The Money Scope Podcast

• Ep. 18: Pensions for Incorporated Business Owners

  In this episode of The Money Scope Podcast, Benjamin Felix and Dr. Mark Soth (The Loonie Doctor) take a deep dive into the complex world of pensions for incorporated professionals. They unpack the pros and cons of the various pension structures available in Canada—from RRSPs and IPPs to MEPPs—and explain how these compare in terms of tax treatment, investment flexibility, creditor protection, and long-term retirement security. Through their discussion, Ben and Mark illuminate how pensions really work for business owners who are both employer and employee, why "pension envy" can cloud rational decisions, and how evidence and math—not marketing—should guide your retirement planning. They also explore the behavioral and psychological side of pensions: why risk pooling matters, how defined benefit plans manage longevity and sequence risk, and when the added complexity of an IPP or MEPP might actually be worth it. This is one of the most comprehensive overviews of pensions you'll hear—combining research, real-world application, and practical insight for anyone trying to optimize their corporate retirement strategy.   Key Points From This Episode: Why pensions matter for Canadian business owners—and why this episode took a while to make. (0:01:20) Canada's three-pillar retirement system: public pensions, employer-sponsored pensions, and personal savings. (0:02:16) The pension landscape: RRSPs, individual pension plans (IPPs), and multi-employer pension plans (MEPPs). (0:03:19) Defined contribution (DC) vs. defined benefit (DB) pensions—who bears the investment risk. (0:06:24) How MEPPs like Medicus and HOOPP allow incorporated professionals to join group plans. (0:08:54) The truth behind branded pension products—why the legislative structure is what really matters. (0:10:20) Pension envy and the economics of compensation: who actually pays for "employer contributions." (0:12:27) Comparing RRSPs and pensions: tax deferral, limits, and liquidity differences. (0:14:55) RRSP flexibility vs. pension restrictions in withdrawals and contributions. (0:17:54) Defined benefit vs. defined contribution pensions—how risk and control shift between employer and employee. (0:22:57) Why small business owners often prefer IPPs after age 40. (0:25:20) What happens to pensions in retirement: RRSPs → RRIFs, pensions → LIRAs/LIFs. (0:29:06) Group pensions vs. individual pensions: pooling risks and costs. (0:31:34) Do big pensions really have investment advantages? A data-driven look at costs and active management. (0:33:18) Why institutional investors often underperform passive portfolios—even with elite managers. (0:39:24) CPP Investments as a case study: $700B in assets, billions in fees, and lagging benchmarks. (0:42:24) Evaluating pensions on liabilities, not just returns—what "immunizing liabilities" means. (0:45:45) Sequence-of-returns and longevity risk: why pooling helps retirees sleep better. (0:48:46) Behavioral finance and the comfort of cash buffers in retirement planning. (0:53:48) The trade-offs of pooling mortality risk—winners, losers, and stability. (0:57:56) Individual Pension Plans (IPPs): what they are, how they're structured, and when they make sense. (1:02:10) Contribution limits and past-service buybacks—why IPPs become powerful after age 40. (1:05:40) How spouses can be included in an IPP—and the nuances of spousal RRSPs. (1:09:39) The importance of actuarial valuations and how contribution "holidays" or "top-ups" work. (1:11:27) IPPs in practice: shifting corporate pre-tax dollars into a tax-sheltered pension efficiently. (1:14:38)   Links From Today's Episode: Medicus Pension Plan — https://www.medicuspensionplan.com/  HOOPP (Healthcare of Ontario Pension Plan) — https://hoopp.com/  Canada Pension Plan Investments — https://www.cppinvestments.com/  PWL Capital — https://pwlcapital.com/  Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/ Dr. Mark on X — https://x.com/LoonieDoctor Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/  Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Money Scope on YouTube — https://www.youtube.com/@MoneyScopePodcast

