Life Insurance and the Capital Dividend Account
Many business owners are unaware that corporate owned life insurance combined with the Capital Dividend Account (CDA) provides an opportunity to distribute corporate surplus on the death of a shareholder to the surviving shareholders or family members tax-free.
Income earned by a corporation and then distributed to a shareholder is subject to tax integration which results in the total tax paid between the two being approximately the same as if the shareholder earned the income directly. Integration also means that if a corporation is in receipt of funds which it received tax-free, then those funds should be tax free when distributed to the shareholder.
The Capital Dividend Account is a notional account which tracks these particular tax-free amounts accumulated by the corporation. It is not shown in accounting records or financial statements of the corporation. If there is a balance in the CDA it may be shown in the notes section of the financial statements for information purposes only.
Generally, the tax-free amounts referred to, are the non-taxable portions of capital gains received by the corporation and the death benefit proceeds of life insurance policies where the corporation is the beneficiary. Read more 
DM Monthly Newsletter – May 2017
Most Important Economy Grinds Ahead, Stocks Follow – While recently perusing the Federal Reserve Economic Data (FRED) website, we were struck by a chart showing real (or ex-inflation) US GDP growth over the past decade. As expected, output plunged in 2008/09 as the financial crisis unfolded and businesses and individuals collectively retrenched. Since economic activity bottomed in mid-2009, however, the recovery has been remarkably consistent, with American growth tracking along an almost perfectly straight upward tilting path.
Click here to read more: DM-Monthly-Report-May-17
Debt Load
Are you out of your debt comfort zone? Does it seem as though you’re paying too much to bill collectors and not enough for savings and the things you enjoy in life? If so, it’s a good idea to figure out just how much debt you have and compare that to how much you earn. This will give you clear understanding of your financial health.
Debt Load
Debt load is a term that is used to describe a consumer’s amount of debt. It is often used to understand if you are carrying a “safe” amount of debt. Creditors look at a debt/income ratio, comparing your income with your debts to analyze whether you have an appropriate amount of debt. The debt/income ratio is figured monthly and reveals either how good — or bad — your financial situation is. Read more
DM Monthly Newsletter – April 2017
How Far Could Climbing Interest Rates Go? N. American interest rates have been on a steep ascent since last summer, with the yields on both US and Cdn 10yr govt. bonds having shot up by more than half over the period. This short term surge has been mostly driven by improving economic fundamentals, with the US continuing its growth leadership and Canada recently posting GDP gains well in excess of expectations.
Click here to read more: DM-Monthly-Report-Apr-17
