August 31, 2026

• Selling your business is an opportunity to define what you want your wealth to accomplish.
• A sale changes the nature of your financial complexity. Investments, taxes, spending, estate planning, and family goals must now work together.
• Burkett Group’s integrated advisory team can turn the proceeds into a coordinated strategy tailored to your lifestyle and legacy.

Selling a business marks the culmination of decades of hard work. It also marks the beginning of a new financial chapter. The focus shifts from building and operating the business to determining how the resulting wealth should be preserved, invested, accessed, and ultimately transferred in a way that supports the owner’s lifestyle, family, and long-term legacy.

A business sale converts an operating asset into financial wealth. It does not eliminate complexity – in many cases, it increases it. After a sale, decisions about investing, spending, taxes, estate planning, and family governance are connected. A strong portfolio, thoughtful tax planning and a well-designed estate strategy can still produce a poor overall result if they are developed independently. That’s why having an integrated financial approach is critical to making your wealth last and achieve your goals.

The first step is to define what your wealth and legacy should accomplish.

Begin by defining what your wealth needs to accomplish

The first question is not what to invest in, but what you want the wealth to accomplish. That may include funding your lifestyle, making future purchases, retaining capital for new opportunities, supporting charitable causes, and ultimately transferring wealth to future generations.

Legacy planning is one important part of that broader discussion. Different families may have very different objectives for children, grandchildren, charities, family assets and the timing or control of future transfers.

Some clients want equal inheritances for children. Other clients want to fund education, support charity, preserve certain assets for family ownership or transfer wealth gradually during life. The plan should reflect those priorities before any legal or tax structure is finalized.

A clear wealth and legacy plan should answer:

• What level of annual spending is required?
• What major purchases are expected and how much capital should remain available for future business opportunities?
• What portion of the wealth should be set aside for children, grandchildren, or charity and when should beneficiaries receive them?
• Who should control the assets and are they prepared to manage significant wealth?
• How should different family circumstances be treated and how should the plan respond if those circumstances change through incapacity, death, divorce, or family conflict?

The answers to these questions will shape the rest of the plan, ensuring the will, corporate structure, insurance coverage, investment portfolio and tax strategy all support the same objectives.

Where the proceeds are held

After the goals are defined, the next step is to identify where the sale proceeds are held.

Depending on the transaction, the funds may be held personally, in an investment holding company or through a combination of personal and corporate accounts. That distinction matters because it affects access, taxation and distribution planning.

If proceeds are held personally, they may be available for spending and investing right away, but they still need to be managed with tax efficiency, liquidity and estate considerations in mind. If proceeds are retained in a corporation, they are not automatically available for personal use.

Personal proceeds

Consider a business owner who receives $8 million personally after the sale and expects to spend about $250,000 a year.

In that case, the portfolio should be built around time horizon and liquidity. Cash needed in the next few years should generally be managed with liquidity and capital preservation in mind, while capital intended for long-term growth can be invested with a greater emphasis on capital appreciation.

The plan also needs to account for portfolio income if the investment returns are intended to fund the owner’s lifestyle. Interest, dividends, taxable trust distributions and realized capital gains can create taxable income that does not necessarily correlate to cash available for personal spending. For example, taxable amounts reported on an investor’s T3 slip from a trust unit investment must be reported on their personal tax return even if the distribution was reinvested to purchase additional units rather than paid to the investor in cash.

That means the planning conversation should consider both spending needs and the tax consequences of the portfolio, not just investment return.

Holding company

Now consider a client who retains $8 million inside an investment holding company and needs about $250,000 annually for personal spending.

Here, the investment plan cannot be separated from the withdrawal plan. Interest, foreign income, dividends, and capital gains can have different corporate and personal tax effects. The relevant question is not simply what the portfolio earns, but how much wealth is ultimately available to the family after the applicable corporate and personal tax consequences are considered.

Investment income earned by a Canadian private corporation may generate refundable dividend tax balances, some of which may be recovered when the corporation pays taxable dividends to its shareholders. Capital gains and losses may also affect the corporation’s capital dividend account. Where a sufficient capital dividend account balance exists and the corporation makes the prescribed election with CRA, a tax-free capital dividend may be paid to a Canadian-resident shareholder.

The investment strategy should therefore be coordinated with the corporation’s tax accounts, the owner’s spending requirements and the family’s longer-term estate objectives. A portfolio decision that appears attractive based only on its pre-tax return may produce a different result once those factors are considered together.

The portfolio design, corporate tax accounts and shareholder withdrawal strategy therefore need to be coordinated. The investment manager, accountant, and tax advisor each need visibility into the same plan.

