Investor's Guide: A 6 Step Process
1. Select an Investment Strategy
Investors are able to separate their investment decision from their tax decision. Select investments that are a suitable match for fulfilling future goals on both a risk and return basis.
2. Select a Tax Option
Select a tax option to complement tax and financial planning objectives such as: tax deferral, income splitting, and tax efficient cash flow generation. Investors can select our Registered Funds to invest in their non-taxable accounts such as: RRSPs, RRIFs and TFSAs.
3. The Funds Invest and Gather Income
All funds are housed within a single “bucket” – The Tax Managed Corporation. The underlying investments within each fund generate different types of income (interest, capital gains, foreign dividends and Canadian dividends). The income generated is tallied within the corporation.
4. The Allocation
The Tax Managed Corporation allocates the gathered income to the tax options, which in turn offer the investors their preferred tax treatment. For example, eligible Canadian dividends are generally allocated to the Dividend Tax Credit Class. By maintaining separate accounting records, we ensure each fund’s returns are calculated accurately and that income is distributed as defined by the preferred tax option.
5. Dealing with High Tax Rate Income
Interest income and foreign dividends attract high tax rates, making them inefficient sources of income for investors. The Tax Managed Corporation does not distribute this high rate income to investors. Our proprietary management process utilizes a combination of available tax refunds and fees/expenses generated by the funds to absorb high rate taxable income.
6. Result: Comprehensive Tax Planning
Investment growth and the facilitation of tax minimization are top priorities within our structure. The two tier decision (selecting an Investment Strategy and a Tax Option) creates a customizable and flexible investment solution that can facilitate an array of tax and financial
Capital Gains dividends are declared as necessary to eliminate the overall tax liability of the structure.
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