No one wants to be in CRA’s cross-hairs. You may be an unsuspecting victim even if you’ve done nothing wrong. We’re not talking about people who are guilty of tax evasion or tax avoidance. Your only criteria may be your marital status. If you are single, divorced or widowed, then you may be CRA’s favourite and unsuspecting victim. If you wish that CRA not be your estate’s primary benefactor, then now may be the time to do something about it.
Being Single Sucks for Tax Breaks
We’re not even talking about the apparent shortfall in tax credits available to single people versus married people. The only real tax credits available to singles is if you have kids or you move (and there are precise qualifying criteria if you move).
The significant difference in taxes between singles, divorced, or widows are when you retire or die.
Being Single and Retirement
The advantages to married couples in retirement are couples have the opportunity to income split, which can represent a significant amount of tax savings. The second advantage is with regards to receiving Survivor Benefits. If a spouse dies, the surviving spouse is entitled to any remaining work pension, CPP and Old Age Security (OAS) pension.
Being Single and Dying
The most significant windfall for CRA is if someone single, divorced or widowed passes away. In the case of married couples, investments, investment properties, pensions and any other assets owned by the couple are transferred to the surviving spouse with no taxable consequence.
If you’re single, dying triggers a liquidation of all assets. This means the single largest benefactor is likely the tax department. So the payment of income tax through the liquidation of registered investments (likely around 53.5%) or capital gains tax on non-registered investments, sale of a business and investment properties. Capital Gains is currently subject to 50% of your eligible assets.
Capital Gains Increase
The federal Liberals have been floating the idea of increasing the amount of the capital gains tax from 50% to 75%. With the number of people transferring wealth throughout the next number of years, it’s speculated that such a rise in the Capital Gains rate would generate upwards of $45 billion extra dollars in revenue for the federal government in the next five years. With the amount of additional debt that the government has incurred over the past couple of COVID years, will this proposal become our inevitable reality?
You Have a Choice on Who You Get to Pay
As much as I can’t ponder any business owner wanting to cut such a significant cheque to the tax department, there are other choices in how you can preserve your lifelong work and your financial legacy. Would you like to transfer this wealth to your family and a meaningful charity of your choice? It takes a little planning, but where would you like to see your life’s efforts land? How would you like to leave a lasting legacy in your family name? I don’t believe the tax department is not about to give you a plaque in honour of your generous cheque.
Death and Tax Credits
We’ve all heard the expression, “the only thing that is certain in life is death and taxes”. Now, your death doesn’t necessarily mean a big tax bill for liquidating your assets. By creating a legacy, you can preserve your wealth and generate a huge tax credit. By the way, the tax credit can happen when you’re living or upon your death. So what’s your preference?
What’s Your Reason?
Are you adamantly opposed to writing a cheque to the government for the wealth that you’ve created over your lifetime? Are you passionate about specific charitable causes and would like to leave a significant endowment now or in the future? Would you like to preserve your wealth for your family? Whatever the reason, there’s a strategy that can work for you and how you keep your wealth through estate planning.
Through the bankruptcy of his first business, a strong balance sheet means nothing unless you can get the money out of your business and into your hands personally, tax efficiently, and creditor protected. Chris helps and coaches business owners to avoid a similar fate as he suffered in his first business.
Through several clever strategies, he illustrates how these little-known vehicles can get money out of your business efficiently, build your corporate brand and create a legacy through charitable means to help make a meaningful difference in the lives of others.
Also, he has seen the impact that mental health can have upon success within your business and your life and how the two are on a constant collision course. When Chris became aware that Entrepreneurs struggled with their mental health at more than twice the rate of average adults, he realized he wasn’t alone and made it his ambition to understand why and do something to help. His business, The Finish Line Group, aims to help support the entrepreneur’s financial, philanthropic, and emotional needs.
Chris’ Why Statement remains, “To openly communicate the lessons learned from my past so that others will thrive in their lives, minimize their setbacks and leave a positive and lasting legacy.”