One coordinated plan

Burkett Group’s integrated approach is designed to avoid that fragmentation. By bringing together accounting, tax planning, investment management and family-office support, Burkett Group can evaluate each decision in the context of the client’s full financial picture. When legal, insurance or other specialized advice is needed, the team can coordinate those professionals within the broader strategy.

The goal is not simply to invest the proceeds or minimize tax in a single year. It is to create one coordinated plan that supports your lifestyle, protects your family’s wealth, and transfers that wealth according to your intentions.

If you’re considering selling your business or have done so recently and are unsure of the best next step, we invite you to connect with us.

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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investment strategies involve risk, including the risk of loss. Past performance is not indicative of future results. Investment decisions should be made based on individual circumstances and in consultation with a registered advisor. The historical data referenced is for illustrative purposes only, to help frame potential trade-offs between different implementation approaches, and should not be interpreted as predictive or prescriptive.

November 19, 2025

When your wealth is built through a corporation, traditional strategies like RRSPs and TFSAs may not deliver the best results. Here’s why, and what to consider instead.

• RRSPs and TFSAs are effective for most Canadians but can limit flexibility and tax efficiency for incorporated business owners.
• For business owners, retaining earnings in a company often creates better long-term opportunities for growth and retirement income.
• Burkett & Co. helps business owners with thoughtful corporate planning to unlock valuable advantages.

For the average Canadian, registered accounts are cornerstones of personal financial planning, including the Registered Retirement Savings Plan (RRSP) and Tax Free Savings Account (TFSA):

• RRSPs allow pre-tax contributions that grow tax-deferred until withdrawal, ideally at a lower tax rate in retirement.
• TFSAs use after-tax contributions, but growth and withdrawals are entirely tax-free.

For employees with a steady salary, registered accounts can be effective tools for deferring taxes and encouraging disciplined saving. However, the same approach, while suitable for salaried individuals, can actually limit long-term wealth for business owners. That’s because corporate structures and strategic planning offer opportunities to significantly reshape the tax landscape.

Business owners have the ability to decide how much to pay themselves and how to manage retained earnings, and they can use these levers to implement different strategies to yield stronger results.

Retaining Earnings Inside the Corporation: Instead of paying out all profits as salary or dividends, business owners can leave funds inside their operating or professional corporation. These retained earnings are taxed at the small business rate, which is 11% for businesses in BC (on the first $500,000 of taxable income), compared to personal tax rates that can exceed 50%. By investing these funds within the corporation:

• More after-tax capital remains available for growth.
• Investment returns compound inside the business.
• Future personal withdrawals can be timed strategically to minimize tax.

This effectively transforms the company into a retirement savings vehicle with fewer contribution limits and more control than an RRSP or TFSA. For example:

A dentist has accumulated surplus earnings within her professional corporation and wishes to begin contributing to her TFSA. She currently has $102,000^[1] of available TFSA contribution room and expects to receive an additional $7,000 of new room each year. To fund the initial contribution, she must declare a dividend of $199,570^[2] in the first year, providing $102,000 of after-tax cash. Each subsequent year, she will need to declare a dividend of $13,696 to fund the annual $7,000 TFSA contribution.

Assuming a 6%^[3] annual rate of return within the TFSA, its value will grow to $577,627 after 20 years, and she will have paid a total of $224,793 in personal tax to fund those contributions. Upon her passing, the TFSA can transfer tax-free to a surviving spouse or common law partner, and when the spouse later passes away, the remaining TFSA balance continues to be received tax-free by the estate.

If instead, the dentist retained her excess earnings within the corporation, the corporate investment portfolio would grow to $957,916^[4] after 20 years assuming an annual rate of return of 4.24% (net of tax^[5]). Assets held within a corporation are not tax-free at death, but with proper post-mortem planning, such as a pipeline transaction, they can be taxed at effective rates as low as 26.75%. This can significantly reduce the overall tax burden on corporate assets at death and preserve more value for beneficiaries. As a result, the after-tax estate value is $646,877, after $311,039 of personal taxes.

Growing Beyond the Limits of Registered Accounts: For business owners with significant retained earnings, the strict annual limits of registered accounts can be constraining.

RRSP contributions are capped at 18% of earned income^[6] (up to $32,490 in 2025) which limits its tax deferral ability and must be funded with personal income, which triggers tax that might otherwise be deferred or reduced through corporate planning. At age 71, the account holder must convert the RRSP to a RRIF and begin mandatory minimum withdrawals each year, reducing flexibility. Upon death, any remaining RRSP or RRIF can transfer tax free to a surviving spouse. However, when the surviving spouse later passes away, the remaining RRSP or RRIF assets are fully taxable as income and may be subject to rates of up to 53.5% in BC.

