That's it folks, years of lobbying have finally paid off and INTEGRIS clients will now have the option of extracting their Personal Pension Plan from the jurisdiction of the Pension Benefits Act of Ontario.
- No more governmental fee to get the plan registered in Ontario.
- No more annual pension assessment paid to the Minister of Finance of Ontario.
- No more online registration with the Pension Services Portal.
- No more Form 7, Financial Statements filings, plan amendment filings etc.
- No obligation for the sponsor of the PPP to make contributions whether these are for annual contributions or special payments.
- Ability to transfer RRSPs in-kind when purchasing past service and doing a qualifying transfer.
- Greater ability to do intergenerational wealth transfers with family members on the payroll of the family enterprise outside of retirement.
- and many more....
Ontario joins other provinces that have relaxed their regulation of PPPs such as, from West to East, BC, AB, MB, QC, NB, NS and PEI.
Any business owner in Ontario that is under the age of 71 and has a company paying him or her a salary should immediately contact their financial advisor to get a PPP quote. The last reason to procrastinate and continue to use an RRSP is now Ontario history.
As a refresher, the PPP provides the largest possible tax deductions permitted by the Income Tax Act (Canada) because of its triple account combination structure. It can double and sometimes triple the amount of tax assistance that someone is entitled to under RRSP rules over a lifetime.
Some of the key tax advantages of PPPs include:
- Terminal Funding during early retirement
- Pension income splitting with a spouse as early as age 50
- Purchase of Past Service if T4 income was paid in prior years
- Special Payments if the internal rate of return on assets is below 7.5%
- Investment management fees are tax deductible
- Interest paid to a lender is tax deductible if loan is used to contribute to the PPP
- RRSP contributions can often be made in addition to PPP contributions in the year of plan set up
- HST pension entity rebate program (33% refund of HST) can be claimed annual
- Contributions to the PPP exclude these passive assets from the Tax On Passive Income rules.
- Contributions to the PPP help purify a corporation when the shareholder wishes to utilize the Lifetime Capital Gains Exemption
- Wealth by passes the deemed disposition on death (and provincial probate fees) when family members are also members of the PPP.
- Assets in the PPP are exempted from the departure tax when a client becomes a non-resident of Canada
- Canadian Tax rate for many PPP clients that retire outside of Canada is 15% (thanks to tax treaties) instead of the normal tax rates in Canadian provinces (eg. top rate in Ontario is 53.5%)
- And of course, higher annual tax deductible contributions than what is permitted under the RRSP rules, every year at all ages!
In light of this, if you have not yet considered upgrading to a PPP, you should consult your financial advisor or contact us at email@example.com to book an appointment to speak to our Sales representatives.
Nota Bene: Only PPPs (and IPPs) for connected persons are able to exempt themselves from the provincial pension rules. Those who sponsor PPPs for non-connected members cannot take advantage of Bill 213.