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Tax Considerations for Corporate Life Insurance & Estate Planning
Most corporate life insurance is sold on one headline: “tax-free death benefit.” For private corporation shareholders, that is only step one. The real outcome is net-to-estate—what the estate can actually receive after CDA limits, share-valuation tax, and post-mortem sequencing effects are accounted for. Below are three friction points that warrant serious consideration, as they can
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Rethinking IFAs: What Accountants Should Consider After Bill C‑59
Print Version The recent GAAR amendments enacted through Bill C-59 mark a turning point for Immediate Financing Arrangements (IFAs). While previously tolerated due to sequencing and legal form, these leveraged insurance strategies could now be exposed to reassessment on the basis of economic substance and purpose. For accountants advising clients with IFAs—or considering one—the deductibility
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The End of an Era? Why GAAR Now Puts Premium Financing on Shaky Ground
For years, Immediate Financing Arrangements (IFAs) have been promoted to high-net-worth Canadians as a tax-efficient way to fund permanent life insurance. The model relies on a simple premise: pay a large insurance premium out of pocket, then obtain a loan secured by the policy to “replenish” that capital. Rinse and repeat. The borrowed funds are
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A Tale of Two Policies – The Impact of Policy Structure on CDA
When evaluating corporately held life insurance policies, many focus solely on the death benefit and premium schedule. However, two policies with identical premiums and death benefits can result in vastly different net value to your estate. The key difference lies in how each policy impacts the Capital Dividend Account (CDA) and the portion of proceeds
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Accessing Corporately Held Cash Value in Life Insurance Policies for Personal Loans: A Strategic Financial Tool
For business owners and shareholders, accessing the cash value held within a corporation’s life insurance policy, such as Whole Life or Universal Life (UL), for personal use can be a strategic financial maneuver. One effective method involves personal loans backed by corporate guarantees. This approach offers several advantages, particularly when a future capital gain event
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