Corporate Asset Transfer

Many successful business owners retain surplus capital (passive assets) in their corporations. The source of these funds can come from the sale of a business, real estate or from retaining excess cash flow from business operations. These funds are normally held in traditional investments such as short term bonds, GICs, current accounts, etc.

Business owners look to:

  • Maintain and/or grow their surplus capital.
  • Minimize taxation on the surplus capital.
  • Enhance the value of their estate.
  • Maintain control and flexibility to allow access to these funds in the future if they’re needed.

The shareholder has access to the capital surplus, however will be taxed under their own personal tax rate. For this reason, the capital surplus often remains locked in the traditional investments and can grow substantially. These passive assets may generate interest or other income that will attract a high rate of corporate tax.

Is there a cost effective strategy that will allow locked-in passive assets to be transferred to shareholders or a shareholder’s estate tax-free?

This could be achieved through a business strategy called the Corporate Asset Transfer.

The Corporate Asset Transfer enables the corporation to:

  • Retain control of their surplus capital in a tax-advantage insurance policy.
  • Provide an immediate enhancement to the assets available for transfer to surviving shareholders or a surviving shareholder’s estate.
  • Offer tax-advantage accumulation while living and potentially a credit to the Capital Dividend Account (CDA) of the corporation allowing a tax-effective way of distributing the passive assets in the corporation, upon death.

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