Corporate insurance & tax planning, in the right order.

Problem 1 — Money trapped in your company

Your corporation earns at 12.2% (small business rate, Ontario) but you spend personally — and the bridge between the two is taxed at up to 47.74% for non-eligible dividends or 53.53% as salary. So the money stays inside, gets invested, and triggers the second toll: passive investment income above $50,000/year grinds away your small business deduction, $5 of limit for every $1 over. At $150,000 of passive income, the low rate is gone entirely.

The fix starts with asset location: which investments belong in which entity, and which belong in containers whose growth doesn't count as passive income at all — corporately-owned participating insurance being the largest of them. Measure your own grind in LAB 01, then read the full guide: Passive income and the small business deduction.

Problem 2 — A tax bill due months after you die

At death you're deemed to have sold your shares at fair market value. Without planning, your estate can be taxed twice — once on the shares, again when the corporation's assets come out as dividends. The final-return tax comes due months after death, and families without liquidity end up selling the business to pay it.

The toolbox here: an estate freeze to cap the growing liability (drafted with partner tax counsel), post-mortem pipeline planning, and the Capital Dividend Account — the mechanism that lets life-insurance proceeds leave a corporation tax-free instead of as dividends taxed at up to 47.74%.

Problem 3 — An exit exemption that quietly disqualifies itself

The lifetime capital gains exemption shelters $1.25M+ (indexed) per shareholder when you sell qualifying small-business shares. The catch: passive investments accumulating inside the company — problem 1 — can contaminate the asset tests years before a sale. Most owners discover this at the deal table, when purification is expensive or impossible. Will your shares still qualify? →

Problem 4 — Income splitting that stopped working

The 2018 TOSI rules ended casual dividend-sprinkling. What survives is narrow: family members genuinely working 20+ hours a week, the votes-and-value exemption for non-service businesses, spousal dividends after 65, prescribed-rate loans. It's documentation-heavy — and often the right person to implement it is your accountant, not me. Part of my job is telling you which. Succession & family planning →

The financing question owners ask next

"If my money goes into a policy, don't I lose access to it?" No — and this is where the strategy gets interesting for owners who reinvest aggressively. A funded policy's cash value can secure a bank line of credit (often up to 90% of cash value), keeping your capital deployed in the business while the policy compounds untouched. That structure has a name — the Immediate Financing Arrangement (IFA) — and it deserves its own honest page, risks included.