Watson Investments is proud to celebrate our Managing Partner, Jennifer Watson, recipient of the Cogeco Business Leader Award presented by the Oakville Chamber of Commerce.

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Case Study

Business owner succession planning

Their situation

Age: Late 50’s

Overview: A local business owner focused on succession planning, with two children currently pursuing post-secondary education.

Net Worth

$3.6 million

Assets

Corporate: $3.25 million Personal: $1.5 million

Liabilities

Business loans: $800k Mortgage: $350k remaining

Their Goals

  • Determine the maximum amount that can be transferred from the operating company to the holding company each year for long-term investment purposes.
  • Structure the corporation and optimize the compensation strategy and asset management for tax efficiency.
  • Understand the financial situation at the time of exit.
  • Sell the business upon exit with tax efficiency.

Watson's Solutions

1
Annual Transfer of Investments from Holding Company
  • Ensured a team was in place to proactively assist and execute portfolio management.
2
Tax Efficiency and Corporate Structure
  • Optimized the corporation’s structure for tax efficiency (e.g., CCPC status), enabling access to tax deductions and deferring taxes on retained earnings.
  • Retained profits within the business to benefit from lower corporate tax rates, supporting future growth.
  • Balanced salary and dividend distribution to optimize RRSP contributions and CPP benefits.
  • Recommended investments in tax-efficient personal vehicles, such as RRSPs, TFSAs, and IPPs, to diversify assets and provide long-term financial security.
3
Corporate Asset and Income Strategy
  • Retained funds within the corporation to leverage tax deferral opportunities and reinvest in growth initiatives.
  • Developed multiple corporate income streams for the future through various accounts and diversified portfolios.
  • Used tax-efficient withdrawal strategies, such as dividends or capital gains distributions, to minimize personal tax liabilities when accessing corporate funds.
4
Exiting the Business
  • Implemented corporate life insurance to fund a buy-sell agreement, ensuring a smooth ownership transition if necessary.
  • Established disability insurance to replace the owner’s income and protect the business from operational disruptions in unforeseen circumstances.
  • Ensured the business was structured to take advantage of the one-time capital gains exemption.

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FAQ

Cash Flow

Will my cash flow be disrupted?

An Education Savings Plan in Canada supports your child’s student education plan with tax benefits and CESG grants. A Registered Education Savings Plan (RESP) offers tax-sheltered growth with a $50,000 maximum RESP contribution limit, while a TFSA provides additional savings for education in Ontario and beyond, reducing financial stress when tuition payments begin.

Combine RESP savings, TFSA contributions, and family gifting options to maximize grants and grow funds tax-efficiently.

It’s best to start as early as possible to take advantage of compounding returns, RESP grants, and long-term growth.

A solid education plan includes RESP contributions, CESG maximization, gifting options, and effective budgeting to meet education costs.

See Cash Flow Service

Tax Efficiency

How can I effectively save and gift for my children's weddings while minimizing tax impact?

An Education Savings Plan in Canada supports your child’s student education plan with tax benefits and CESG grants. A Registered Education Savings Plan (RESP) offers tax-sheltered growth with a $50,000 maximum RESP contribution limit, while a TFSA provides additional savings for education in Ontario and beyond, reducing financial stress when tuition payments begin.

See Tax Efficiency Service
“ We want to bridge the gap between your goals and the complexities of life “ 

Peter Watson

Founder

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