Meanwhile, corporations can distribute dividends to shareholders based on individual cash flow needs and preferences, providing greater flexibility in managing income. With appropriate planning, assets retained within a corporation can be taxed as low as 26.75% upon death, making this structure potentially more tax efficient. For example:

A physician with a $500,000 RRSP plans to contribute $30,000 annually over the next 20 years. Assuming a 6% annual rate of return, the RRSP would grow to $2,773,350. If there is no surviving spouse, the full RRSP balance would be taxed as income on the final return. The after-tax estate value would be $1,289,608, after $1,483,742 of personal taxes.

Alternatively, if the same funds were invested within the physician’s professional corporation, the initial $500,000 corporate portfolio, with $26,700 in annual contributions (net of the 11% small business tax on $30,000), earning 4.24% annually after tax, would grow to $2,225,545^[7] after 20 years. With proper post-mortem planning, the after-tax estate value would be $1,499,137, after $726,408 of personal taxes.

When business owners invest through their corporations rather than registered accounts, they can often achieve greater tax efficiency and control, using strategies not typically available to salaried individuals. That said, several other considerations, such as preserving lifetime capital gains exemption eligibility, income splitting opportunities, tax on split income (TOSI), and alternative minimum tax, can influence the best course of action, though they fall outside the scope of this report.

At Burkett & Co., we specialize in helping business owners leverage the flexibility of corporate structures while navigating the complexities of Canada’s tax system. If you would like to learn more about how strategic corporate planning can help you grow and preserve wealth efficiently by aligning your corporate structure, personal goals, and investment strategy, contact us today to schedule a conversation with one of our tax professionals.

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[1] Consisting of $5,000 of accumulated room for each of 2009 through 2012, $5,500 for 2013 and 2014, $10,000 for 2015, and $5,500 for 2016, 2017 and 2018 and $6,000, 2019 through 2022, $6,500 for 2023 and $7,000 for 2024 and 2025.

[2] Assumes a personal ineligible dividend tax rate of 48.89% in BC.

[3] The portfolio return is composed of 2.18% interest income, 0.90% dividends, 1.23% capital gains, and 1.68% deferred growth, for a total return of 6.00%. Your actual after-tax return will vary based on several factors, including inflation, investment type, market conditions, asset allocation, and portfolio performance.

[4] $957,916 consists of a portfolio value of $819,166 plus accumulated Refundable Dividend Tax on Hand (RDTOH) of $138,750.

[5] Interest income is taxable at the top corporate tax rate of 50.67%. Dividends are taxed at the corporate tax rate of 38.33%. Capital gains are taxed the top corporate tax rate but benefit from a 50% inclusion rate. The deferred growth portion is not taxed until the investment is sold and is typically taxed as a capital gain at that time. RDTOH accumulates at a rate of 30.66% on taxable investment income, such as interest and capital gains, and also includes refundable Part IV tax, which is 38.33% on dividends received from other corporations. These taxes are refundable to the corporation when it pays taxable dividends to shareholders.

[6] Dividends received by an individual do not qualify as earned income for RRSP purposes and therefore do not generate RRSP contribution room.

[7] $2,225,545 consists of a portfolio value of $1,893,645 and $331,990 of RDTOH.

When it comes to your investments, peace of mind starts with knowing exactly where your assets are held and how they are protected.

• Utilizing independent third-party custodians helps ensure your assets are held safely by a regulated bank, not by your investment firm.
• Daily reconciliations between Burkett and our custodian’s records helps protect you from errors.
• CIRO membership or directed custody relationships help maximize safety of your assets in event of insolvency.

As an independent wealth management firm, Burkett Asset Management Limited (“Burkett”) is often asked a simple question: “Where is my money actually held and is it safe?”

There is a simple answer that gives peace of mind. The assets we manage for you are held safely with a third-party custodian: regulated financial institutions that specialize in safeguarding investor assets.

What’s a custodian and why do they matter?

A custodian is an independent financial institution with its own terms and regulations, usually a bank or trust company, that securely holds your investments.

This separation is essential. It means your investments remain legally yours, even if anything were to happen to Burkett. Custodians provide an extra layer of protection, oversight, and transparency between you and your investment manager.

At Burkett, we reconcile our records with our custodian’s records every business day to ensure every holding, transaction, and cash flow is accounted for between organizations. It is one of the most important daily checks in place to confirm your portfolio reflects exactly what’s held in your accounts.

Your assets are held in the safety of a bank

The assets under Burkett’s management are held directly in your name at one of three reputable custodians:

• Scotiatrust
• RBC Investor Services
• Aviso Financial Inc. (formerly Credential Qtrade Securities Inc.)

Each custodian is a regulated Canadian financial institution, and each has its own strengths and safeguards. Burkett cannot withdraw any funds, except charging our management fee.

