How Business Owners Can Pay ZERO Taxes Legally

There's certainly no celebration going on within the walls of Parliament. They're spending their time talking about completely ignoring the over spending the, the bloated bureaucracy and saying, how can we reach further into the pockets and purses and wallets of Canadians? Where can we find more money to feed a machine? And so you've gotta be acutely aware of what's going on so that you know exactly what to do. A participating dividend paying whole life insurance contract is the greatest exemption that exists in the Canadian tax code today. The government levies a tax on your right to earn an income. It's called income tax. The same applies to your business. The government levies a tax on your business's right to earn profitable revenue and to conduct business. It's called corporate tax. When you plan to leave things behind to family, knowing that you're going to die someday, the government levies the tax on your wanting to transfer all of those assets to your family. It's called capital gains tax. It's called terminal income tax. You haven't died yet, so you haven't experienced that. Yeah. What business owners want outside of the fact that they want to have a successful company, they want to create great employment opportunities, they want to serve the marketplace and whatever it is that that they. I haven't met a business owner yet who said I really don't feel like I'm being taxed enough. Right. It just doesn't happen throughout your life, throughout your business cycle. You can't ignore the tax structure. It's there. Logically, you've got to make decisions about what you do, how you handle money that's flowing through your business and how you handle money that's flowing through your hands personally. What are your thoughts on that, Sargo?

Money is a tool which is required to do the things that business owners want to do, which as you mentioned, Jason, is to provide to the family that are supported by the business as income for the families, the divisions that they have in terms of expanding, scaling their business because that's the energy that, that's why they are in business, is to fulfill their the need and want to serve people which could be their team members, which could be people that they serve, who buy their products, services, whatever it is. So money is just a means and the more money we have, the more we can use and the biggest loss to the money in terms of use of money, basically taxes.

Precisely. Precisely. If you were to ask a business owner, let's select a business owner who's running a profitable company and you ask the Business owner, hey, what was your profits last year? You know, we generated a million dollars in profit. A. That's, that's a great degree of profitability. So congratulations for doing that. How many years of that level of profitability do you want to insure? Well, I'd like less. Exactly. Yeah, you know, pick a number. Okay, well, I want to ensure five years of profitability at a million bucks. Okay, so we'll create a policy. And of course the death benefit has to have merits and of course. But if you just follow that logic, the way that the business owner arrived there, an understanding of how to ensure five years of profit is that the business owner understood logically that their capital had to reside somewhere. Money must reside somewhere. There are no exceptions. When you look at the attributes of a variety of different warehouses that you can store money in, we're focusing on one particular instrument. Dividend paying participating whole life insurance contracts that in this case are corporately owned. The premium comes from capital, not from income. The corporation itself pays the premium. The corporation itself owns the policy. That policy is generating contractually guaranteed daily cash value accumulation. So you're also creating a tax free surplus addition to the balance sheet of the company because you're paying no tax on the buildup and that buildup is daily. The company now co owns another company which is the life insurance company, participates in the form of annual dividends that once declared or contractually guaranteed to be paid, cannot be repossessed, cannot lose value. From the corporate business owner's perspective, logically, the corporate business owner looks at it and says, oh, I understand. Contractually guaranteed daily accumulation of cash. That's good. I understand that I pay no tax on that build up. That's also good. I understand that the policy is exempt from the passive investment income tax rules. That's really good. I understand that I am going to. If, if I live a long time, which if you get approved for the coverage, then the insurance company is placing a bet that you're going to live a long time. You're going to pay no tax on the death benefit proceeds. Your surviving heirs or shareholders are going to be able to extract from the capital dividend account. Tax free capital dividends. We're not disregarding the tax structure, we're addressing it head on. The corporate owner sees that says logically, how much additional capital do I not.

Want residing there when an opportunity strikes the business? Because opportunities for the use of capital strikes the business owners all the time with one phone call or a simple form that they get to complete which they just put in the policy or no policy number the corporation name because the corporation owns the policy. How much money they need, what they can access is 90% of cash value. So, and then on demand, the money shows up while the balance sheet on the corporation still gets better every single day because the cash values never were interrupted.

How good is that?

Yeah, this is pretty awesome. And a lot of our clients, Jason, who are business owners in different professions, they, they may be from medical profession, they may be from construction field, from other operation and services, they have taken advantage of all this because when a business takes a policy on the business owner, what they're ensuring in addition to the income for the business owner is the income truly for the business.

Totally.

And income that business produces is income that is, that is used to support the operations, the opex of the business, which also includes payroll salaries of T4 employees which are on the business. So when, when the business owner exits, which every business owner is going to exit at some point, either by choice or with no choice. Yeah, this is going to take care of a business owner. If a business owner lives a long life, it'll take care of the business owner. But if the business owner exits by debt, then he's going to take care of the people that are depending on the business, including the families of the business owner and the other families that the business supports.