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• Ep 17: Live at PFI 2024

  Today, we bring you another live episode, this time from the Annual Canadian Physician Financial Wellness Conference. We answer a series of compelling audience questions — drawing on information from past episodes — that meaningfully impact both sides of the client-advisor relationships. To kick things off, we break down the best time to incorporate, the downsides of incorporating too early, getting money out of your corporation tax efficiently, and common misconceptions around tax efficiency. Next, we discuss the changes in capital gains tax and if it still makes sense to incorporate despite the increase, whether you should pay debt or invest as you juggle all your different priorities, and when to take dividends versus salary. We also get into the topic of corporate bloat and how to address it through measures like smoothing out consumption, why you need to know your notional account balances, insights on dividend-paying ETFs, and advice for alternative investments, including real estate. To close, we discuss how you can determine when you've reached financial independence and how a professional financial planner can help you make that call, along with a few final audience questions. Join us to hear the full scope of today's conversation on navigating the ins and outs of getting incorporated, tax efficiency, and much more!   Key Points From This Episode: (0:00:31) An update on Money Scope and the tools we've been developing.  (0:03:32) Our first audience question: when should you incorporate?  (0:05:59) Getting money out of your corporation to pay off credit tax-efficiently.  (0:08:01) Common misconceptions around tax efficiency and tax deferrals.  (0:13:19) Unpacking if it's still better to incorporate after the capital gains tax increase.  (0:16:03) A breakdown of whether you should pay off your debt or invest.  (0:20:19) The conditions under which you should take dividends versus salary.  (0:23:12) Insights on corporate bloat and methods for addressing it.  (0:32:14) How to come up with an optimal compensation strategy.  (0:36:50) What you need to ask your advisor or accountant about: notional account balances.  (0:39:01) Exploring whether there's a role for dividend-paying ETFs during long-term investing within a corporate investment account.  (0:45:29) Reasonable alternatives to investing, other than ETFs, particularly when you reach the passive income limit.  (0:53:32) How you can tell when you've reached financial independence.  (0:59:08) Ways to approach optimal charitable giving throughout your life.  (01:01:02) The role of a family trust as a way for inheritance planning within a medical corporation.    Links From Today's Episode: Salary and Dividend Optimizer Calculator — https://www.looniedoctor.ca/ccpc-income-disperser/ Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/ Dr. Mark on X — https://x.com/LoonieDoctor Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/  Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/  

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• Ep 16: Live at IAFP 2024

  Today's episode comes to you live from the 22nd Institute for Advanced Financial (IAFP) Planning Conference in Gatineau, Quebec, recorded in front of an audience of professional financial planners. For this special episode, we cover key planning issues for incorporated business owners and walk through the lifecycle of a business owner or professional who eventually chooses to incorporate. We discuss crucial financial decisions they face along the way, particularly as corporate assets begin to grow, and wrap up with a Q&A covering topics like tax brackets, salary offsets, and more. Our conversation also tackles common misconceptions and explains strategies for income smoothing, tax deferral, and managing 'corporate bloat.' With today's conference theme inspired by Star Wars, expect plenty of niche references along the way! Key Points From This Episode: (0:00:17) Introducing the topics that will be covered in today's special live episode at the 22nd Institute for Advanced Financial Planning Conference in Gatineau, Quebec.  (0:03:57) Guidelines and benefits of becoming incorporated, including income smoothing.  (0:06:49) Advice for navigating taxes when becoming incorporated.  (0:08:42) Common misconceptions that people have regarding getting incorporated.  (0:13:53) How to capitalize on the benefits of tax deferral in a corporation.  (0:16:24) Key insights on tax integration and eligible dividends.  (0:20:07) Achieving optimal compensation and how it solves the problem of "corporate bloat."  (0:25:08) Ways to treat and prevent corporate bloat.  (0:28:47) The math behind Mark and Ben's optimal compensation algorithms.  (0:32:08) Advantages of planning over products for solving optimal compensation.  (0:35:10) Audience questions and answers, from tax brackets to Star Wars.    Links From Today's Episode: Institute for Advanced Financial Planning Conference — https://iafpsymposium.ca/Salary and Dividend Optimizer Calculator — https://www.looniedoctor.ca/ccpc-income-disperser/ 'Dividends To Maximize Your Corporate & Personal Cash Flow' — https://www.looniedoctor.ca/2023/06/30/pay-dividends-corporation/#algorithm Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/ Dr. Mark on X — https://x.com/LoonieDoctor Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/  Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

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• Ep 15: Budget 2024: The Capital Gains Inclusion Rate

