Grow Your Wealth While Keeping The Taxman Away

By on November 12, 2014
couple finance

By Adrian Spitters and Win Wachsmann. Doug and Louisa (not their real names) sat in my office with a concerned look on their face. The taxman had just presented them with a big bill for some non-registered investments they had.

“Can you help us stop Revenue Canada from taking such big bites out of our nest egg?” Louisa pleaded. They were frustrated the way taxes were eating away at their investments.

They are not alone. Distributions and transactions in most corporate or non-registered accounts may result in significant tax liabilities.

As a Family Wealth Advisor, I showed them how the tax efficiency of their investments was as important as the investments themselves. My role as a Family Wealth Advisor is to grow their portfolios, reduce tax liabilities, while also reducing their investment risks. My role is to assist families, like Dave and Louisa, to identify priorities for the control, growth and protection of their investments.

Over the next hour or so, I was able to introduce them to the tax-efficient Corporate Class Managed Portfolios..

I demonstrated how Corporate Class Managed Portfolios provide many of the benefits that can be found with tax-free savings accounts or other registered accounts, including the ability to defer tax on investment income and capital gains. The best part of this class of investments was there are no contribution limits!

This would give them increased growth over the long term. Working together with me and my professional consultants, they would be able to make investment decisions such as re-balancing their portfolio, without worrying about the tax consequences.

A Special Portfolio for Discriminating People

Corporate Class Managed Portfolios are special mutual fund portfolios that are structured to operate like a corporation.

Standard mutual funds are structured as trusts but Corporate Class funds and portfolios are structured as corporations. This means that the Corporate Class Portfolio will hold several different funds as part of a single tax entity.

If your eyes haven’t glazed over yet, please bear with me as I continue. I apologize if sometimes the language and jargon in our industry is just overwhelming.

I will gladly answer all your questions about this very beneficial program.

In the same way that businesses move their money among different company accounts to cover expenses and make necessary purchases, the money managers in a Corporate Class Managed Portfolio move the invested money between the various funds to increase the value of the portfolio without triggering the payment of taxes and/or capital gains and losses.

The biggest advantage of a Corporate Class Managed Portfolio is that it provides many of the benefits that can be found with tax-free savings accounts or other registered accounts, including the ability to defer tax on investment income and capital gains.

To recap: Some of the benefits of Corporate-Class Managed Portfolio include the ability to:

  • SWITCH or REBALANCE: Capital gains in one fund may be offset by losses in other funds. Thus no tax is payable. The result: TAX FREE SWITCHING and the fund grows and compounds quicker.
  • MINIMIZE DISTRIBUTION: Spreading the gains and/or losses over all the funds reduces the amount of money that needs to be paid out as distributions. If money must be paid out as a distribution, that money is classified as capital gains and/or dividend income. When one receives capital gains or dividend income, the taxes to be paid are substantially less than if the money was received as interest income.
  • RECEIVE tax-efficient capital gains or Canadian dividends from traditional income funds.

Our Corporate Class Managed Portfolio advisors work hard at reducing interest and dividend income so that all you receive is capital gains with minimal dividend income thus reducing you’re your overall tax bill.

Government regulation and attempts to extract the most out of our pockets has resulted in a tax code so big that one needs an accounting specialty to understand it. No wonder we have to keep hiring accountants and lawyers.

Who can benefit from Corporate Class Managed Portfolio?

  • Incorporated businesses and farms (holding corporate cash) and high net worth individuals who have maxed out all their registered plans (TFSA, RRSP, RRIF, Etc.) will be the biggest benefactors of this portfolio class.
  • Seniors, who want to stop the government from clawing back part of their OAS pension, will also benefit.

What about fees?

An important fact to remember is, not all Corporate Class Managed Portfolios are created equal. If you go elsewhere, you may find their Corporate Class Managed Portfolios sometimes have a higher fee. However, our managed portfolios do not have any additional fees.

Sure, the funds/advisors need to be paid for their services, but remember, their fees may be fully tax deductible. This is another example of where a cost can be expensed and the impact of the cost reduced significantly.

Our team is committed to growing your portfolio through tax deferred compounding and prudent management.

Can you see how DEFERRING and MINIMIZING taxes on your investments NOW can SUBSTANTUALLY increase the value of your investments over time, allowing you to achieve TRUE WEALTH, while reducing YOUR financial uncertainty?

Commissions, trailing commissions, management fees and expenses, may all be associated with mutual fund investments.  Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.  Please read the prospectus and consult your Assante Advisor before investing.

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Adrian Spitters, FCSI, CFP, FMA, is a Senior Wealth Advisor with Assante Capital Management Ltd. He can be reached ataspitters@assante.com or visit his website at www.adrianspitters.ca

Win Wachsmann has been helping businesses improve their marketing and helping them get ready to sell their business. He doubles as an author, journalist, syndicated columnist, filmmaker and businessman who makes his home in the Fraser Valley of British Columbia. His articles and columns can be found in some of the finest offline and online magazines, journals and media properties.
He can be reached at
win@wachsmanncommunications.com.

 

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