The excerpted article was written by Julia Mastroianni | Financial Post
Here are a few ideas:
Sheltering investment income
For any Canadian with the ability to save money, sheltering income from the taxman in one of the two main savings vehicles the government makes available is a no-brainer.
David Rotfleisch, founding tax lawyer of Toronto firm Rotfleisch and Samulovitch, recommends Registered Retirement Savings Plans (RRSPs) to everyone.
“You should be putting away the maximum you can into your RRSP. That in and of itself is the most important tax-saving tip and it’s available to everyone,” he said.
Contributions to an RRSP are tax-free, meaning you don’t have to pay any income tax on them in the year of the contribution. The funds can also be invested with no tax on gains until the age 71 — at which point a taxpayer must begin to withdraw funds, which are then treated as taxable income.
Tax-free savings accounts (TFSAs) are another option. While the money you contribute to your TFSA will be post-tax income, any interest, dividends or capital gains earned in it are tax-free for life, and you won’t have to pay taxes on the withdrawals.
Wealthy Canadians use these accounts too, though Jamie Golombek, managing director of tax and estate planning at CIBC, said they might use them a bit differently. They’re likely maxing out their RRSPs and TFSAs by contributing the yearly limit — but they aren’t stopping there.
“What the wealthy are doing beyond that is they are actually using TFSAs to fund for their children once the children reach the age of 18,” Golombek said. “So some wealthy families are giving money to their kids at 18 to encourage the kids to put money into their own TFSAs. And what that does is it’s able to transfer wealth intergenerationally while keeping all the investment income tax-free.”
Many wealthy Canadians run a side business (or their own business) for the benefits of lower tax rates, business write-offs and tax-deductible individual pension plans.
If you run a business, are self-employed or doing freelance and contract work, it’s worth considering incorporation. Barrett said the choice should depend on how you use the income you’re earning.
“If all the income that’s coming in is being consumed by you every year, then there’s no advantage,” he said. But if the money you’re making through self-employment, even if it’s a small side business, is extra money for you, incorporation has its benefits. The 2019 small business tax deduction rate was nine per cent after the federal tax abatement, meaning you’d be taxed at the much lower corporate rate on your income.
Before you incorporate, Rotfleisch said to evaluate whether it’s worth your time and money. “Incorporation costs a couple of thousand dollars, but then you have your accounting costs to do the financial statements and tax returns and that’s going to cost you around $1,500 dollars,” he said. “So you have to decide if it’s worth spending that for the other tax benefits.”
Income-splitting and prescribed rate loans
While this strategy is particularly effective for wealthier Canadians within the highest tax bracket, there are benefits for the average Canadian too. If one spouse is in a higher tax bracket than another, they may want to shift some of that taxable income to another family member, including children.
However, in Canada, if you just loan money to a family member, the money will be attributed back to you on your tax returns. Instead, you would need to set up a prescribed rate loan with the Canada Revenue Agency-approved interest rate (currently two per cent). As long as the family member pays that interest rate to you every year, the money you’ve loaned will count under their tax return. When loaned to a child or spouse who doesn’t earn any income, that money then becomes taxed at the lowest tax bracket.
Permanent life insurance
Most Canadians are familiar with term life insurance, which provides temporary coverage for a set time. Permanent life insurance, on the other hand, lasts for life. This life insurance comes with an investment component that grows free of annual taxation.
However, it’s not quite accessible to the average Canadian, as it’s sometimes six to 10 times the cost of term life insurance. Permanent life insurance is usually an additional investment option for the wealthy who have already maxed out their RRSPs, TFSAs and other investment options and know that they have extra income that they’d rather not pay taxes on every year.
Jennifer Poon, director of advanced planning at Scotia Wealth Management, said that this is an option normally favoured by wealthier Canadians because it’s a long-term investment. “You can’t always just lock up all your cash in a life insurance policy because this is a tax shelter,” she said.
Ultimately, Barrett noted, the more money you have, the more tax planning you can do with it. Average Canadians can try out these strategies, but the savings won’t come close to the thousands and millions that the wealthiest are saving every year.
But with the right planning, savings are still possible.
“Even if you’re making 60 grand a year, and you’re smart and you’re frugal, and you’ve done all your tax planning properly, you can still get some really good savings that may be meaningful to you at that kind of an income level,” he said.
NEW YORK, N.Y. — NFP Canada Corp., an insurance broker serving the needs of the trucking industry, is unifying its Canadian businesses under the “NFP” brand, further integrating acquired brokerages.
The company announced Tuesday that several of its Canadian brokerages, including Capital Benefit Financial Group, Corporate Benefits Analysts Insurance Agency, Consortia Group, PBL Insurance Limited, Dalton Timmis Insurance Group, Mass Insurance Brokers, McLean Hallmark Insurance Group, Elective Benefits Services and Indemnis Trade Risk Management, will adopt the NFP name.
This implementation marks the latest in a series of strategic initiatives of NFP Corp. across North America, the company said.
“We are thrilled to come together under the NFP brand and unify our operations in Canada,” said Greg Padovani, president of NFP in Canada.
“The integration of these well-established firms creates a platform for NFP that has the size, scale, and capabilities to provide a full range of insurance solutions to Canadian corporations and individuals.”
