mordko said

Dean said

So Tangerine beginning to move into Business Banking is a Bad Thing⁉️

Interesting !
Dean  

Tangerine already had a business saving account. They are expanding the offering. Obviously a good thing but I am struggling to see who would want it given the alternatives. 3% for a savings corp account isn’t enough for small businesses owners like me. Moving money around for an extra percent or so is ok in a personal account but it's just not worth it for a corporation. Unfortunately Tangerine is missing proper investment accounts for businesses.  

I am an existing user of Tangerine Business. Their business savings account rate is 1.95%.
I do agree that Tangerine Business is currently not that interesting.
Since our small business has funds that will not be used in the next 12-24 months, for me it was worth opening a Tangerine Business account since I was getting 1% with RBC.
RBC Business now offers 1.90% interest on if your savings balance is $100,000 - $249,999; if that was their rate before, I would not have bothered opening a Tangerine Business account.
I ended up putting half of the funds in a Tangerine 1-year GIC (3.6% interest per annum).
So the 3% promised (if not promotional) would be a step up for an existing user like me.

Dean said

So Tangerine beginning to move into Business Banking is a Bad Thing⁉️

Interesting !
Dean  

Tangerine already had a business saving account. They are expanding the offering. Obviously a good thing but I am struggling to see who would want it given the alternatives. 3% for a savings corp account isn’t enough for small businesses owners like me. Moving money around for an extra percent or so is ok in a personal account but it's just not worth it for a corporation. Unfortunately Tangerine is missing proper investment accounts for businesses.

Dean said

mordko said

Trying to compete with Wealthsimple and EQ and stem the loss of clients for the group.

Still looks like a hard sell when compared to WS which offers a business chequing account paying 2.25% across the board paired with a proper corporate investment account.

So Tangerine beginning to move into Business Banking is a Bad Thing⁉️

Interesting !
Dean  

Nah.... It is just that Mordko has bought into the WS playbook, hook, line and sinker given his multiple posts on the matter in forums. His views may well be justified given the progress WS has made but for now I consider it work in progress.

It is a good thing Tangerine is expanding and evolving. Not everyone needs a complex array of offerings from what is/was primarily a brokerage (WS).

mordko said

Trying to compete with Wealthsimple and EQ and stem the loss of clients for the group.

Still looks like a hard sell when compared to WS which offers a business chequing account paying 2.25% across the board paired with a proper corporate investment account.

So Tangerine beginning to move into Business Banking is a Bad Thing⁉️

Interesting !

Dean

Still looks like a hard sell when compared to WS which offers a business chequing account paying 2.25% across the board paired with a proper corporate investment account.

Dean

• Chequing account offering 1.25% interest, unlimited free e-Transfers, no fees or minimum balances: https://www.tangerine.ca/en/bu.....ng-account
• Savings account offering 3.00% interest, no fees or minimum balances: https://www.tangerine.ca/en/bu.....gs-account

You need a good CCPC accountant.

Investment income taxation
When [passive] investment income is taxed on a corporate level [at the higher rate] and subsequently paid out as shareholder dividends, a certain amount of [higher] corporate tax is refunded to the corporation. For example, there is a $1 corporate tax refund when you pay $2.61 of taxable dividends [in such situations]. This is commonly known as Refundable Dividends Tax on Hand (RDTOH).

Refundable Dividends Tax on Hand
RDTOH is a notional account that is increased when a CCPC pays corporate tax on its investment income (e.g. taxable capital gains, interest, rents, etc.) and any dividends from unconnected Canadian corporations. 30.67% of the investment income and [all of] the Part IV tax payable by the recipient corporation of the dividend income are added to the RDTOH account. …

It simply represents a prepayment of an estimated amount of personal tax at the corporate level. This exists to eliminate any tax deferral opportunity for investment income and integrate the system when the money flows to the shareholder personally.

The earlier the corporation pays out the passive investment income as dividends, the earlier the corporation receives that RDTOH refund.

I would advise though that what you need is someone who specializes in "retirement INCOME planning". There are tons who know all about retirement planning from the savings point of view but fewer who understand the income side well.
I would think though that in a city full of retirees there must be someone!

I first ran into this concept in a book by Daryl Diamond, who was talking about it with reference to RSP or RIF withdrawals, but I think the same principle applies. He is or was in Winnipeg. I think he has or had a company focusing on retirement income planning but don't know the name of it.

My advice would be that if it is difficult to explain this idea to the accountant, then that's not the person for you. You want someone who "gets it" or wants to learn, not someone who just plays one old tune.

However, some people have found that they're better off to do this sort of thing all in one year. It's a huge tax bill, of course, but then you are done with it and can invest what you net out of it for better returns over the coming years and there is nothing for your kids to have to clean up.

I can't say whether this is a good idea for you or not; it would require some careful calculations.

Tax factors to consider in this regard would be: loss of Age Amount for only one year (but you might already be losing all or most of it, depending on current income); total tax payable by doing it this way as opposed to dribbling it out over 12 years; OAS clawback is not infinite - it ends it has been entirely clawed back - around 140K (don't quote me as I can't remember it well; and it will depend on how much OAS you are actually receiving, which in turn depends on when you ben receiving it and whether you are 75 or older). If the amount you still have to take out from the business is significantly more than that amount, then it could cost you less to take it all out at once than having the clawback on the withdrawal every year. Add in the additional income you could earn on it outside the business minus any tax implications from that. It's a complicated calculation but could be worthwhile. It might be helpful to consult an accountant or CFP, especially if you already have one.

re: that clawback maximum: if, for example, cashing out all the business money would bring you to income of 200K, the clawback would end at 140K (if that's the right amount for you), and the other 60K would not create a further clawback because your OAS will have been entirely clawed back at 140k or so. But if you took it out bit by bit annually, it would all be subject to clawback up to 140k or so. I hope that makes sense considering my vagueness about numbers. You also have to consider the marginal rate for amount up to 200K, i.e. whether it increases.