Canadians: A Trance of Deception
Adrian C. Spitters FCSI?, CFP?, CEA? President, Author, Private Wealth Advisor
I Execute Tax-Efficient Investment Portfolio Solutions So That Your Business, Family, And Estate Assets Are De-Risked And Protected Against Financial Risk, Economic Threats, Inflation And Higher Taxes.
Guest Contributor: Peter J. Merrick, TEP
How the Canadian Government is Corralling Business Owners into Financial Slavery...
Did you know that in hypnosis, the way to put someone into a trance is to overwhelm their senses so they get completely confused and have to turn inwards into their minds to make sense of it all? With that external confusion, they become more suggestible. This is no different from what the Canadian federal government and their controllers are doing to Canadians right now.
The Capital Gains Inclusion Rate Hike
Canadians, it's time to wake up. The Trudeau government’s decision to increase the capital gains inclusion rate (CGIR) from 50% to a staggering 66.7%, effective June 25, 2024, is not just another tax hike. It's a calculated move designed to cripple the financial independence of hardworking Canadians. For those of you who have invested time, effort, and money into building your wealth, this is nothing short of an attack on your future.
The Push Towards Corporate-Owned Life Insurance
Canadian business owners are being corralled into purchasing Corporate-Owned Life Insurance (COLI). This is not an accident. The government knows exactly what it is doing. By overwhelming us with these changes, they are pushing us into a state of confusion and compliance. With the increase in CGIR, they are forcing our hands into using COLI as a means of financial survival, creating a temporary solution that will be costly to unwind in the future.
The Mechanics and Benefits of COLI
You might ask, what is so special about COLI? The gains within COLI policies are not taxed. The after-tax corporate investment into COLI is fully eligible for the Capital Dividend Account (CDA). The CDA, as defined in the Canadian Income Tax Act, allows for certain types of non-taxable amounts received by a corporation to be paid out to shareholders as tax-free capital dividends. This includes the death benefits from a COLI policy.
The Strategic Use of COLI
I have spoken to tax professionals across Canada, and they all tell me the same thing: the only way for business people in Canada to shelter their money from heavy government taxation is by utilizing their corporations to take their retained earnings and place them into a COLI policy. This allows the money and growth within the policy to be sheltered from tax. It enables the owner of the company to use life insurance as collateral for personal loans so they can access the money while alive. When they die, the money from the death benefit from the COLI policy can be paid out through the capital dividend account tax-free, effectively paying off personal debt and benefiting the heirs in the most tax-efficient manner possible.
Government Awareness and Future Risks
The Canadian government knows what insurance does, don't think they don't. It is a governmental policy that is written into the Canadian Income Tax Act. So why, after a relentless onslaught of attacks on Canadian businesses with corporate tax changes that targeted passive earnings and prevented much income splitting of corporate earnings with family members, would the government allow and not touch how insurance death benefits are treated for tax purposes? How is it that a building held in a corporation is subjected to this CGIR increase, but death benefits paid out from a COLI policy are not?
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Potential Policy Changes and Their Impact
From all the attacks on the middle class and business owners in Canada over the past decade, I am not a fortune teller, but I can tell you this: too many insurance agents have been pushing COLI for retained earnings for the benefits. There is no way I can see the government allowing tens of billions of dollars to escape the taxman for long. When the Canadian government removes the capital dividend account eligibility for corporate-owned life insurance policies, this will be more costly for business owners than if they had not purchased these policies in the first place.
The Call to Action
Canadians, we are being hypnotized into financial compliance. The Trudeau government's tax and other policies are designed to confuse and control us, making us more suggestible and compliant. But there are solutions. I left Canada in 2019, and I have developed strategies for Canadian expats who, like me, see the future and want to protect their wealth. If you want to take your money out of Canada while you still can, you need to act now. Canada will be one of the first countries to implement Klaus Schwab's vision, where you will own nothing and be happy.
Next Step:
If you need guidance on safeguarding your financial future, contact me by scheduling a meeting. If you value your financial freedom and independence, reach out. Together, we can develop strategies. Don’t be the frog that stays in the pot. Be the one that jumps out while there’s still time. To schedule a complimentary introductory meeting with Peter J. Merrick, CLICKING HERE.
About the author. Peter J. Merrick, TEP, is a Commentator/Keynote Speaker & Expert in US/ Canadian/International Cross Border and Estate Planning and Insurance & Annuity Planning - Author of The Business Novel - The King of Main Street. To read reviews, please click here.
Who is Peter J. Merrick, CFP, TEP?
Over three decades, Peter specialized in de-risking and saving his clients up to 40% of their wealth that would have otherwise been paid out because of poor planning. These proven solutions effectively shelter income, reduce taxes on income and estates and defer or eliminate tax on investments and creditor-proof assets for domestic and international clients.
Peter is also an author.
Peter has written three comprehensive LexisNexis business, legal, tax, succession and estate planning textbooks. For 18 years, Peter wrote a column for LexisNexis called "The Bottom Line," one of the largest professional tax and accounting publications.?Peter was also a university and college finance and financial planning lecturer for over 12 years.
In 2019, Peter relocated to San Diego, California, from Toronto, Canada. Right now, he sees a number of wealth-saving opportunities resolving long-ignored issues for Canadians in corporate planning, cross-border US and international planning, financial, philanthropic, and estate planning implementation, utilizing Canadian/US Life Insurance and Canadian/US Annuity strategies.
Peter works with high-net-worth individuals and their legal, tax and financial professionals performing Canadian estate freezes and terminal tax planning, as well as those who seek to relocate to the US or have financial interests in the US from places like Canada and other national jurisdictions.
It is absolutely essential that you partner with and work with an expert familiar with the Canadian Income Tax Act, the IRS Tax Code, and US/International Tax Treaties before implementing any strategy in the areas of Canadian estate freezes, terminal tax planning, and cross-border planning.
Let's set up a complimentary introductory meeting with Peter J. Merrick to review your policies by CLICKING HERE.
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