Shielding your passive income:
Individual Pension Plan (IPP)
One of the few remaining effective tax shelters in Canada for Business owners
Why an IPP?
Business owners require more comprehensive and robust financial tools to shield their assets from taxes.
There are fewer tax shelters available for business
owners.
There are fewer tax shelters available for business
owners.
This is how an IPP can improve the situation…
The Individual Pension Plan (IPP) allows for higher contributions than an RRSP
As the business owner ages, current contributions allowed to the IPP increase.
Try this tool to understand how much more you would be able to contribute to an IPP in comparison to an RRSP.
An IPP is
non-seizable
for bankruptcy
As opposed to an RRSP
Management fees are
fully tax deductible
for the employer
As opposed to an RRSP
Additional contributions in case of deficit
Average 3-year total returns lower than the member can contribute an amount equal to supplement their contributions.
This deficit can be pain at any time or not at all.
Surplus belongs to the member
Average 3-year total returns higher than IPP surplus belongs to the member.
An IPP requires actuarial reports every 3 years.
Additional contributions in case of deficit
Average 3-year total returns lower than the member can contribute an amount equal to supplement their contributions.
This deficit can be paid at any time or not at all.
Surplus belongs to the member
Average 3-year total returns higher than IPP surplus belongs to the member.
An IPP requires actuarial reports every 3 years.
Who is an IPP for?
IPP benefits business owners and incorporated professionals.
Here are the main characteristics that make them good candidates for an IPP:
Business owner or incorporated professional
Ages 40 to 71
Receiving T4 employment earnings
Small business deduction limit
Choosing tax-efficient investments that do not factor into your passive income
calculation can help mitigate any effects on your Small Business Deduction limit.
Helps the business’s taxable income from surpassing the available business limit.
