Happy New Year and welcome to the second edition of the TAAG Quarterly. We were very pleased with the response to our initial edition. If you missed it, you can access it here. Our first edition included articles on the importance of interest rates; strategies for countering Canada's new capital gains rules; an introduction to TAAG Law’s unique concept of entrepreneurial law; and a description of TAAG Marketing and Design’s Virtual Chief Marketing Officer service.
In this edition we provide food for thought for how businesses and individuals can reduce their tax obligations. A recurring theme is having a plan. As we enter a potentially volatile financial environment in 2025, it is essential to take into account all the risks and opportunities that lie ahead.
One article in this TAAG Quarterly provides options for business owners to employ more tax effective means for taking income from their business. A second article describes the advantages of secondary wills for eliminating probate taxes. A third article encourages the use of proven strategies for getting better returns that go beyond traditional accounting and wealth management offerings.
For better planning, we provide a summary of key CRA deadlines and information for 2025.
In the first edition of the TAAG Quarterly, we asked the question: What will be the most important issue facing Canadians in the next federal election? Not surprisingly, an overwhelming number (60%) said that it was the economy. Most elections, including the recent one in the U.S., really come down to “bread and butter” issues. Other issues generally take a back seat when the ordinary voter enters the polling booth.
For this TAAG Quarterly, we ask a question about a recent federal government policy:
Is the two-month GST/HST holiday for certain goods a good idea for Canadians and the economy?
You will find the survey at the end of this newsletter
I hope you enjoy this edition of the TAAG Quarterly.
Ian Sadinsky
Editor, TAAG Quarterly
Don’t Get Shortchanged Paying Yourself
Business owners spend a lot of time and effort calculating what they should pay employees, suppliers, and sub-contractors. Unfortunately, many are too busy running their businesses to figure out the best way to pay themselves.
Why is this important? Choosing the optimum way to pay yourself can lessen your personal tax burden and also affect the financial health of your business. Cashflow is the livelihood of most companies. So how and when you take money for yourself is important.
There are many sophisticated ways to organize your personal “take home” pay. But the three most common approaches are: salary-only; some combination of salary and dividends; and dividends-only.
The salary-only option is for those who prefer simplicity and/or are concerned about meeting their personal income needs. Many businesses just starting off fall into this category. Basically, owners treat themselves like regular employees. They pay themselves what they can afford while their businesses get off the ground.
A combination of salary and dividends can be a more tax-efficient approach as a business matures. Owners pay themselves a reasonable salary that takes into account both tax and superannuation considerations. Some or all of excess business income is then paid out in the form of company dividends depending on both personal and business cash flow requirements.
A dividends-only approach becomes attractive as a business becomes highly profitable and the owner does not need regular cash flow for personal expenses. Focusing on dividends can minimize the owner’s personal tax liability. The company can decide how much and how often dividends should be paid.
A regular TAAG client was able to reduce personal tax liability by switching from a salary-only structure to a combination of salary and dividends. This change allowed the client to take advantage of the lower tax rate on dividends while maintaining a sufficient salary to cover living expenses and retirement obligations.
Some clients may be hesitant to make a change because of a lack of understanding of tax implications; a fear of increased complexity for balancing salary and dividends; and/or concerns about maintaining a healthy business cash flow. There may also be a psychological factor of “how much can I afford to pay myself?”. These are all legitimate areas of concern.
Entrepreneurs should consult accountants for business finances and tax planning purposes; financial advisors for investment strategies; and legal professionals for advice on any business restructuring matters. Fortunately, TAAG is a multidisciplinary firm with all these functions under one roof. Clients can receive integrated advice for the full scope of their business and personal goals in a timely fashion.
You put a lot of your time, energy and soul into your business. Why shouldn’t you be paid fully?
For more information on how TAAG professionals can assist you, contact us at reception@taag.ca.
Andrew Abraham
Chief Executive Officer (CEO) at TAAG
Leveraging a “Secondary” Will to Avoid Probate on Your Estate
It is frustrating to know that you can work hard your entire life, pay all of your taxes, and upon your passing, your loved ones will incur a capital gain to receive your estate. Then the government will give you the parting gift of one final tax: probate.
