Personal Insurance Options

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CPP Benefits

Canada Pension Plan (CPP) provides disability benefits to people who have made enough contributions to the CPP and who are disabled and cannot work at any job on a regular basis. Benefits may also be available to their dependent children.

  • To qualify for a disability benefit under the Canada Pension Plan (CPP):
    • A disability must be both "severe" and "prolonged", and it must prevent you from being able to work at any job on a regular basis.
      • Severe means that you have a mental or physical disability that regularly stops you from doing any type of substantially gainful work.
      • Prolonged means that your disability is long-term and of indefinite duration or is likely to result in death.
    • Be under the age of 65 and
    • Meet the CPP contribution requirements. To qualify for a CPP disability benefit you must have contributed to the CPP in:
      • Four of the last six years, or
      • Three of the last six years if you have contributed for at least 25 years.
  • How much could you receive:
    • For 2023, the average monthly CPP disability benefit is $1,127.30 and the maximum monthly amount is $1,606.78. You will receive the basic monthly amount fixed for all recipients, plus an amount based on how much you contributed to the CPP during your entire working career.
    • If you are receiving a CPP disability benefit, your dependent children may also be eligible for a children's benefit. In 2023, the flat monthly rate your child can receive is $281.72.

Workers Compensation Benefits (WCB)

WCB is here to help when an injury occurs at work. A workplace injury can be difficult and stressful for everyone involved. Workers' compensation insurance is no-fault insurance providing:

  • Medical and return-to-work support services. Your injured workers will have access to the appropriate medical services to help them safely return to work. This includes chiropractic treatments, physiotherapy, counselling, etc.
  • Protection against loss of income. Compensation for lost wages is based on 90 per cent of the worker's net earnings or income. In 2023, the maximum is $102,100., based on gross annual earnings.
  • Lawsuit protection. This includes protection for you, your workers and other parties covered by WCB. (If you're incorporated, the directors must carry optional personal coverage to be protected from lawsuit. Personal coverage provides you with access to the same benefits and services available through workers' compensation insurance.)
  • Effective Jan. 1, 2016, waged farm workers in Alberta are protected under the workers' compensation system.
    • If you are injured at work, this means you will have access to the benefits and services available under the Workers' Compensation Act. This includes replacing lost wages resulting from your injury, as well as providing medical and rehabilitation support to help you recover and return to work safely.
    • Coverage for farm and ranch owners, family members of owners, and non-waged workers is optional.
    • Industry classifications set the stage for rate setting. All employers are classified into industries to help us accurately set premiums.
    • You're classified in an industry with other employers who have similar businesses and risks as you do, rather than by the occupations of your employees. Premium rates are then set for your industry classification. The rates vary from industry to industry, reflecting the loss experience for each group.
    • When developing these industry descriptions, we consult with business and industry representatives. Although we've tried to include all of the activities within an industry, the descriptions may not list every process or activity. We've classified employers in industries that we think best reflect their overall business. Rates – 2.75 to 2.97.

Blue Cross

  • How are my benefits calculated? The payable WI (Weekly indemnity) benefit amount is usually based on a portion of the salary you were earning immediately before you stopped working. The method used to calculate your WI benefit amount is outlined in your employee benefits booklet.
  • The payable LTD benefit amount is based on a portion of the earnings you were receiving before your disability began and will commence following an elimination period as outlined in your employee booklet. This amount may be reduced by other sources of income as defined by the group policy. Examples of primary deductions are benefits payable under Worker’s Compensation or Canada/Quebec Disability Benefits (CPP/QPP).
  • LTD benefits or waiver of premium benefits typically have a maximum benefit period based on age. Unless otherwise specified under your group policy, the termination age is typically 65.

Chambers of Commerce Group Insurance Plan

  • Comprehensive Protection: Short Term & Long Term Disability Insurance.
    • Disability insurance, whether short or long term, gives employees a financial cushion in the event they become disabled due to an injury or illness and are unable to work for a period of time. Although Health insurance will typically cover the costs of treating an injury or illness, most people will have a difficult time paying for basic necessities if they aren't able to work.
  • Short Term Disability Insurance (Weekly Indemnity) We understand that each of our clients has a different budget and unique needs. You will be able to decide how long your employees must be off work before they may begin to collect benefits, and how long they may collect benefits. For employees under age 65, Short Term Disability insurance benefits represent 66 2/3% of their gross income to a maximum of $1,200 per week.
  • Long Term Disability (LTD) Insurance Insuring employees for the long term, LTD coverage can help provide financial security so a disabled employee can focus on recovery and returning to work. Chambers Plan LTD benefits provide employees with:
    • Up to $7,000 per month.
    • Benefits for 2 or 5 years, or until age 65.
    • Guaranteed coverage to groups with 3 or more employees (non-evidence limits vary from $1,200 to $3,000).

There Are Many Types of Fraud

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There are many fraud types and new ones are invented daily. Some are imaginative, some are aggressive, and some appear legitimate!

Be vigilant if you receive, either by telephone, mail, text message or email, a communication that claims to be from the Canada Revenue Agency (CRA) requesting personal information such as a social insurance number, credit card number, bank account number, or passport number.

These scams may insist that this personal information is needed so that you can receive a refund or a benefit payment. Cases of fraudulent communication could also involve threatening or coercive language attempting to scare you into paying a fictitious debt to the CRA. Other communications may urge you to visit a fake CRA website where you are then asked to verify your identity by entering personal information. These are scams and you should never respond to these fraudulent communications or click on any of the links provided.

Canada Revenue Agency will never:

  • Send emails with a link and ask you to divulge personal or financial information;
  • Ask for personal information of any kind by email or text message;
  • Request payments by prepaid credit cards;
  • Give taxpayer information to another person, unless formal authorization is provided by you;
  • Leave personal information in a voice mail;
  • Threaten, or use nasty language.

