An Alberta business owner contributes over $200,000 annually to corporate-owned insurance

The situation

He had accepted that a near-50% rate on his investment income was the price of being a successful Alberta business owner. He had done everything his accountant told him to do: skip the extra dividends, leave the money in the company, build retained earnings. What nobody had raised was that once passive income clears $50,000, the small business deduction starts grinding, and the surplus was being taxed as if it were idle money instead of the next generation's capital. His words were "I don't mind paying my tax, but I don't see the value in the taxes I'm being forced to support." The advisor reviewed over $2 million of surplus held in taxable corporate accounts.

What the advisor describes

• Over $200,000 a year moves out of taxable corporate investments on a 10-year funding schedule.
• Growth inside the contract is not taxed each year and does not feed the $50,000 passive income grind.
• He can still reach the money by borrowing against the cash value or withdrawing at his discretion.
• The death benefit pays out through the Capital Dividend Account, largely tax-free to the next generation.

Where it left them

He is ten years into a plan he can see the end of. Over $200,000 of surplus leaves the near-50% environment every year, the growth on it is no longer taxed annually, and his operating companies keep their small business deduction. He can still reach the capital through collateral borrowing or withdrawals, which means he did not trade access for tax treatment. And when he dies, the money reaches his children through the Capital Dividend Account instead of through a tax bill.

Michael Sidhu

360 Degree Wealth Strategies

Alberta · Preserve Wealth Group network