when they retire. Below is an overview on some ideas for consideration. A corporation is a separate legal entity from you the physician and is owned by the shareholders.  The corporations’ articles of incorporation established the existence of the corporation, the shareholders’ class of shares (for example A, B, C), voting rights, share value and the different rights…

New Tax Rules: Advanced Planning to reduce tax

On June 25th the Liberal government quietly passed Bill C-74. This legislation brings new rules on income splitting and limits access to the small business deduction where passive investment income exceeds $50,000 a year. Below is a summary, the impact and advanced planning solutions. The small business tax rate is 13.5% on the first $500,000 of active business income and 26.5% thereafter. Income from passive investments is taxed at 50.17%. Under Bill C-74, income subject to the small business tax rate…