Tax-Efficient Solutions

Optimize Your Wealth

At Parkhouse Financial, our mandate is to help you grow, protect and access your wealth.

The following are some of the tax-efficient solutions in which we specialize.

Personal Solutions:

TFSAMaximizer & RRSP Freeze

You have accumulated a significant amount of RRSP investments worth at least $500,000. Even if you no longer make contributions, future growth during both your remaining income earning years and when you start to withdraw from your RRSP will lead to a significant liability as you haven't yet paid any tax on these assets. Freezing future growth from taxation by melting down your RRSP now using a personal mortgage solution will eliminate the future tax liability. And, having growth in the TFSA instead of the RRSP will then eliminate tax on this retirement designated income.

The following solutions utilize Cash Value growth within exempt life insurance policies because it is tax exempt - and at death, gets paid tax-free, as part of the insurance policy's death benefit.

Insured Retirement Plan (IRP)

A strategy designed to meet the dual need for life insurance protection now and a supplement to retirement income in the future. Overfund, i.e. deposit amounts into the policy in excess of what is required to pay the policy premium, a tax-exempt life insurance policy to create cash values by retirement. At retirement, the insurance policy can be used to secure a bank loan. The borrowed funds are received tax-free and may be used to supplement retirement income. At death, the insurance proceeds repay the loan and any excess amount is paid to beneficiaries.

Intergenerational Wealth Transfer

You have savings or extra income that you do not need for lifestyle purposes. You invest the cash in GICs or other taxable investments and earmark these investments for your heirs or favourite charity. You want a financial planning strategy that will increase the funds available when you die. This financial planning strategy requires your to use your surplus cash to purchase a life insurance policy. By replacing the taxable investments with a life insurance policy, you will increase the funds available to your heirs when you die and reduce the amount of tax you will pay today and in the future.

Corporate Solutions:

Immediate Financing Arrangement (IFA)

You need permanent life insurance protection and you also want to accumulate wealth through your company or through your investments. Deposit funds into a permanent life insurance policy. Put more money into the policy that what is required to cover the insurance. This excess creates significant cash value within your policy.

Release of Corporate Locked-in Surplus / Corporate Estate Transfer

Your company is an operating company or an investment holding company. It has retained profits or surplus cash that is not paid to you, since you do not need the income. Your corporation invests the cash in GICs or other taxable investments, which you earmark for your heirs or favourite charity. You want a financial planning strategy that will increase the funds available when you die. In this financial planning strategy, you replace taxable investments with a tax-exempt life insurance policy, increasing funds available to your heirs by reducing the amount of both current and future tax your corporation pays, and create a mechanism to move funds out of your corporation tax free at death.

Buy-Sell Arrangement

You are a shareholder of a successful, private corporation. You want your business to continue if any of the shareholders die. If you die, you want to be sure that funds are available to buy your shares and provide your estate with the liquidity it needs. You also want to ensure that if another shareholder dies, funds are available to purchase their shares to facilitate an orderly and timely buy-out. There are a number of different ways you could provide for this capital. You could establish a savings plan to accumulate the required funds, or at the time the need arises, you could use personal or corporate cash or borrow fund from a bank. A life insured Buy-Sell Arrangement is designed to provide the capital needed to facilitate the purchase of shares at death, at the time it is needed. Each shareholder is insured under one or more life insurance policies. Upon the death of a shareholder, the life insurance proceeds are available to provide the cash needed to purchase the shares of the deceased shareholder.