If you are in doubt about the validity of a communication claiming to be from the CRA, don’t panic! Ask your accountant to verify the information given, or call CRA at 1-800-959-8281 (individuals) or 1-800-959-5525 (business accounts) to verify. Don’t call the number displayed as it may be fraudulent.

If the communication is a scam, you can report it to the Canadian Anti-Fraud Centre online, or by calling 1-888-495-8501.

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What is the difference between an audit and a review?

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What are audits and reviews?

Audits and reviews are engagements intended to provide an enhanced degree of confidence in a set of financial statements within a certain accounting framework. An accounting framework is a set of rules or standards used to prepare financial statements. The framework determines how the balances and transactions in the financial statements are measured and presented, and what information needs to be disclosed in the notes to the financial statements. Depending on the type of entity (public, private, not-for-profit), different frameworks may be used to prepare the financial statements.

An audit or review engagement consist of a set of procedures to gain a degree of confidence that the financial statements were prepared in accordance with the framework (in all material respects). The area where they differ are the degree of assurance that is provided, and the procedures performed under each engagement.

Reasonable vs. limited assurance

Audits are designed to obtain reasonable assurance. Reasonable assurance is a high (but not absolute) level of assurance that the financial statements are materially in accordance with the stated framework.

Reviews are designed to obtain limited assurance. While the definition is a little vague, limited assurance is defined as being a meaningful level, but less than reasonable assurance.

What extra work is done in an audit?

A review consists of procedures primarily including inquiry and analytical procedures. This includes asking questions of people within or outside the organization and evaluating financial information through the lens of plausible relationships to determine if anything causes the reviewer to believe the statements aren’t presented according to accounting framework.

An audit is a more rigorous engagement that includes obtaining an understanding of a client’s business and industry, identifying and assessing overall and specific risks of material misstatement, and obtaining sufficient audit evidence using procedures such as inquiry, analytical procedures, confirmation, recalculation, sampling, inspection, and observation.

When is an audit or a review necessary?

The Business Corporations Act of Alberta requires all companies to appoint an auditor every year. Although, if the company is not a public company, the shareholders may waive the requirement to have an audit. If a corporation has significant financing, the bank may require an audit or a review as part of the financing agreement. Audits and reviews are usually required under the by-laws of most not-for-profit organizations.

IPP vs. RRSP: A Comprehensive Comparison for Alberta's Private Corporation Owners

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Managing finances and planning for retirement is a vital aspect of any successful business owner's life. If you are the owner of a Canadian Controlled Private Corporation (CCPC) in Alberta, you may be exploring various retirement savings options. Two popular choices for CCPC owners are Individual Pension Plans (IPPs) and Registered Retirement Savings Plans (RRSPs). In this blog post, we will provide an in-depth comparison of IPPs and RRSPs to help you make an informed decision about which option is best suited to your financial goals and retirement needs.

What Are IPPs and RRSPs?

Individual Pension Plans (IPPs):

  • IPPs are defined benefit pension plans designed specifically for business owners and incorporated professionals.
  • Contributions are made by the corporation on behalf of the owner and are tax-deductible for the business.
  • IPPs offer fixed retirement income based on a predetermined formula, typically taking into account years of service and income history.
  • They are subject to annual contribution limits, which tend to be higher than RRSP limits.

Registered Retirement Savings Plans (RRSPs):

  • RRSPs are tax-advantaged personal savings plans available to all Canadians.
  • Contributions to RRSPs are made with after-tax dollars, and contributions can be deducted from taxable income.
  • RRSPs provide flexibility in investment choices, allowing individuals to invest in a wide range of assets.
  • Withdrawals from RRSPs are taxed as income when funds are taken out during retirement.

Key Differences:

1. Contribution Limits:

  • IPPs typically offer higher contribution limits than RRSPs, making them an attractive option for those looking to maximize retirement savings quickly.
  • RRSP contribution limits are based on a percentage of your earned income, with annual limits set by the government. In contrast, IPP contribution limits are determined by actuarial calculations.

2. Tax Efficiency:

  • Contributions to an IPP are tax-deductible for the corporation, reducing the overall tax liability of the business.
  • RRSP contributions provide a tax deduction for individuals, helping reduce personal income tax payable.

3. Retirement Income Guarantee:

  • IPPs offer a defined benefit pension plan, which means that the retirement income is predetermined, providing financial security during retirement.
  • RRSPs do not guarantee a specific retirement income; the amount available during retirement depends on the performance of the investments.

4. Creditor Protection:

  • IPPs may offer some level of creditor protection, depending on provincial legislation.
  • RRSPs generally provide a high degree of protection from creditors.

5. Administrative Requirements:

  • IPPs come with more administrative responsibilities and costs due to actuarial calculations and ongoing compliance requirements.
  • RRSPs are relatively simpler to manage and require less administrative overhead.

Conclusion:

When deciding between an Individual Pension Plan (IPP) and a Registered Retirement Savings Plan (RRSP) as an Alberta-based CCPC owner, it's essential to consider your financial goals, risk tolerance, and long-term retirement needs. IPPs offer a secure and tax-efficient way to build retirement income, particularly for those with higher income levels and a desire for guaranteed retirement income. On the other hand, RRSPs offer flexibility and lower administrative burdens, making them a suitable choice for individuals who prefer more control over their investments.

Ultimately, the best choice for you will depend on your individual circumstances and objectives. Consulting with a financial advisor or tax professional experienced in retirement planning for CCPC owners is crucial to making an informed decision that aligns with your unique financial situation. Both IPPs and RRSPs have their merits, and the right choice will help you secure a comfortable retirement and make the most of your hard-earned money.