Precisely. And when you run into a situation where a business owner passes away and the business owner's shares in his or her business automatically roll over to the surviving spouse, while the surviving spouse is now locked in to the business, but locked out of the cash.

Right.

The surviving spouse wants the cash, not the shares. And so the company's got to come up with capital, which in this case, another added advantage is that there's a windfall of money that shows up precisely when it's needed the most. So that their surviving spouse is not locked out of the cash, the surviving spouse can say, look, I'm going to be paid the value of those shares someone else can carry on in the business. And again, it's business owners. Being that we are business owners ourselves, we think differently about the advantages of putting capital into this unilateral binding contract. A dividend paying, participating, whole life policy. I'll give you an example. You've heard me share this before because it's so poignant to how logical it is and how motivated a business owner gets. So think about it. From, from this vantage point, you've got a business owner. So in this scenario, I'm referring to Bonnie and Martin. They Run a great vacuum truck business. They're amazing clients, have been clients for years. Wonderful people, great family. And this is a business that they've been operating for now. It would be just approaching two decades. And most businesses don't make it to their first decade, let alone the second. And they run a really, really good company. We went through a process of determining how much death benefit was necessary, right? Because again, death benefit has to have it worked out to where? The first policy, they now have several. The first policy that they put into place, the annual premium consideration was 50,000 per year. That wasn't the required annual premium. That's the amount that they had the contractual authority to put into the policy, but they were only contractually bound to put in less than 50,000. Well, when we were going through this calculation, so we had a starting death benefit just north of 1.8 million. Really good policy. We went through this calculation where I asked, I said, martin, I've got a question for you. And he said, sure, what is it? I said, if you think about this logically, answer this question for me. Do you have anyone in your company that you're presently paying $137 a day or more? And he said, oh, yeah, we've got people in the company that earn a really good salary and certainly it's north of $137 a day or 50,000 a year. And I said, so if you were to add another employee to your payroll for 50,000 a year, would that bend or break your company? And he said, no, absolutely not. We've got surplus capital. We're profitable. It wouldn't bend or break the company. I said, so put me on your payroll for $137 a day and I'll put 1.8 million into escrow with your name on it. Immediately that clicked. It was like, oh, my God, that makes perfect sense. If I can put $137 a day into my constructing this warehouse of wealth, can I put additional capital in? Well, then we had a conversation with the accountant and determined that there was terminal tax obligations. God forbid if the unthinkable happened. The accountant addressed a good point. The accountant said, yeah, but you can pay that obligation in installments. And I said, you're absolutely right. Let's go through a little bit of math on that. If we've got a million dollar terminal tax obligation and you can pay it in installments and the interest on the installments is 5%, that's $50,000.

So I asked Bonnie and Martin, I said, well, if you had Sitting here today put two checks on the table. One check was payable to Revenue Canada for a million bucks. The other check was payable to the life insurance company for $50,000. Which check do you want to sign? Well, we want to sign. Which number do you like, the smaller one or the bigger one? Well, we like the smaller one. Said yeah, because today you have a choice. You're both still alive. When you're gone, you don't have a choice. The big check needs to get signed. And it's always cheaper to do it my way because you're buying. For every dollar of death benefit that you're purchasing, you're paying about 4 cents for it. So how many of those dollars do you want to buy? And both Bonnie Martin said, as many as we can. But we had to start somewhere. But they understood logically what that represented. And I'll end that particular use case with this. Vacuum trucks are 400 grand a piece. So business owners, I want you to think about all the overhead in your company because you can app I'm about to share to anything as it relates to your business. About four years in, they knew that they were going to have to replace because these vacuum trucks go through a duty cycle and then once they go through their duty cycle, you've got to replace them. They were able to request a policy loan from the insurance company. And when you request a policy loan, this is ready access capital on demand, on your terms, meaning unstructured loan corporation controls the repayment schedule. The way that they were buying trucks before is they were using a sinking fund method. They would set aside money each and every year, build up a fund substantial enough to go and pay cash for the truck. While they built up the cash, they just built it up in their own warehouse, not someone else's. And they borrowed against that accumulation to go buy the truck. And every day that an employee is buying a truck, their total cash value is still growing uninterrupted in their system of policies. Brilliant. And the accountant understands that and goes, that makes perfect sense because you still got this asset on the balance sheet called cash value that's rising every single day. You've got an ever increasing permanent death benefit. You're paying no tax on the buildup. You're purchasing a vehicle that's going to generate more revenue for your company. And you as the company get to control the repayment schedule of that loan. So if you have any variability in cash flow, any seasonal waves in revenue, you don't have to. Nobody from the insurance company is calling you to say, hey, what are your plans to repay this loan? Because the lien is on the death benefit of the insurance policy, not on the vacuum truck. Brilliant. Isn't that good?

