Tax related planning
The structure of Bob’s finances is relatively straight forward. He has and will continue to accumulate wealth in three distinctive "buckets" or "pots" (1) He has accumulated fairly significant amounts of personal investment assets in both non registered and registered accounts. This is a function of his success in business and the incomes and bonuses that he has enjoyed over the past number of years. (2) He has also accumulated a fairly significant amount of investment assets in his holding company. This is a result of his and Bob’s business success. They have retained fairly significant amounts of income within their companies over the past few years (to take advantage of the 16% small business tax rate). Rather then leaving the surplus cash in the operating company they have chosen to have it distributed to their holding companies. (3) He and Bob have built a successful, profitable business that carry’s significant value. From a tax planning point of view there are three areas that I will focus on: The first two are areas that I understand the tax accountant has already introduced to Bob. For this reason I will keep our discussion relatively general. I expect our thoughts to be relatively consistent with the tax accountant’s.
Return to Managing
How should Bob and his family structure their ownership of "his" holding company; Where within the corporate structure should the retained investment assets be held; How to use insurance products within his personal and corporate structures to defer and reduce tax on growing values;
Families make changes to the ownership of their companies for various reasons. One common purpose is to allow other persons to share in the growing value of the company. A second is to allow others to share in the distribution of income.
