Let us take a 45‐year old owner/operator drawing $140,000 per annum in salary and contributing the maximum under either an RRSP or Personal Pension Plan.
This individual decides to retire at age 65. Throughout the accumulation phase of 20 years, assets return 7.5% (and earnings are tax-exempt while in the registered accounts).
|Age at start of period||45||45|
|Total Assets at age 65||$1,692,109||$2,431,017|
|Annuity Purchase Factor||14.5467||14.5467|
|PPP Advantage (monthly)||$4,233|
Every day that this person does not upgrade to a PPP translates into a loss of $136. This does not factor in additional tax savings (and higher tax refunds) relating to the PPP features such as:
· Deductibility of Fees
· HST 33% Refund
· Terminal Funding
· Corporate Deduction for Purchase of Past Service
· Tax Deductibility of Special Payments
In light of the new tax rules that penalize passive investments within CCPCs, advisors must understand how pension legislation can become a powerful tool to deal with wealth succession, business succession, and tax optimization within a corporate environment.Learn more about the ppp101 course