This presentation looks at RCA as well as the proposed tax changes by the government of Canada on Small Business

1. SMALL BUSINESS AND
WEALTH MANAGEMENT –
CANADA – AUGUST 2017
PAUL YOUNG CPA, CGA
SEPTEMBER 22, 2017

2. PAUL YOUNG - BIO
• CPA, CGA
• Financial Solutions
• SME – Risk Management
• SME – Emerging Technology
• SME – Business Process Change
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
Contact information:
Paul_Young_CGA@Hotmail.com

3. AGENDA
• What is a RCA Pension?
• Manulife and RCA
• RCA implications for Business
• New Tax Rules

4. WHAT IS RCA PENSION?
• Source - https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/special-payments/retirement-
compensation-arrangements.html

5. MANULIFE / RCA
Source - https://repsourcepublic.manulife.com/wps/wcm/connect/a611357c-e831-4351-84a8-
fb82b0304765/ins_tepg_taxtopicrcas.pdf?MOD=AJPERES&CACHEID=ROOTWORKSPACE-a611357c-e831-4351-84a8-fb82b0304765-lJvwhgT

6. COLLINS AND BARROWS / RCA
Source - https://www.collinsbarrow.com/en/cbn/publications/taxalert-what-is-a-retirement-compensation-arrangement-rca

7. TANNER FINANCIAL
Source - http://www.tannerfinancial.ca/canadian-small-business-tax-changes/
Canadian small business needs to speak up and make sure someone is actually listening. The
implication from Mr. Trudeau and Mr. Morneau is that most owners of small corporations in Canada are
somehow ripping off the system and that is treating the rest of Canadians unfairly. There are several
insinuations here and even in the 2 articles linked here that are simply false statements. Mr. Trudeau
goes so far as to say that an employed individual (ironically probably working for the small corporation
business owner) earning $ 50,000 somehow pays less tax than the business owner’s earning $ 250,000.
The fact is most don’t income split fully as many spouses have other jobs and are paying tax already.
The logistics of starting a small business are difficult and many spouses and families require multiple
incomes during this period just to survive.
However, let’s give Mr. Trudeau the benefit of the doubt and assume the spouse doesn’t work at all
however unlikely that may be. Ironically again, if the spouse doesn’t work they are more than likely
legitimately helping with their spouses business and entitled to a salary anyway. Let’s assume a perfect
split of the $ 250k to both spouse so they are each paying tax on $ 125k. The $50,000 employee pays $
10,625 and the business owner doing a full split with their spouse of their $ 250,000 is still paying $
76,460 in income taxes about $ 20,000 less than they would if all taxed on one income. Given that they
employ Canadians, pay other forms of taxation such as employer portions of employer health tax, CPP,
EI, workers comp and so on this hardly seems advantageous.

8. BDO / SMALL BUSINESS
Source - https://www.bdo.ca/en-ca/insights/tax/tax-articles/tax-planning-using-private-corporations-the-government-speaks/