It's good. So it's a suggestion. This family, just by rethinking their thinking about what problems would this process solve for them, it just became a no brainer. Because the problem that this process solved for them was not just tax liability, which for every dollar they were paying 4 cents were. And as the system of policies grew, they were able to finance the trucks which runs their business, which runs their lifestyle because it produces cash flow, cash flow coming in. All their cash in the policy kept growing tax free. So that was brilliant. But if they never had done it this way and they would have just stick the old way, they may not even had death benefit by now because they would have taken an advice of paying it an installment and it would have cost them dollar for dollar. And they had to finance it the traditional way or they had to pay cash for those trucks and all the money, all the wealth would have been trusted away, which is less for the business itself precisely because how much, how.

Much interest could they have earned if they continued the sinking fund method and used corporate money to go and buy the truck? They permanently give up the opportunity to earn interest on that corporate money. For as long as the corporation exists, they're still buying the trucks. They're just doing it differently. And I had no clue, Sarblo, how expensive these trucks are to even maintain pain, like just tire replacements or several thousand dollars. Well, now it's their system of policies. They're using the life insurance company's money because you have a contractual loan provision where you can request a policy loan at any time. And you're using the life insurance company's money, not the corporation's money. Because what so many people don't really have an accurate understanding of is that cash value is money. Well, it's not money in the sense that otherwise they would just call it cash, right? They would say, here is your total cash in the policy. But they name it, they properly characterize it as cash value. They don't have little vault in the insurance company that has your policy number on it that they go and put money into every day. It's a value, a contractually guaranteed sum and you get to borrow against that value. And that value increases each and every day. So again, if you think about this logically, the business owner says, okay, I like things that go up in value. How many? How many?

Right.

How many Business owners sit there and go, you know, really like a company that gradually declines in value. That's the type of business that I want to run, and I want assets that do that too. No, the business owner is saying, I love the fact that a. I'm getting. I'm solving a number of really important objectives with one instrument. I am addressing the tax structure in the most responsible way because the business owner and the individual, you have a responsibility to pay the least amount of tax, and what you do with that additional money is going to be based on what you prioritize. And business owners prioritize value creation and they prioritize capital and the deployment of capital. Well, this is a great instrument to achieve all that. And then knowing, like you said, you know, the business owner is going to exit the company someday. I would ask any business owner tuning into this, do you have a plan to take it away favorably if you exit your business, either dying, getting sick, selling it, disappearing insolvency, voluntarily or involuntarily terminated, do you have a plan to address all of that? Because if you don't, you have an opportunity. And that's where connecting, of course, you know, with the right person on our team would represent a huge advantage to that business owner. Because this is, again, this is what we specialize in. This is what we do. And it's not just about putting the instrument in place. It's all the coaching and mentoring that goes along with it. What would you say about that?

The biggest thing, Jason, that people come to us, the reason why they come to us, is because of the coaching that comes along with everything else that we do. It's not about, hey, here's a plan that we're going to put together for you and go execute it. And call us in five, 10 years ago, 10 years from today, and let us know how it turned out regarding the implementation of the process for the purpose of buying vacuum trucks. They're not going to get anything done because they business owners have their own unique abilities. They're uniquely good at what they do. This is not unique to them. This is where we come in, and this is unique to us. This is our unique ability where we coach and teach and help them implement this process in the business so that we can get them started when it becomes a second nature. Because that's the whole idea. This will become second nature to you. And when it becomes second nature, it'll just flow naturally. But to do that, some coaching is required, some accountability is required, and that's where we come in. And that's why we post so much content. There's almost 700 videos on Bankers Vault today, almost hitting 160 episodes on the wealth without Bay street podcast. And we got a bookstore full of the valuable books that any business owner individual can buy and immerse themselves to educate more about this concept. Education is key and that's why we always help rethink your thinking. And the way we do that is by education. And once they know what is truly is happening, what's holding them back to achieve the success they want. Because nobody thinks in them terms of banking. People always think in terms of, hey, the solution to my problem is to go work hard to make more money. That's always people think.

It reminds me of the things that Nelson, you know, used to share with us. We're talking about Nelson Nash, who is our late mentor and he developed the process of becoming your own banker, the infinite banking concept. And he wrote a great book titled becoming your own banker. He wrote another great book titled building your warehouse of wealth, co authored the case for the infinite banking concept, the case for ibc. What I would say is that he was so great at just keeping it simple. He would say, you know, once you really understand what's going on, you'll know exactly what to do. Again, it just really, for me, it always boils down to logic.

Logic.

