Meet Tim
Tim, a successful 55-year-old mortgage broker, faced a common problem among business owners: He had accumulated excess cash in his corporation and wasn’t sure how to invest it wisely.
Tim felt unsatisfied with his personal investments. He was paying too much tax to withdraw money from his corporation to invest in his RRSP, which left him wondering if there were more efficient ways to grow his wealth.
His ultimate goal was to retire comfortably, living off passive income without losing too much of his hard-earned money to the CRA. Most importantly, he didn’t want to manage his investments. He wanted to leave the heavy lifting to the experts and get time to enjoy the things he loved.
How Ocean 6 Grew Tim’s Wealth Tax-Efficiently
The first step is to strategize how to best grow Tim’s excess cash. Starting with ensuring all investments were made inside his corporation to avoid withdrawing money to invest personally. This way, Tim would have more money to make his initial investments since he wouldn’t need to pay a layer of personal taxes.
Inside his corporation, our main strategy was to convert Tim’s passive income to capital gains and return of capital (an investment return that is not taxable).
We invested his excess cash in corporate-class mutual funds and other capital gains-producing vehicles. These investments were chosen for their tax efficiency and potential for growth, allowing Tim to reduce the taxes he paid on his passive income.
Our focus on effective tax management strategies enabled Tim to withdraw one-third of his capital completely tax-free from his corporation.
The Impact
Tim significantly reduced his tax bill in all areas. The investment plan we implemented for him is designed to grow his wealth tax-efficiently, setting him up for a comfortable retirement where his money works for him, not against him. Tim generates income by strategically selling a portion of his investments each year while minimizing his tax liability.
We proactively optimize his portfolio and seek out new investment opportunities. Tim gets more time to spend with his loved ones and focus on what he enjoys, knowing his money is in good hands.