  Understanding the implications of the 2024 Federal Budget and its proposed changes to capital gains taxation is crucial for individuals and corporations alike. In today's episode, we take a deep dive into the Canadian federal budget for 2024 and its impact on capital gains taxation. In our conversation, we discuss the technical details of capital gains taxation and its historical context and offer practical advice for navigating the proposed changes in the 2024 federal budget. We discuss the increase in the capital gains inclusion rate and how these changes will affect individual investors and corporations. Discover the mechanics of capital gains tax in Canada, essential tax planning strategies, the importance of diversified tax exposure, and the concept of capital gains harvesting. Gain insights into the impact of the changes on the retirement plans of incorporated business owners and professionals, the role of optimal compensation in realizing capital gains, and approaches for navigating the proposed changes. Join us as we delve into the complexity of tax planning for incorporated business owners and the importance of long-term projections, personalized advice, and strategic decision-making for realizing a capital gain. Tune in now! Key Points From This Episode: (0:00:00) Overview of the changes and their relevance for Canadian investors.  (0:07:59) How capital gains tax works in Canada and its impact on taxable income.  (0:13:34) Reasons for the variation of capital gains inclusion rates.  (0:18:18) The differences in tax treatment for individuals versus corporations.  (0:22:41) Capital gains in a CCPC, how it works, and the role of a shareholder.  (0:29:36) Implications of the changes on Alternative Minimum Tax (AMT) in Canada.  (0:37:58) Learn about the 'breakeven horizon' and essential capital gain considerations.  (0:46:35) Capital gain harvesting and how optimal compensation ties into it.  (0:58:17) Explore the trade-offs of realizing a large capital gain and tax-reducing strategies.  (1:12:30) Hear case studies that illustrate the application of various tax-reducing strategies.  (1:29:56) Impact of capital gains inclusion rates on retirement planning for CCPCs.  (1:37:36) Final takeaways and tax planning recommendations.    Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/ Dr. Mark on X — https://x.com/LoonieDoctor Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/  Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Episode 10 & 11: Case Conference — https://moneyscope.ca/2024/04/12/ep-10-11-case-conference-corporate-investing-puzzle-pieces/ Episode 13: Optimal Compensation from a CCPC — https://moneyscope.ca/2024/04/26/episode-13-optimal-compensation-from-a-ccpc/ Rational Reminder: Episode 304 — https://rationalreminder.ca/podcast/304 The Loonie Doctor Calculators — https://www.looniedoctor.ca/canadian-financial-calculators/#tax Realize or Defer Capital Gains Calculator — https://research-tools.pwlcapital.com/research/realize-gain Conquest Planning — https://conquestplanning.com  

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• Episode 14: CPP & and EI for Business Owners

  Business owners often have reservations about paying into the Canada Pension Plan (CPP). Many think they're getting a bad deal by paying both the employer and the employee portion of the contribution, but can they do better by paying themselves dividends? In the last two episodes, we did an extensive review of how you can compensate yourself as a business owner through a private corporation. Today, we take a deeper look at two of the payroll expense aspects that often come up in discussions with financial planners: CPP and Employment Insurance (EI). If you are self-employed, there are a few things you need to consider, including your decision to pay yourself a salary or take dividends. We discuss that in this episode, as well as whether self-employed business owners are really getting the short end of the stick when it comes to CPP and EI contributions. Tuning in today, you'll learn about some of the unique features of CPP, how it's calculated, and the three major risks it offers protection against, plus we walk you through various models to illustrate the consequences of paying yourself dividends versus salary. We also delve into EI for self-employed business owners, the special benefits thereof, models that consider different amounts of income and consumption, and much more. For a comprehensive guide to CPP and EI for self-employed business owners, don't miss this episode of Money Scope with Benjamin Felix and Dr. Mark Soth!   Key Points From This Episode: (0:00:20) Reasons that today's topic on CPP and EI is so complex.  (0:04:04) How CPP is calculated: an overview of what you pay and what you receive.  (0:05:59) Whether or not business owners get a bad deal with CPP.  (0:11:34) Viewing CPP as a tax and when paying dividends versus salary is favourable.  (0:17:33) The unique features and benefits of CPP and the risk protection it offers.  (0:25:15) Assessing the value creation and performance of a pension fund like CPP.  (0:30:42) Crunching numbers to calculate a combined CPP benefit for a household.  (0:33:52) Making the comparison between paying CPP and investing in a corporation.  (0:37:23) Tax planning consequences of paying dividends to avoid paying into CPP.  (0:41:16) Various models to illustrate many of the scenarios we covered in this episode. (0:48:36) Why paying into CPP and dying early results in a bad financial outcome.  (0:51:36) Comparing CPP with other corporate and personal investment options.  (0:59:54) Key takeaways on CPP; a chance to buy into a truly inflation-indexed annuity.  (1:01:48) An overview of employment insurance (EI) for self-employed individuals.  (1:05:38) EI special benefits that self-employed business owners can access.  (1:13:55) Insight into EI for incorporated versus non-incorporated business owners.  (1:23:43) Our post-op debrief of today's episode on CPP and EI!    Links From Today's Episode: Dr. Mark Soth (The Loonie Doctor) — looniedoctor.ca Dr. Mark on X — twitter.com/LoonieDoctor Benjamin Felix — pwlcapital.com/author/benjamin-felix  Benjamin on X — twitter.com/benjaminwfelix Benjamin on LinkedIn — inkedin.com/in/benjaminwfelix Aravind Sithamparapillai — ironwoodcanada.com/aravind-sithamparapillai Sebastien Betermier — sbetermier.com   Papers Mentioned: 'Five Examples of Direct Value Creation and Capture in the Pension Fund Industry' – papers.ssrn.com/sol3/papers.cfm?abstract_id=4616266

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