Grow wealth and avoid the passive income problem faced by small business owners. Investing the after-tax income of the corporation into a corporately owned life insurance policy, to protect the life of the business owner or partner, may be an effective tax planning strategy and ideal solution for the passive income problem for Canadian controlled private corporation. The income and growth in the underlying investments are tax-sheltered within the life insurance policy and are not included in the corporation’s income on an annual basis, so they don’t form part of “adjusted aggregate investment income”. The death benefit then flows out as a capital dividend and paid out tax-free to the shareholders. Read more...

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