Federal government announced that the capital gains inclusion rate hike will be postponed until January 1st, 2026.

Reduction in Income Tax

For corporations where shareholders are also employees of the corporation, in order to reduce tax payable on death, tax laws allow an employer, as a way of recognizing past services of a deceased employee, to pay to the deceased employee’s heirs a ‘death benefit’. The first $10,000 of such benefits are exempt from tax. Therefore, with a little planning, the corporation can enter into an agreement whereby it undertakes, upon the shareholder-employee’s death, to pay to his survivors the sum of $10,000. For corporations where spouses are both shareholder-employees, you can provide that a sum of $10,000 would be paid to the surviving spouse and another $10,000 would be paid to the survivors of the last spouse shareholder-employee to die for a total tax saving of $20,000.

Contact a member of Sicotte Guilbault LLP’s Business Law team for more information.