Probate is the fee a court charges your estate to validate your will and authorize your executor to carry out your instructions, typically about 1.5%. In Ontario, this means that passing a $1.0 million property to your children could incur about $30,000 in land transfer tax and probate fees alone, and then capital gains on top of that!
You may already know that having a will is a critical estate-planning tool to provide clear instructions, avoid some unnecessary taxes, and leave more of your hard-earned wealth and legacy to your loved ones. A lesser-known tool is the “secondary” or “corporate” will.
Not all property is required to go through probate. It can be passed to your beneficiaries without a court validating your executor’s authority to deal with the property. Because most people do not know about this, all their property gets caught up in their Primary Will and tens to hundreds of thousands of dollars are needlessly thrown away. The following types of property may be passed through a Secondary Will instead:
As Canada’s first Entrepreneur Law™ firm, TAAG Law specializes in leveraging solutions from across the legal landscape to maximize our clients’ wealth retention from what is a seemingly unending stream of taxes, fees, and other punishments by government against their success.
Secondary Wills are an incredibly powerful tool for entrepreneurs who are business owners and/or real estate investors. Such entrepreneurs often have significant portions of their wealth in their businesses and/or companies holding title to their investment properties. When these core assets pass via a Primary Will, it is an additional 1.5% of your company or real estate portfolio thrown right out the window. To make matters worse, if your estate or beneficiaries do not have the cash for probate, they will likely be forced to sell part of your estate to pay it!
The Secondary Will can be particularly useful for passing on real estate investments. Where real property is held by a corporation, the transfer of shares (usually) does not attract land transfer tax. And if you put these shares into your Secondary Will, you can further optimize matters by avoiding probate as well.
If you are a business owner or real estate investor and you do not have a Secondary Will, or maybe even a Primary Will, we encourage you to speak with your solicitor or contact TAAG Law for a free consultation.
Take charge of your legacy and pass it to your loved ones, not to the government.
To schedule a consultation, please email TAAG Law’s Managing Director, Andrej Litvinjenko: andrej@taag.ca.
Andrej Litvinjenko
Managing Director and Lead Counsel at TAAG Law
The Keys to Wealth Management: Having a Plan and Diversifying
For many individuals, the whole idea of wealth management can be daunting. As any seasoned investor knows, the first rule of successful investing is to have a plan. The second is diversification.
Proper wealth management requires detailed planning, not only of one’s investments, but also a longer-term analysis of one’s lifestyle, responsibilities, goals and dreams. An investment plan must be customized to fit each individual’s needs, covering possible risks, budgeting for both the short- and long-term, including consideration for retirement.
For any investment plan to achieve true diversification, it must include a variety of options; GICs and mutual funds alone simply are not sufficient. A study of ultra-high net worth individuals by Capgemini showed a fairly even division of investible assets amongst publicly traded equities, real estate, fixed income, alternative investments, and private investments that included credit instruments, Real Estate Investment Trusts (REITs) and non-public equity.
Through our preferred network of dealers and advisors, TAAG Family Office is able to offer investors access to all the asset classes required for a properly balanced, risk-adjusted portfolio. For example, Saskatchewan farmland with a 12.7% compound annual return over the past 20 years and no years of negative return; a private equity fund containing pre-IPO, tech companies including Open AI, Anthropic, and Turo; or private credit instruments that use rigorous risk mitigation processes to provide an average annual return of 12%. You won’t find any of these opportunities at your local bank!
To arrange for a consultation, please contact our financial advisors at familyoffice@taag.ca
Colin Keddy
Director of TAAG Family Office
Important CRA Information for 2025
Staying informed about upcoming deadlines set by the Canada Revenue Agency (CRA) is essential for individuals and businesses. Missing these deadlines can result in penalties and interest charges. Here’s an overview of the key CRA deadlines you should mark on your calendar for 2025.
However, monthly and other arrangements are possible. With careful tax planning you will be well prepared for the year ahead.
Is the two-month GST/HST holiday for certain goods a good idea for Canadians and the economy?
Please click below to send us your response.
We hope you enjoyed this edition of the TAAG Quarterly. If you would like to send any feedback or comments regarding this issue or future ones, contact Ian Sadinsky at ian@taag.ca.
