Article Licenses: CA, unknown, unknown, unknown
Advisor Licenses:
Compliant content provided by Adviceon® Media for educational purposes only.
Capital gains from a business, cottage, second residence, rental property, or non-registered investment are subject to taxation when the property is disposed of. How and when the property is disposed of requires serious consideration, as the tax implications can be enormous.
Here are some areas where capital gains tax may develop:
If you own a Family Business Many family businesses have accrued large capital gains over time, due of course to the success of the businesses. When sold, the business will incur a taxable disposition that could be subject to high taxable capital gains.
If you own non-registered Investments Any capital asset that is held outside of an RRSP, whether a stock, GIC, or investment fund to name only a few, will be taxed on the difference between its fair market value at time of sale, and the cost of the asset. The difference between the purchase price and the sale price will be either a taxable gain or loss.
If you own a Cottage When you sell your cottage, or you and your spouse die, capital gains tax will be triggered on the difference between the cost and the fair market value at the time of sale. One major consideration is how to keep the cottage in the family.
Assuming the kids want the cottage, how can the tax problem be handled? What if there are not enough assets in the estate to pay the taxman? If there are not enough assets or cash to pay for the tax bill, it may be that the cottage has to be sold.
Can A Solution Cost Pennies on the Dollar?
One solution that can help overcome tax issues, and provide enormous estate savings, is a permanent life insurance policy. A permanent life insurance solution will create a non-taxable death benefit that can pay the capital gains tax on the accrued increase in value of a family business, cottage, second residence, or unregistered investment. The most common form of estate policy purchased is a Joint Last-to-Die Life Insurance contract. These types of policies can insure both spouses’ lives, but only pay out on the last death. The cost of the product is often more affordable than an individual policy since the insurance risk is lessened by insuring two lives.
Publisher's Copyright & Legal Use Disclaimer
All articles are a legal copyright of Adviceon®Media and are for educational
purposes only. The particulars contained herein were obtained from sources
which we believe are reliable, but are not guaranteed by us and may be
incomplete. This website is not deemed to be used as a solicitation in a
jurisdiction where this representative is not registered. This content is not
intended to provide specific personalized advice, including, without
limitation, investment, insurance, financial, legal, accounting or tax
advice; and any reference to facts and data provided are from various sources
believed to be reliable, but we cannot guarantee they are complete or
accurate; and it is intended primarily for Canadian residents only, and the
information contained herein is subject to change without notice.
References in this website to third party goods or services should not be
regarded as an endorsement, offer or solicitation of these or any goods or
services. Always consult an appropriate professional regarding your particular
circumstances before making any financial decision. The information provided
is general in nature and should not be relied upon as a substitute for advice
in any specific situation. The publisher does not guarantee the accuracy and
will not be held liable in any way for any error, or omission, or any
financial decision.
Mutual Funds Disclaimer
Commissions, trailing commissions, management fees and expenses all may be
associated with mutual fund investment funds, including segregated fund
investments. Please read the fund summary information folder prospectus
before investing. Mutual Funds and/or Segregated Funds may not be
guaranteed, their market value changes daily and past performance is not
indicative of future results. The publisher does not guarantee the accuracy
and will not be held liable in any way for any error, or omission, or any
financial decision. Talk to your advisor before making any financial
decision. A description of the key features of the applicable individual
variable annuity contract or segregated fund is contained in the Information
Folder. Any amount that is allocated to a segregated fund is invested at the
risk of the contract holder and may increase or decrease in value. Product
features are subject to change.
Life Insurance and Segregated Funds Disclaimer
Life Insurance policies vary according to contract terms. Please read any
Life Insurance policy contract provided, or the segregated fund summary
information folder prospectus before the time of purchase. Full details of
coverage, including limitations and exclusions that apply, are set out in
the policy of insurance. Commissions, trailing commissions, management fees
and expenses may be associated with segregated fund investments which may
not be guaranteed and their market value changes daily and past performance
is not indicative of future results. A description of the key features of a
life insurance policy, a segregated fund; and any applicable individual
variable annuity contract is contained in information provided by the
company from which it is purchased. Talk to your advisor before making any
financial decision. For specific situations, advice should be obtained from
the appropriate legal, accounting, tax or other professional advisors. The
information provided is accurate to the best of our knowledge as of the date
of publication and is general in nature, intended for educational purposes
only, and should not be relied upon as a substitute for advice in any
specific situation. For specific situations, advice should be obtained from
the appropriate legal, accounting, tax or other professional advisors.
Rules and their interpretation may change, affecting the accuracy of the
information.
