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Corporate Income Tax Optimizer (CITO)

The Corporate Income Tax Optimizer (CITO) offers a strategic framework to help owners of incorporated businesses assess the tax implications of passive investment income. It explains the benefits of investing in corporate-owned life and critical illness insurance. These include reducing tax impacts, providing non-taxable benefits in the event of death or covered critical illness, increasing business liquidity and providing retirement income as needed.

  For more information, contact your dedicated individual insurance expert.

  For more information, contact our Business development team - Insurance.

The Corporate Income Tax Optimizer (CITO) is part of a dynamic planning approach offered by Desjardins Insurance. This concept is designed to help owners of incorporated businesses to assess the impact of passive investment income rules on their business and highlight the following benefits of taking out corporate-owned life and critical illness insurance:

  • Retained earnings are reallocated to pay insurance premiums, which reduces the tax impact of passive investment income rules
  • Death and critical illness benefits are non-taxable
  • This approach can help to increase liquidity for future operations and provide potential retirement income for a shareholder or key employee of the business

It helps improve how a business manages risk in the event of death, critical illness or retirement of a shareholder or key employee.

Available products

  • Life insurance with a business policyowner: term, permanent, participating whole life, universal life
  • Critical illness insurance with a business policyowner: Health Priorities – Term and permanent
  • Health Priorities – Business with Executive Health Plan (EHP) concept

The Corporate Income Tax Optimizer is designed for business owners who:

  • Operate a Canadian-controlled private corporation (CCPC)
  • Have a business that generates recurring profit and qualifies for the Small Business Deduction (SBD)
  • Have investments generating more than $50,000 in passive investment income in a year
  • Need life and critical illness insurance and are insurable

The Corporate Income Tax Optimizer (CITO) is available in the illustration tool.

Go to the Strategies tab and open the Concepts – Business Owners menu. This is a calculator, so you don't need to fill out the Clients and Products tabs.

Procedure

  1. Click on the Strategies tab
  2. Open the Concepts section
  3. Select Corporate Income Tax Optimizer in the drop-down menu
  4. Click Export to download the concept
    When the browser has finished downloading the spreadsheet, open it directly from the link in the browser or from your Downloads folder
  5. Enable content and macros when opening the spreadsheet

  6. This screen will open:
  7. Enter the required information in the various sections of the form
    • You'll see 2 dynamic graphs on the right side of the screen. These will be updated as you enter information in the form. That will give you some insight in real time before you generate the report.
  8. Select the PDF icon to display the report once you've entered all the data
  9. The concept report showing the passive investment income impact over a 10-year horizon will open in a PDF file
  10. A copy of the report is automatically saved in the \Downloads\Desjardins directory, so you don't have to save the report manually and you can print and email the document
  11. When you've finished viewing the report, go back to the data entry screen and click Quit.