[Cash Trapped] Is Your Corporate Surplus “Stuck”?

What Is Trapped Surplus?

In Canada, many business owners accumulate substantial surplus in their corporate accounts. Taking funds out personally may result in combined corporate and personal tax that may exceed 50%. Keeping funds in the corporation can limit personal wealth planning, while withdrawing them may create a significant tax cost.

Does This Sound Familiar?

• Your corporate account keeps growing, but you are hesitant to take money out.
• You want to plan for family wealth transfer but are unsure how to make effective use of corporate surplus.
• You want to access funds for retirement but are concerned about triggering significant tax and an OAS clawback.

A Planning Approach: Corporate-Owned Life Insurance

Corporate-owned life insurance may provide tax-deferred cash-value growth and a tax-free death benefit to the corporation, subject to policy terms and professional advice.

• Policy financing, such as an Immediate Financing Arrangement (IFA), may provide access to liquidity while the policy serves as collateral.
• A coordinated strategy can support both retirement income and intergenerational wealth transfer.

Make Trapped Capital Part of Your Broader Planning Strategy

The right insurance and financing strategy may help corporate surplus support family wealth, retirement planning and intergenerational wealth transfer. Contact us to explore an approach built around your circumstances.