Canada Needs a Financial Plan

According to a July 23 publication by the Fraser Institute, we are getting poorer here in Canada and the prospects for economic growth are looking grim.  This should be of concern to every Canadian concerned about their “real income” – that’s their purchasing power – and by extension - their ability to fund consumption now and for important family milestones in the future:  retirements, education and homeownership.  It’s grim, but there are practical suggestions for a turn around plan. Here’s a synopsis of the report.   

The federal government has recently back-tracked on their plan to limit access to the capital gains deduction available to shareholders in a family business corporation, and that’s a very good thing, as the proposals would have cost family businesses a lot of money.

The world has changed dramatically over the last couple of decades—and that requires that tax and financial advisors adapt their strategies for pre-retirees. Recognizing the current economic and societal changes drivers, it appears that  debt management, and debt reduction strategies at various life stages, require more attention. This will be a key planning theme at Knowledge Bureau’s upcoming CE Summits.

The legalization of Marijuana is coming  in time for Canada’s next birthday party, reflecting new government priorities, and unique societal trends.  This indeed will impact the work tax and financial advisors do. Your clients may or may not want to talk to you about this.  Yet, insurance and financial advisors need to understand the financial implications of this major change in Canada.  This year’s Distinguished Advisor Conference will help prepare for the issues you need to discuss in a world filled with disruption — including the legalization of marijuana.

As Shakespeare said in Twelfth Night, “Some are born great, some achieve greatness, and others have greatness thrust upon them.” In establishing your new value proposition and leadership challenges in a growing business climate, which of these applies to your great potential?

The Finance Department backtracked on a few of their controversial tax reforms for private corporations this week, adding a tax cut of $2.9 Billion over the next five years to douse the flames of discontent. However, family businesses will continue to face tax risk and uncertainty due to a “reasonableness” test – albeit a simplified one – that will limit income sprinkling to contributors of labor, risk or capital in the business.

Finance Minister Morneau today announced that his department will move forward with their goal to tax passive investment income earned within private corporations.  What’s becomes apparent from the minimal details released, is that not much has changed in the government’s intentions, since the measures were first floated on July 18, 2017.