S
upporting
Y
our
P
ractice
The Power ofTaxDeferredCompounding
– BusinessAccount
Withinyour incorporated
business structure, youwill
have “activeassets”
that generate income from
your business activities and
are taxedat a relatively low
rate (approximately15%
dependingonyour province),
and “passiveassets” that
generate income from
investment activitiesbut
are taxedat amuchhigher
rate. Youmayusecorporate
class funds to reduce taxes
on some income fromyour
passiveassetswhile
deferring taxesoncapital gains
toa later date.We recommend
that you talk toyour accountant
to learnmoreabout the tax
advantagesof corporateclass
funds.
Investing in
Corporate Class
As amember of theCanadiandental
community, youhaveexclusiveaccess
toCDSPI’s familyof corporateclass
funds,managedbyCI Investments
(
Table1
).
a
Supposeyou invested$50,000 ina
corporateclass fund familyand realizedan
annual compoundedcapital appreciation
of 7%, switchingassets fromone fund to
another as required. If you redeemout of
these investments after 30years, theywill
beworth$380,613. Bearing inmind that
50%of capital gains are subject to tax, and
applyinga45% tax rate to that amount,
your net valuewill be$306,225.
Makinga$50,000dollar investment in
aportfolioofmutual funds,with the
same7% return, your net valuewill be
$243,937after 30years, assuming identical
rebalancingandyearly taxationongains.
BeforeTax:
$380,613
After Tax:
$306,225
After yearly rebalancing
and taxationongains:
$243,937
Savingsof$62,288
INSIDE
CORPORATECLASS
OUTSIDE
CORPORATECLASS
CorporateClass
FundName
Fund
Category
Risk Level
Management
Expense
Ratio
Morningstar
Rating
1
CDSPI CanadianBond
FundCorporateClass
Canadian
Fixed Income
Low
1.10%
★★★★★
CDSPI CanadianEquity
FundCorporateClass
Canadian
Equity
Medium 1.65%
★★★★
CDSPI CorporateBond
FundCorporateClass
HighYield
Fixed Income
Low to
Medium
1.25%
★★★★
CDSPI Incomeand
GrowthFundCorporate
Class
Global
Neutral
Balanced
Low to
Medium
1.45%
★★★★★
CDSPI Short-TermFund
CorporateClass
Canadian
Money
Market
Low
0.75% Less than
5years
1. Asof September30, 2015.Morningstar ratingsarebasedonanalysisbyMorningstar, Inc. ofCDSPI funds
withperformance recordsofoneyearormore. Pastperformance isnotnecessarily indicativeof future results.
Formoredetailson thecalculationofMorningstar ratings, please seewww.morningstar.ca. Information in this
article is for informational purposesonlyand isnot intended toprovidefinancial, legal, accounting
or taxadvice.
Table1:
CDSPI CorporateClassFunds