Scotiatrust and RBC Investor Services are directed custody arrangements, meaning your assets are held segregated from the bank’s balance sheet. This means in the unlikely event the bank ever faced insolvency, your funds would remain secure.

Our third custodian, Aviso Financial Inc., is a Canadian Investment Regulatory Organization (CIRO) member firm, insured by the Canadian Investor Protection Fund (CIPF). CIPF coverage provides an additional layer of investor protection, not unlike deposit insurance at your bank, but for your investments, protecting eligible property in the event of a custodian’s insolvency.

How to determine if your firm uses a custodian

If you’re ever unsure whether your money is held securely, ask two questions:

1. Is my investment firm registered with a securities regulator? You can confirm this easily by checking the Canadian Securities Administrators’ national registrant list, here.
   
2. Does my firm use a third-party custodian to hold assets? You should receive statements directly from that custodian, not just your advisor. This independent reporting is your assurance that your assets exist, are properly recorded, and remain under your name and control.

The Burkett difference: independence and integrity

At large banks, your investment advisor is often also your broker, meaning the same institution sells you products and holds your assets. This creates potential conflicts of interest as the bank benefits from promoting its own products.

Burkett is different. As an independent fiduciary, our only incentive is to act in your best interest. By utilizing independent third-party custodians, we eliminate any temptation to steer assets toward any particular institution’s products.

Your investment manager and your custodian have distinct, independent roles:

• The custodian safeguards your assets and issues independent reporting.
• Burkett manages your portfolio, selecting investments guided solely by performance, risk, and your long-term goals.

This independence is the foundation of trust, and it’s why clients choose Burkett for the long run. We believe true wealth management is not just about growing your assets, it is about protecting them. Through daily reconciliation, directed custody, CIPF insurance, and independent oversight, your investments are not only managed with care, they are safeguarded with precision. Your peace of mind is our priority.

If you would like to learn more about how Burkett’s custodian relationships enhance the safety and transparency of your investments, contact us today to schedule a conversation with one of our portfolio managers.

There are lots of tax-deferred or tax-sheltered programs in Canada today for registered accounts such as RESP, RRSP, RRIF, LIRA, LRIF, TFSA, FHSA, and RDSP. Each registered account has unique considerations regarding the consequences of the plan holder’s passing. The concept of a beneficiary is generally well understood with respect to registered accounts. However, TFSAs and RRIFs involve more complex considerations, allowing for the designation of a successor holder or a successor annuitant, respectively. Below is a discussion on the distinction between a successor holder, a successor annuitant, and a beneficiary, along with the advantages of each.

Successor Holder

A successor holder is a spouse or common-law partner who takes ownership of their partners TFSA after their partner passes away. The main advantage of naming a successor holder over a beneficiary is that the successor holder can claim the assets in the TFSA and combine the assets with their own TFSA account. This effectively increases the successor holder’s lifetime TFSA contribution room by the amount of the inherited TFSA. In contrast, a beneficiary receives the TFSA assets tax-free; however, they do not obtain the additional contribution room that a successor holder does, as they must invest the assets elsewhere. In subsequent years, the successor holder will gain additional TFSA contribution room from making withdrawals from the combined TFSA, and through the annual contribution limits set by the Canadian government.

Successor Annuitant

The successor annuitant shares many features with the successor holder, with the key difference being that the successor annuitant applies to RRIF accounts. Like the successor holder, a successor annuitant only applies to a spouse or common-law partner. When the holder of a RRIF account passes away, the successor annuitant assumes ownership of the RRIF account. In the year that the RRIF holder passes away, the RRIF account will pay the surviving partner the pre-determined RRIF draws that have been set by the deceased partner. In the following year, the successor annuitant can combine the inherited RRIF account with their own RRIF account and can then change the draw amounts, the draw frequence, and the draw timing from the combined RRIF account. If the successor annuitant is under 71, they have the option to combine the RRIF account with their RRSP account or keep the inherited RRIF account open. In comparison, a beneficiary receives the cash value of the RRIF less tax which can be substantial.

Conclusion

In most cases in which someone has a spouse or common-law partner, utilizing a successor holder for their TFSA and/or a successor annuitant for their RRIF offers many advantages. Naming a beneficiary may be a better approach if the person wants to name multiple beneficiaries or prefers funds go to people other than their spouse. Finally, where a successor annuitant or successor holder is named, it may be useful to name a contingent beneficiary, acting as beneficiary in a case where the named successor passes away.

For more information or a comprehensive analysis of your situation, please contact Burkett Asset Management Limited (250-370-0667 | [email protected]).

Disclaimer: This article is intended to inform readers in general terms. It is not intended to provide any tax, investment or business advice. Please consult your advisor if you have any questions about your unique situation. While we have tried to ensure the accuracy of the information in this article, we accept no liability for errors or omissions.