Investment Options

Corporate Class Structure

Corporate Class Funds are designed to provide tax advantages for non-registered assets by giving their investments the potential to grow without being impeded by taxes. Unlike individual mutual funds where each fund is taxed as a separate entity, a mutual fund corporation exists as one legal and taxable entity. When an investor purchases a Corporate Class Fund, they are, from a tax perspective, purchasing shares of a particular class of shares.

Corporate Class Funds are specifically designed to provide the following advantages for non-registered money:

• Tax-deferred rebalancing – Buying and selling mutual fund units to move between funds can result in a taxable disposition, but corporate class funds are all held within the same corporation so investors can move their money from one class fund to another class fund without triggering immediate tax consequences. It is only when you sell the units and leave the shelter of the corporation that tax becomes payable on capital gains. The ability to control when to trigger taxable dispositions can be a very powerful tax planning tool because you can control when gains or losses are realized.
• Tax efficient growth – The corporation exists as one entity for tax purposes, so the tax can be managed within the corporate class structure in a way that other investment vehicles cannot.The corporation does this in two ways:
  • — using capital losses realized by the corporate class funds to offset capital gains by the corporation,
  • — using expenses from corporate class funds to offset income generated within the corporation.

Managing the tax in this way means that corporate class funds may reduce the amount of tax liability. The taxes are minimized or deferred, leaving more money in an investor’s account to benefit from compound growth on a pre-tax basis

Mutual Funds For business

Yes, mutual funds make sense as business investments too. They offer easy access, great liquidity, diversified holdings in just about any instrument or market you can think of, based on solid investment research, and professional portfolio management.

Segregated Funds

For business owners, succession planning should include taking a serious look at segregated funds. Segregated funds are similar, often identical, to mutual funds in that there is a pool of investments held by unitholders, and professional managers invest the funds according to stated objectives – in fact, the better known mutual funds often offer segregated versions of the same investment products.

Like mutual funds, the market value of segregated fund units fluctuate with the fund’s portfolio. However, segregated fund units often come with a guaranteed minimum value as high as 75% or 100% of the original purchase, as a protection for their investors.

But the key difference is that segregated fund units are contracted as a life insurance benefit passing immediately to a named beneficiary, separately from the estate, probate and taxes. Because of this feature, segregated funds can only be purchased through life insurance companies.

Segregated funds can also offer creditor protection, in many cases sheltering a beneficiary from creditors of the estate.

These and other features can vary from fund to fund, but your Orr representative knows the segregated fund market well and can give specific guidance to suit your goals.

Guaranteed Investment Certificates

Need somewhere to park cash? Or buy some time while you make other decisions? GICs provide a guaranteed rate of interest with high security.

Among its numerous benefits are:

• confidence from a guaranteed rate of interest
• terms ranging from 30 days to 10 years
• flexible range of payment options
• income that can be paid monthly, semi-annually, annually, or compounded annually and paid at maturity
• liquidity to cash GICs before maturity, subject to an adjustment.

GICs issued by insurance companies offer unique advantages over those of other financial institutions, specifically creditor protection under certain circumstances where a preferred (family class) beneficiary has been named. Nominated beneficiaries in GIC contracts will receive death proceeds directly eliminating delays and costs due to probate.

Savings Account – Why not?

It’s simple, liquid and insured up to $100,000.

And there’s more

Talk to your Orr Insurance and Investment Broker or Financial Advisor about how these and other financial instruments and planning tools could help you in reaching your personal and business financial goals.