Is this logical? Yes. Are you motivated to do this? Yes. Okay, then where should we begin? That's the other advantage that you get to determine where you begin. And the, oh gosh, just the change that positive. You would agree with me on that? You see in our business owner clients over the years as they, as their program grows and they're utilizing it, taking advantage of that coaching and that education that you described. And they're, they're utilizing their, their system for just a variety of different things. The most common feedback that we get is that I wish I had known about this when I first started my business. And so this applies to newly minted business owners as well. Because I promise you that once you set down this path, you're going to be commenting the very same and saying, I wished I would have known about this when I got my business off the. Isn't that good?

It's good. And you know, the need for financing for any business is never going to end.

Oh, it's very extensive.

Right. As you grow your business that generates revenue and income and cash flow and all the great things, make sure that you simultaneously grow your financing business, which is going to give this business more cash confidence to do More great things going forward.

That's brilliant. I love the way that you just described that. It's absolutely brilliant. And you know, you've heard the expression before, laughing all the way to the bank. We've changed that. It's laughing all the way to your own, become your own bank. Bank.

And so like you said, you're creating that business that finances everything that your company does and provides your company with cash confidence. Business owners operate much better in the realm of cash confidence. And it's difficult to run a company with surplus capital. How does it feel to try and run a business without money? And believe me, again, not ignoring the tax structure is very important because again, if you were to deploy logic, do you believe that our government is going to require more or less money in the future? Right. There's certainly no celebration going on within the walls of Parliament where everybody's glad handing each other, going, look at all the money that we're saving Canadians. Look at all the money we're saving people by operating more efficiently. That's not what they're spending their time talking about. They're spending their time talking about completely ignoring the over spending the, the bloated bureaucracy and saying how can we reach further into the pockets and purses and wallets of Canadians? Where can we find more money to feed a machine? And so you've got to be acutely aware of what's going on so that you know exactly what to do. A participating dividend paying whole life insurance contract is the greatest exemption that exists in the Canadian tax code today. So do you want to take a little bit advantage of that exception or do you want to take majority advantage of that exemption? Logically, yeah.

Well, for majority, so yes, for sure. Jason. Oh, this is good.

Isn't that good for the business owners tuning in on the YouTubes and you know, watching this? Let's create a tax free surplus for your company and then you can also do this personally.

And it works wonderfully personally as well.

And teach your team members to implement this in their lives because if they are financially doing well, they're going to have more focus working on the business to help you scale the business because.

They'Ve got more cash confidence. Brilliant.

And then that's what we teach here at SN N Financial to, to our team members.

That's right. Very good point. All of our team members, part of one of the incentives that we provide in our business is profit sharing. Really enjoy doing that because we're very grateful for all the contributions of our team members. But one of the Criteria to even be eligible, participate in that is that you have to be practicing this process in your own life so that you can show up in authenticity. You can approach conversations with our existing clients and future clients with integrity. To say, I'm doing this too. And so not only am I going to describe it to you and have a share a conversation about it, but I'm doing this in my own life, and here's how I'm doing it. Just, it brings such a higher degree of confidence, of appreciation from the perspective an existing client who says, wow, I really appreciate that I'm dealing with someone who's actually practicing this in their own lives. And it's not just our advisory team, it's everyone at Ascendant, literally, figuratively, everybody. There aren't many organizations that can say that, although there are some companies where maybe you wouldn't want to be, you know, doing what they're doing, you know, in, in your own life, but in our business, certainly, wow, it's. It's a huge advantage. And, you know, business owners, you and I talked about this, right? We really want to continue to outreach more and more to business owners because we understand them, you understand what they go through on a daily basis. And we understand because we are living proof of utilizing this wonderful instrument with all the attributes that are so logical to take full advantage of. We're just excited. So if you're a business owner and you find yourself thinking this is logical, and I want to examine how I can, you know, begin to implement this and just get in touch with us. There's contact details in video notes, the description. You'll find contact details there. And you can schedule a time to connect with the right person on our team. And Sarblo and myself meet with wonderful people all the time, but we have an amazing, amazing team of authorized infinite banking practitioners who would be more than pleased to hear from you and to connect with you. Take that time to share a personalized conversation with us. It'll be well worth every minute of it.

You know, we just did a webinar on how to create a cash flow confidence business, right? And it just went live on YouTube two days ago. So you can click this link right here.

Okay.

Get access to that webinar, which will take a deep dive into creating this cash flow confidence business, which is going to help your other business generate and gain cash confidence going forward.

I love that. That's a great segue to the end of the video because you'll see this playlist that Starblow just referenced. We have an amazing editing team. It just shows up great, highly skilled people. I don't know how to do that. And so click through to that video and then continue your journey of learning. We've got, as Sarbill said, hundreds and hundreds of videos all designed to educate you and so continue your journey of learning. Thanks so much for tuning in, Sarbill. This was a great conversation. We've got these scheduled on a recurring basis. So to everyone in on the YouTube's viewing this be a lot more great discussions like this one that you can tune into. So make the rest of your week outstanding.