Entering Corporate Assets
To add corporate assets to your projections, please follow these steps:
In this article:
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Enter the Corporate Financial Assets
While you have the corporation selected, you can navigate to Scenario Setup --> Assets.
On the Assets page, click Add Financial Asset.
Make sure to fill out all fields of the table. The Value is considered to be the account balance at the beginning of the year the projections are started. Enter the asset allocation percentages for Cash, Fixed Income and Equity, ensuring the sum equals 100%. The total rate of return (RoR) will be calculated for you automatically.
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Adjust the Portfolio Settings if desired
Default portfolio settings are enabled for you and these can be edited. Click the Portfolio Settings button from the Scenario Setup navigation on the left side of the screen.
Equity is distributed amongst dividend and capital gains producing stocks and the default is 60% Capital Gains, 20% Canadian Dividends and 20% Foreign Dividends as shown above. The actual amount of investment income that will come from the Equity asset class will depend on these settings.
The Annual Portfolio Turnover setting controls how much equity is bought and sold each year to trigger capital gain tax. The default is 5%. Hence, by default, approximately 95% of capital gains are deferred. Note that more capital gains will be realised if there are withdrawals made from the account and also they may be triggered by automatic portfolio rebalancing as described below.
All capital assets for the Corporation are governed by these same portfolio settings. Personal non-registered assets are governed by the portfolio settings for the personal projections.
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Enter the Real Assets
While you have the corporation selected, you can navigate to Scenario Setup --> Assets.
On the Assets page, click Add Real Asset.
Fill out the details for the Real Assets. You can leave the Future Purchase Date and Future Sell Date blank if they are not applicable.
The Active toggle of Yes or No determines whether any capital gain realized from that Real Asset impacts the small business deduction in the year of sale. If the Real Asset is part of the operating business, then you can set the Active status to Yes and the capital gain will not reduce the small business deduction limit in the year of sale. If the Real Asset is part of the holding company/is a passive investment then you can leave the Active as No and the capital gain will be factored into the passive investment income in the year of sale to determine whether an adjustment to the small business deduction is required.