NFP is one of the top 10 Canadian brokerages, with 750 employees.
It may seem like un-Canadian behaviour, but new research from Finder Canada shows that a surprising number of Canucks not only hope for an ‘insurance-paid upgrade,’ but would actually crash a car, break a bone or burn down a house to get it … if they wouldn’t get caught.
“Honestly, we thought the numbers for the illegal insurance actions would be much lower,” said William Eve,” Country Manager for Finder Canada. “We began this as an exercise to show how stereotypically honest Canadians are.”
Key Findings of the research:
i) Canadians are willing to do the crime… if they don’t get the time!
21% – one in five Canadian adults – would stage an event or mislead an insurance company to get an insurance-paid upgrade… providing they don’t get caught.
12% would crash their car or pretend it was stolen, 10% would flood or burn down their house and 6% would go as far as breaking their own arm or pretend to have a chronic illness for insurance money.
More than twice as many men (13%) vs. (6%) women would burn down or flood their home. Significantly more men (15%) vs. women (8%) would crash a car or pretend it was stolen.
ii) Younger Canadians are more likely to create a car catastrophe
Gen Z (26%) and Millennials (16%) are far more likely to crash, damage or say their car was stolen than older Canadians–like the Silent Generation (5%), and Baby Boomers (5%).
iii) Nearly half of Canadians are secretly hoping for an insurance-paid upgrade
43% of Canadians surveyed said that they are secretly hoping for damage to their property and possessions to get an upgrade.
iv) Many Canadians are unhappy with their cars
27% of Canadian adults are hoping for an insurance paid upgrade on their cars and 24% would endure a car accident (where no one is hurt but the car is totaled) to get one. On the extreme side, 11% of Canadian adults would endure a car crash where they broke bones but suffered no permanent damage to get an upgrade.
v) Nearly no-one would endure a bed bug infestation for the insurance money
Only 8% of Canadians would suffer through a bed bug attack for an upgrade, meaning they would prefer to suffer through a car accident (24%), a massive flood in their home (14%), or a fire where their home burns down (16%) than deal with bed bugs.
“The truth is that false claims and fraud drive insurance costs up for all Canadians,” added Eve. “For those who are caught, there are severe fines, costs and even jail time. At the very least, they lose their coverage and ability to get insurance coverage in the future. It’s much smarter (and safer) to carefully compare policies and get the very best deal possible on insurance premiums.”
You can find the full report here: www.finder.com/ca/insurance-paid-upgrade-report
Please refer to this Finder Canada research in any media coverage
About Finder Canada:
Millions of North Americans use Finder to help them make better financial decisions. Finder understands that making everyday life decisions such as finding a credit card, buying a home and getting health insurance can be daunting. That’s why we’re here. Our goal is to help Canadians navigate those complex decisions by making them less of a chore (and hopefully less of a bore, too!)
Data is from a national representative survey of 1,200 Canadian adults commissioned by Finder and conducted by PureProfile in February 2020.
SOURCE Finder Canada
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The round was led by a group of angel investors including board chair Mike McDerment, CEO and co-founder of Freshbooks, and Briza CEO Ben Munro. Angel investors included Sid Sankaran, CFO of Oscar Health, Alon Neches, former treasurer of AIG, Sharon Ludlow, former CEO of Swiss Re Canada, and Louis Beryl, founder and former CEO of Earnest. The round also saw participation from Leaders Fund.
“They say the commercial insurance industry walks slowly, but this can’t continue in the era of APIs.”
Briza, which is currently participating in Batch 26 of 500 Startups’ seed accelerator, also received capital from 500 Startups for the seed round. The accelerator typically provides $150,000 USD to startups accepted to its program in exchange for six percent equity.
Briza was founded in 2016 by Munro, who has 20 years of experience in the insurance industry, including at global insurance company AIG. The team is also led by Rishi Sharma (CTO) the former director of engineering at Freshbooks and Dom Bortolussi (COO), the founder of Toronto-based development agency TWG.
The startup has developed what it calls an insurance-as-a-service API that enables instant quoting, binding, and issuance of commercial insurance policies for businesses. Briza’s platform connects insurance underwriter systems to insurance companies allowing consumers to get quotes, pay online, and receive those insurance policies instantly.
“They say the commercial insurance industry walks slowly, but this can’t continue in the era of APIs,” said Munro. “Briza is creating the infrastructure that underwriting systems will use to talk to insurance agencies, consumer apps, and anybody who wants to instantly sell insurance with just a few lines of code.”
Briza claims its is revolutionizing commercial insurance by offering a solution to the process for writing insurance policies that the startup says can normally take up to five hours for a small business. The company noted that it currently has partnerships with four insurance carriers, Fairfax company Crum & Forster, Hiscox, Markel, and Coalition. It also claims to have more than 100 insurance companies in the United States signed up for a closed beta version of its product.
According to Briza, this seed funding round brings its total funding to date to $3.9 million CAD ($3 million USD).
Briza is one of five Canadian companies participating in 500 Startups’ latest seed accelerator cohort. An overall 29 companies are currently going through the program, which is slated to have its demo day on March 19.