The ability for companies to attract and retain strong executives often depends upon the company's ability to offer competitive compensation packages. A combination of salary, bonuses, pensions and stock options tend to be quite important but often times these executives of the company do not want to have an immediate increase in their compensation. Rather, the objective is to defer receipt of compensation increases in order to supplement the pension benefits currently offered by the company. A natural outcome of such an objective is to ensure that the executive will not be liable for income taxes on a deferred compensation strategy until such time as the funds are received by the employee. These same expectations exist for many owner-managers of successful smaller businesses. That is the desire to defer liability for income taxes until they really need the funds.
Companies strive to develop and offer competitive packages which can:
- Minimize the after-tax cost of funding the plan;
- Minimize administration costs of the plan;
- Minimize risk of Canadian Customs and Revenue Agency reassessment of intended tax results; and,
- Ensure that the senior executive remains an employee of the company until his or her retirement.
At Sinclair Billard Weld, we can assist you to identify appropriate compensation options and develop compensation plans that are appealing to targeted executives or simply constitute effective income tax planning for you as an owner-manager and key person to the organization. Although not an exhaustive list, we can evaluate the merits or exposures of:
- Retirement compensation arrangements(RCA);
- Retiring allowances and death benefits;
- Individual pension plans;
- Deferred compensation plans secured by a "sinking fund" to provide retirement incomes; and,
- Salary Deferral Arrangement (SDA).
