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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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The New GAAR and Its Impact on Insurance Planning: Reassessing the Viability of Financing Premium
In the realm of high-net-worth insurance planning, Immediate Financing Arrangements (IFAs) have emerged as a popular strategy. These arrangements allow policyholders to purchase life insurance while simultaneously obtaining a loan to cover the premium payments, with interest payable on the outstanding loan until death. The key attraction of IFAs is the ability to deduct the…
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Understanding Cash Surrender Value (CSV) Tax Implications in Canadian Life Insurance Policies
When planning for life insurance in Canada, it’s crucial to understand the concepts of Cash Surrender Value (CSV) and Adjusted Cost Basis (ACB). These elements play a significant role in the tax treatment of life insurance policies, impacting both individuals and corporate policyholders. Here’s an in-depth look at how they work and their implications under…
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Manulife: Have we entered another tax dimension?
With increased funding and audit powers, the Canadian Revenue Agency (CRA) is an increasingly formidable force. Recent changes to the Income Tax Act have taxpayers and their advisors facing the burden of disclosing aggressive tax planning to the CRA. In this eye-opening episode, Desiree D’Souza, Assistant Vice President, Tax and Estate Planning and Florence Marino,…
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