TRAVEL INSURANCE











IMPORTANT LINKS

HealthCare Professionals

Healthcare Professionals require a unique approach to wealth planning that follow financial, insurance and investment planning that reviews their total financial situation-both personal and corporate-to ensure their needs, goals and aspirations are met in the long run.

Incorporate: The Professional Corporation ("PC")
The Professional Corporation offers numerous tax-saving advantages, creditor-proofing and family planning features, namely:

    • Deferring Tax (and saving) on retained income:
    • Up to $500K in "active business income" each year eligible for low 16.5% tax rate (Ontario)
    • Excess income above $500k only 32% tax rate in 2009, and down to 25% in mid-2013
    • Significant tax savings when considering the highest personal tax rate still 46.4% (Ontario)
    • On $500K in excess income, tax deferral is about $150K per year! (over 20 years, this amounts to over $3 million!)
    • Ability to income split between Spouse, kids and parents: The essence of INCOME SPLITTING involves the legal shifting of taxable income among family members-income from the higher tax-payer to the lower rate payer-such as a spouse or children and thus reducing the overall tax a family pays. The Professional Corporation allows for multiple income splitting opportunities.
    • Maintain full control by holding shares in a trust for kids less than 18 years of age
    • The Issuance of Non-Voting shares to family members. Dividends up to $35,000 can be paid tax free (conditions apply) to children over 18.
    • Full flexibility of shares: Option to arrange just dividend shares or growth shares, or combination of two
    • Objective of shares issuance to others: tax savings by paying dividends to low rate shareholders
    • Most beneficial to children over the age of 18 or spouse with little income. Dividends up to $35,000 can be paid tax free (conditions apply)
    • Children less than age 18: "kiddie tax" minimizes most benefits. Customized planning required for children under 18.
    • In some situations, use of $750K "Capital Gains Exemption" ("CGE") offers significant tax savings
    • On rolling-over existing practice to PC, shares will qualify for CGE
    • "Crystallizing" CGE right after rollover can have estate-planning benefit: a reduced capital gain on death
    • The ability to arrange an Individual Pension Plan "IPP". HealthCare professionals have an opportunity to increase their contributions to a retirement program beyond regular RRSPs. These programs, "super-charged RRSPs", allow for increased tax deductions to the PC as well as the ability to increase retirement funds as a perk that grow in a tax-free environment.
    • Health Care Spending Account (HSA) or Private Health Services Plans (PHSP). These programs allow a healthcare professional and employees to pay for medical expenses through the PC, instead of individually. This results tax savings because the expenses are paid with pre-tax dollars, as opposed to after-tax insurance benefits premiums. There are many more medical expenses that qualify under a PHSP and there are no limits on the amount that can be claimed.
    • Arrangement of a Hygiene Corporation: Ideal for income splitting with a spouse or a family member. Provides an additional small business deduction of $500,000 at a low tax rate of 16.5%.
    • Family Members Salary. Family members can be paid a reasonable salary for work done on behalf of the practice, within certain parameters.
    • Corporate Owned Life Insurance
      Life insurance can be owned and the premiums paid by the PC as opposed to being paid personally. This makes the payment of the premiums much less, net of tax considerations. In addition, the death benefit is paid tax-free (via a CDA credit) to the surviving beneficiaries, including your spouse.
    • Ability to issue "Eligible Dividends"-which are taxed at lower rates than non-eligible dividends. There is significant benefit for the healthcare professional to taking dividends instead of salary if the PC's income is $500K or less, and the professional requires more than the $118,000 of salary for meeting their living standards and personal spending.
    • The ability to establish a Retirement Compensation Arrangement "RCA". HealthCare professionals have an opportunity to increase their contributions to a retirement program beyond regular RRSPs. These programs allow for increased tax deductions to the PC as well as the ability to increase retirement funds as a perk that grow in a tax-free environment.
    • PC's, like any corporation with active business income and employees, can establish an Employee Profit Sharing Plan (EPSP), providing great benefit to employees, goodwill and retention.
For more information on Tax Planning Solutions, click here.