Q: What is “Intestate”?

A: A situation in which an individual does not have a Will in place prior to death. All assets are distributed according to the Intestate laws of your province.

 

Q: What is an Executor and an Executrix?

A: An Executor (male) or Executrix (female) can be defined as a person or institution that is appointed by an individual to carry out the terms of that individual’s Will after death.

Q: What is a Sinking Fund?

A: A fund formed by periodically setting funds aside for the gradual repayment of a debt or a replacement of a wasting asset.

Q: What is a shotgun clause?

A: A shotgun clause is a blunt legal agreement between shareholders in a business that allows one partner to put a price on the table for the value of the business and leave it up to the other partner to take the money or match the offer in a short period of time (usually 20 to 40 days).

 

Q: What is a Health Spending Account (HSA)?

A: A Health Spending Account is a group benefit that provides reimbursement for a wide range of health-related expenses, over and above regular benefit plans. HSA’s are administered in accordance with Canada Revenue Agency guidelines.

 

Q: Can a Business Owner claim his or her spouse and children’s medical expenses with a Health Spending Account (HSA)?

A: Yes, the entire family becomes a tax deduction for the Business Owner.

 

Q: What do I need in order to qualify for a Health Spending Account (HSA)?

A: An individual needs a minimum $5,000 in T4 income and the business must be incorporated.

 

Q: Who should own the Health Spending Accounts?

A: The Operating Company.

 

Q: Where can I find Private Health Service Plans (PHSP) in the Income Tax Act?

A: Private Health Service Plans (PHSP) can be found in Section 248 of the Income Tax Act.

 

Q: What is the maximum amount that a family can claim?

A: The approximate amount is $15,000 per family. If the spouse is an employee as well then the max may be more.

 

Q: What is a CDA?

A: Capital Dividend Account

 

Q: Who should own a CI policy?

A: The Operating Company.

 

Q: Is a CI policy a tax write off?

A: No, we are just using the before tax dollars.

 

Q: Which corporation is able to write off taxes – the Holding Company or the Operating Company?

A: The corporation which issues the cheque.

 

Q: In the event of a demise, how does a spouse collect corporately owned life insurance?

A: The surviving spouse must be a shareholder and can withdraw the money tax free through the CDA account. If the spouse is not a partner, then the CDA can hand the funds to the passing partner’s estate tax free. The policy must go through the corporation to have the benefits tax free.

 

Q: When typing up a Will, how many witnesses are needed?

A: When typing a Will, you require 2 witnesses. If it is handwritten (holographic), you will need to only sign it – no witnesses are required.

 

Q: Why should you have a Unanimous Shareholder Agreement?

A: There are many reasons why you should have a unanimous shareholder agreement. Including but not limited to:

1) Death of one Business partner prematurely, whether they have a Will or not, the spouse of the deceased partner will be automatically become the business partner.

2) Business partner declares bankruptcy.

3) Partner goes through a divorce

4) Criminal activity