Question 1

What is a corporate wealth strategy?

Accepted Answer

A corporate wealth strategy is a comprehensive plan for incorporated Canadian business owners to protect, grow, and transfer corporate wealth through tax-efficient structures. It typically includes corporate tax optimization, corporate-owned life insurance, the Immediate Financing Arrangement (IFA), and trust and entity planning to minimize CRA taxation on corporate surplus.

Question 2

What is the Immediate Financing Arrangement (IFA)?

Accepted Answer

The Immediate Financing Arrangement (IFA) is a CRA-compliant strategy that allows incorporated business owners to purchase whole life insurance, assign the policy as collateral, and borrow against the cash surrender value to access capital without triggering personal tax. On $500K of corporate income, the IFA can prevent up to $265K from being surrendered to CRA through personal taxation.

Question 3

Who qualifies for corporate wealth strategies with Northern Shield Savings?

Accepted Answer

Northern Shield Savings works with incorporated Canadian business owners (CCPCs) with $100K or more in retained corporate earnings. This includes professionals in medical, legal, accounting, technology, trades and construction, and real estate industries. A free consultation is available to determine eligibility and suitability.

Question 4

How does corporate-owned life insurance reduce taxes?

Accepted Answer

Corporate-owned life insurance allows business owners to use pre-tax corporate dollars to fund a whole life policy. The cash value grows tax-sheltered inside the corporation, and the death benefit is paid out tax-free to the corporation through the Capital Dividend Account (CDA). This creates a tax-efficient vehicle for wealth transfer and estate planning while providing corporate key person protection.

Question 5

What is the Corporate IFA Playbook?

Accepted Answer

The Corporate IFA Playbook is a free educational playbook from Northern Shield Savings that explains corporate wealth strategies including the Immediate Financing Arrangement (IFA), corporate-owned life insurance, and tax-efficient wealth transfer. It covers CRA-compliant strategies for reducing corporate and personal tax burdens for incorporated Canadian business owners.

Question 6

What is the Insured Retirement Plan (IRP)?

Accepted Answer

The Insured Retirement Plan (IRP) is a tax-efficient retirement strategy for incorporated Canadian business owners. The corporation purchases a participating whole life insurance policy, builds tax-sheltered cash value, then borrows against that cash value to provide the owner with tax-free retirement income. On death, the insurance proceeds repay the loan and the remaining benefit flows tax-free to the estate through the Capital Dividend Account (CDA).

Question 7

How does the Capital Dividend Account (CDA) create tax-free wealth transfer?

Accepted Answer

When a corporate-owned life insurance policy pays out, the death benefit minus the adjusted cost basis is credited to the corporation's Capital Dividend Account (CDA). Funds in the CDA can be distributed to shareholders as tax-free capital dividends, bypassing both corporate and personal taxation. This is one of the most powerful tax-free wealth transfer mechanisms available to incorporated Canadian business owners.

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