Financial planning considerations for incorporated business owners in Canada

Begin with the people and obligations

Identify who depends on the business and what happens if an owner dies, leaves or cannot contribute. Consider household spending, business debt and ownership agreements. A general conversation can reveal questions, but it cannot settle the legal or tax treatment of a corporation’s arrangements.

Review compensation with an accountant

Salary and dividends can have different implications, including payroll obligations and retirement-savings considerations. There is no universally correct mix. Have your accountant review the relevant rules, corporate records and household needs before acting.

Be careful with corporate insurance claims

A corporation may own life insurance in some arrangements, but ownership, beneficiaries and shareholder benefits matter. Premiums are not automatically deductible. Limited exceptions have specific requirements; do not treat a general insurance discussion as permission to claim an expense.

Coordinate succession and liquidity

An ownership agreement and an insurance policy should be reviewed together with the professionals responsible for them. Discuss how funding would be used, who would receive it and what tax or legal implications may arise. No policy replaces a properly reviewed business agreement.

Keep the scope clear

Ask who is authorized to recommend an insurance contract and who will provide accounting and legal advice. ERG Wealth’s stated scope is life insurance and segregated funds. Product availability, individual licensing and jurisdiction need confirmation before a recommendation.

Official sources

• Shareholder benefit considerations — CRA
• Insurance expense guidance — CRA

Rules and eligibility can change. Check the current official guidance and obtain qualified advice for your own situation.