Three instruments. One worktable.
Modest in ambition, transparent in arithmetic. Move the figures, watch the lines change. Treat the outputs as guides, not as advice.
Structure Recommender.
Six short questions. The recommendation that follows is illustrative — a starting point for a conversation with your accountant.
What kind of business or practice do you operate?
Are you regularly leaving meaningful surplus inside the corporation each year?
Surplus = profit you do not need to live on, that piles up as cash or short-term investments.
How exposed is your operating entity to lawsuits, contracts, or operational risk?
What is your time horizon to drawing on this wealth?
Do you intend to leave wealth to a spouse or next generation?
Is a sale of the operating business plausible in the next 10 years?
Tax Deferral Calculator.
One year of profit, invested for a horizon, at one growth rate. Compares: paid out personally now, vs retained corporately and drawn later.
Note The corporate line assumes the surplus stays inside the corporation throughout. The “net” line subtracts the eventual personal tax when the funds are drawn.
- Personal route (taxed now)
- Corporate route — gross
- Corporate — net of eventual draw
Gross deferral edge after 20 years: $197,239. Net of eventual personal tax: $49,069.
Insurance vs. Corporate Investing.
Compares paying the same annual amount into a corporate taxable investment account against paying it as premium into an exempt permanent life policy held by the Holdco.
Caveat The death benefit is illustrative; real policies have non-linear DB growth tied to the policy fund. Use this for shape, not for pricing.
- Policy cash value
- Corporate taxable a/c
- Cash value inside the Holdco-owned policy compounds without annual passive-income tax.
- The death benefit, less ACB, credits the Capital Dividend Account — paid out tax-free.
- Premium is paid with corporate dollars, far cheaper than after-tax personal income.
- Policy charges and surrender penalties matter; insurance is not a liquid investment.
A note on use. These instruments compress complex tax codes into a small set of inputs. They assume Canadian-style corporate / personal rates by default, ignore some attribution and integration nuances (notably the refundable tax on passive corporate investment income, and TOSI), and use simple compound growth without re-investing dividends. They are designed to teach the shape of the answer, not to produce one. Confirm any decision with a qualified accountant, tax lawyer, or insurance professional in your jurisdiction.