Contributors: Mark Arruda, BMATH, FCIA, FSA, CERA James W. Kraft, CPA, CA, MTAX, CFP, FEA Jeffrey H. Waugh, B.PHIL, LL.B, CFP, CLU – –

Why business owners are investing millions in a strategy that CPAs often miss?

As Canadian Controlled Private Corporations (CCPCs) grow, they employ a comprehensive team of professionals to manage their complex and expanding interests. Increasingly, affluent business owners will rely on Chartered Professional Accountants (CPAs) to partner with other professionals to offer multi-dimensional strategies aimed at ensuring business sustainability. Without professional collaboration, there’s a missed opportunity to deliver value-added service to key clients.

It might surprise you that today, more and more of Canada’s wealthiest business owners are turning to permanent life insurance to help protect their estates and address tax issues. It might also be surprising that hundreds of millions of dollars are being used to purchase corporate-owned policies each year. CPAs can deliver significant value to their clients by seeing the opportunity that insurance offers as a tax-efficient asset, and not just an expense.
Ironically, many CPAs who specialize in creating tax efficiencies don’t expand their team to include life insurance professionals. Used well, life insurance provides an opportunity to help solve three significant problems for their business owner clients:

■■ Minimizing corporate tax during lifetime asset accumulation
■■ Minimizing personal tax at death
■■ Preserving and improving liquidity for the business

This article examines how permanent life insurance helps enhance a corporate balance sheet by minimizing tax burdens and enhancing liquidity. We’ll also look at how CPAs are uniquely positioned to bring this solution to the table, and why introducing this wealth preservation strategy will help solidify your role as a vital member of your advisory team.