Tax efficient investing for lifeTax efficient investing for life Investors Group Corporate Class Inc.Investors Group Corporate Class Inc.™™ Allegro Corporate Class PortfoliosAllegro Corporate Class Portfolios™™
This presentation is offered by
Provided by Investors Group Financial Services Inc., a financial services firm.
Presented as a general source of information only, and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or any other investment or financial matters, please contact me, Turenne Joseph, consultant at Investors Group.
The Investors Group Corporate Class™ mutual funds are shares issued by Investors Group Corporate Class Inc.
Commissions, fees and expenses may be associated with mutual fund investments. Read the prospectus before investing. Mutual funds are not guaranteed, values change frequently and past performance may not be repeated.
™ Trademark owned by IGM Financial Inc. and licensed to its subsidiary corporations.
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Turenne JosephFinancial Security Advisor, Mutual Funds RepresentativeLicensed in Quebec, Ontario and British ColumbiaInvestors Group Financial Services Inc., a financial services firm [email protected]
Investors Group Corporate Class Inc.Investors Group Corporate Class Inc.TMTM
1.1. Efficient tax-planningEfficient tax-planning Reducing your taxable income
2. Beyond registered investments Our solution for you
Investors Group Corporate Class Inc.TM
Allegro Corporate Class PortfoliosTM
Who can benefit? A case-study: David vs. Susan
3.3. Generating cash flowGenerating cash flow Allegro Corporate Class PortfoliosTM - Series T Return of Capital (ROC) Coordinating multiple income sources
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1. 1. Efficient tax Efficient tax planningplanning The basics
1. 1. Efficient tax Efficient tax planningplanning The basics
Understanding Your TaxesUnderstanding Your Taxes How much will you pay? It depends on…
your marginal tax rate. the type of investment income you receive.
Tax treatment of $10,000 of income under varying types of taxation, assuming a combined marginal tax rate of 46.41%:
Interest income
Eligible Dividen
d income
Capital Gains
income
RRSP/RRIF withdrawa
ls
Return of
Capital
Marginal tax rate
46.41% 23.10% 23.20% 46.41% 0.00%
Income tax
$4,641 $2,310 $2,320 $4,641 $0
You keep $5,359 $7,690 $7,680 $5,359 $10,000
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Reducing your tax billReducing your tax bill
Conversions Convert assets into tax-efficient investments
Deductions Use existing tax credits to reduce your overall taxable income
Divide Transfer income to your spouse or children to reduce your
overall family unit taxable income
Deferral Choose investments that allow you to defer payment of taxes
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Limits placed on registered investments… Registered retirement savings plan (RRSP)
Annual contribution limit of 18% of your previous year’s income to a maximum of $22,000 for 2010
Contribution age limit set at 71
Tax-free savings account (TFSA) Annual contribution limit of $5,000 dollars per year regardless of past
year’s income
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What if these are not enough to meet your needs?
Most common option is…
Non-registered investmentsProblem : tax liability incurred every time rebalancing occurs
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2.2. Beyond registered investments Investors Group Corporate Class Inc.TM
Allegro Corporate Class Portfolios™
Tax efficient investing for lifeTax efficient investing for life
Investors Group Corporate Class Inc. funds Over forty Investors Group Corporate Class investments
Broad selection of cross sectors and geographic diversification
Fee-free switching between investments
Allegro Corporate Class Inc. Portfolios Seven approaches to choose from
Broad selection of cross sectors and geographic diversification
Fee-free switching between portfolios
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Tax-efficient investing Avoid triggering tax liabilities when re-balancing your
portfolio
Allows your investments to grow on a tax deferred basis
Unique fixed income exposure options provide safety without immediate tax consequences
Additional benefits No contribution limits
No age restrictions
No loss of contribution room as a result of early withdrawals
Limited impact on your income tested benefits
Corporate Class Corporate Class takes tax planning seriouslytakes tax planning seriously
Who can benefit most from this strategy? Who can benefit most from this strategy?
Investors who :
Hold investments outside of registered accounts, but have maxed out their RRSP and TFSA contributions
Would like the freedom of adjusting their portfolio regularly without realizing capital gains
Have a long-term investment time horizon
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Case study: David versus Susan Case study: David versus Susan
David and Susan have both maxed out their RRSP and TFSA investments and are searching for alternatives.
Susan opts to invest $100,000 in the Investors Group Corporate Class structure
David invests $100,000 in the same portfolio but in a traditional non-registered structure
Let’s assume the following conditions apply Both have a 25 year investment time horizon
Both have a marginal tax rate of 39% for the period
The Corporation pays a 2% capital gain dividend each year
10% of the portfolio is rebalanced each year resulting in funds being sold and reinvested.
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Case study: David versus Susan The after-tax value of Susan’s Corporate Class investments is over
$60,000 greater than David’s regular unit-trust portfolio.
Initial Investment After Tax Benefit of managing investment inside Corporate Class over 25 years
$15,000 $9,284$25,000 $15,473$50,000 $30,947$75,000 $46,420
$100,000 $61,894
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• 60% of the portfolio consists of equity investments realizing an annual return of 8.5%.• 40% of the portfolio consists of fixed income exposure investments earning a 3.5% return.• The portfolio is rebalanced at each year end, resulting in 10% of the funds being sold and reinvested in other funds.• The mutual fund trusts make annual distributions of their net investment income and capital gains distributions equal to 2% of net assets.• A 39% marginal tax rate, an annual capital gain inclusion rate of 50% and the Corporation pays a 2% capital gain dividend each year.• Investments are sold after 25 years.• The mathematical table shown is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values or
returns on investment.
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3. 3. Generating cash flowGenerating cash flow
Return of capitalReturn of capital
Tax efficient monthly payoutTax efficient monthly payout Transfer your Series A and/or B portfolio and/or fund over to
Series-T Allegro Corporate Class Portfolios and save tax through the return-of-capital feature
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Series A or B Allegro Corporate Class
Portfolios Series-T Allegro Corporate Class
Portfolios
Systematic withdrawal plan with return-of-capital
Tax efficient monthly payout
Series A or B Corporate Class funds
Payout is a return of capital, which is your original investment
and therefore not subject to tax
The complexities of multiple income sourcesThe complexities of multiple income sources Understanding your sources of income is critically important
in order to coordinate them in the most tax efficient way:
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Personal savings:RRSP/RRIF TFSANon-registered investmentsEtc…
Government:CPPQPPOASEtc…
Other:Part-time employmentHome equityEtc…
Employer sponsored:Employer pension planGroup RSPDeferred profit sharing
17“Turn your tax problems into investment solutions” – C3224 – 05/2009
Tel. Office : (514) 350-8750 poste 8815Toll Free : 1 (866) 688-8750Fax : (514) 350-8752Email : [email protected]
Financial Security Advisor
Mutual Funds RepresentativeLicensed in Québec, Ontario and British Columbia
Investors Group Financial Services, a financial services firm
2001 University, Suite 1620Montréal QC H3A 2A6
You have questions?You have questions?You have questions?You have questions?
Maximize your possibilities and financial freedomMaximize your possibilities and financial freedom……Maximize your possibilities and financial freedomMaximize your possibilities and financial freedom……
Turenne Joseph
