1. Strategies for Incorporated Professional Presenters:
Strategies for Incorporated Professional Presenters: Dale Durand, CA, CFP Vice President, Estate & Tax Planning
September 18, 2018

2. Disclaimer
Invest better: Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their value changes frequently and past performance may not be repeated. The payment of distributions for Dividend Tax Credit Class and the Return of Capital Class should not be confused with a mutual fund’s performance, rate of return or yield. If distributions paid by a mutual fund are greater than the performance of the fund, then your investment will decline. Distributions paid as a result of capital gains realized by a mutual fund and income and dividends earned by a fund are taxable in your hands in the year they are paid. For Return of Capital Class, your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, then you will have to pay capital gains tax on the amount below zero. The contents and information contained herein are for informational and educational purposes only and should not be construed as legal, tax or investment advice. Information contained here is believed to be accurate and reliable at the date of printing, however, NexGen cannot guarantee that such information is complete or accurate or that it will remain current. The information is subject to change without notice and NexGen cannot be held liable for the use of or reliance upon the information contained here. 2

3. NexGen – Overview
Highly experienced, team with exemplary professional reputations
“Led one of the Canadian investment industry’s most innovative and successful public companies from 1992 to 2005 compounding shareholder value in excess of 20% per annum over the period”
Extremely well capitalized
Jim Hunter, as founder, has invested $5 million
3rd party investors – have invested an additional $19 million
A growing Fund Company even in challenging markets
16 ”Registered” and 16 “Tax Managed” Open-end Mutual Funds
Positive net sales in every quarter
January 1, 2007: $9 million in AUM
December 31, 2009: $506 million in AUM
October 29
Solid performance 1Yr 2Yr
First or second quartile 56% 71%
First quartile 31% 43% -
-Mention Mackenzie Financial and Jim, Laurie and most of the others leaving Mackenzie in 2005, post the IG purchase

4. In the Tax Act, all incomes were not created equal

5. NexGen’s Innovative Fund Structure
Tax Classes are available for all NexGen Tax Managed Funds except NexGen Canadian Cash Tax Managed Fund which pays Capital Gains and Return of Capital through a corporate series.

6. Incorporated Investment Portfolios
Two Gifts from CRA to the Corporate Owner

7. Professional Corporations (PC)
Applies to Medical professionals, lawyers and accountants
Each provincial professional body sets rules on the structure of these corporations.
All provinces allow PC to have direct family (spouse and children) members to own “special shares” for income splitting purposes.
These special shares are non-voting and usually retractable.
Professional must own all voting common.
Some provinces (i.e. BC) allow a special share to be allocated to a Holdco to allow for tax free dividends and investments to be housed in Holdco away from the PC. Otherwise not available.
PCs are a subset of all Canadian Controlled Private Corporations and except for the above, all rules and strategies apply. 7

8. Tax Integration in a Nutshell – An Opportunity
Income ($$$)
Corporation
Individuals
Earning Income directly or indirectly, the tax is (supposed to be) the same!!

9. Gift #1 – Tax Deferral 46.41% 30.91% = $154,550 15.5%
Canadian Private Corporations in Ontario enjoy a very low tax rate on the first $500,000 of Active Business Income ($500,000 Federal)
Comparison of 2010 Corporate Small Business Rates to Top Personal Tax Rates (Ontario)
46.41%
30.91% =
$154,550
15.5%
Tax Rate on Top Personal Tax Deferral
Small Business Income Tax Rate Advantage
Invest Low-Taxed Corporate Income Within the Corporate Structure
to defer taxation and achieve Higher Wealth Accumulation

10. How to Invest the Tax Deferred Advantage
Okay, I’ll keep the investments inside my own corporation, but How do I manage the investments properly?

11. The Tax Efficiency Advantage
Eliminate Tax “Drag”
Example: Compare interest bearing security against a NexGen Fund with Compound Growth Class
Assumptions:
Initial Investment: $1,000,000
Incorporated Investment Portfolio
Annual Return: 5%
Liquidate after 20 years
Interest Bearing Security
NexGen Fund with Compound Growth Class
Taxes
(Corporate and Personal)
$949,000
$728,000
20 Year After-Tax Result
$1,420,000
$2,058,000
The Tax Efficiency Advantage
$221,000 (23% less tax)
$638,000
(+152% greater ROI)
Result:
152% higher after-tax investment return
Long term tax deferral and conversion from high tax rate to “half taxed” capital gains
The rates of return, annual distribution rates and income components comprising a given distribution contained in the tax cases and reflected in certain graphs and tables are for illustrative purposes only utilizing various assumptions to demonstrate the importance of compound growth and the effects of taxation on a given investment. They are not intended to reflect, nor should they be interpreted, as an indication of future values or returns on investment in respect of any NexGen Fund.

12. Gift #2 – Lower Taxes by Income Splitting
Deferrals are fine, but how do I get the funds out to spend in an efficient manner?

13. Mrs. Wise and [Modest Income]
Use Your Family to Income Split
A Tax-Efficient Family Income Strategy – An Example
Mrs. Wise and [Modest Income]
Class B
Shares
Class A
Shares
Mr. Wise
[High Income]
Adult Child
(Modest Income)
Any
Corporation
Class C
Shares
Minor Child
No income
Class D
Shares
Strategy:
Allocate Income to Family Member that will pay the least income tax on that income! But Mom and Dad Control Everything!
Result: Minimized Tax Payable 13

14. Income Splitting – Not All Bad News!
Let’s assume your PC earns net income before tax of $400,000
You need $200k after tax to fund your personal living requirements
No income Income
Splitting Splitting
Net income of the PC $400, $400,000
Corporate tax (54,000) (54,000)
Net income , ,000
Dividends:
professional (275,000) (72,000)
spouse (72,000)
1 adult child (72,000)
Cash retained in the PC $71, $130,000
Annual Savings $59,000

15. Further Tax Reductions by Earning the Correct Investment Income
Based on $1,000 of investment income created in the Corporation, the shareholder would receive net of all taxes the following: (Ontario, shareholder in the highest tax bracket)
Interest $536
Capital Gains $ Portfolio Dividends $739

16. Proposed Strategies - Family Wealth Corporation
Professional Corporation
Non voting shareholders
Family Trust
Voting shareholder
Professional
Corporation
Family Wealth
Corporation
$$$ 16

17. Summary: DOs and DON’Ts of Investments within a CCPC
If the objective is to grow the funds:
do not create any investment income (compound Free of Tax).
NexGen Compound Growth Class
Avoid High-Taxed Income
All NexGen Classes
Take Advantage of Income Splitting Opportunities
Generate Capital Gains and Dividends for Tax Efficient Withdrawal
NexGen Capital Gains, Dividend Tax Credit and Compound Growth Class

18. Thank-you for taking the time to hear our story!