Tax Planning for Business Owners Nearing Retirement

Tax Planning for Business Owners Nearing Retirement

As a business owner in Calgary, you’ve spent years building a profitable company. Now, as retirement approaches, a key question arises:

“How do I transition into retirement without losing half my wealth to taxes?”

The good news? With the right wealth management strategies, business owners can retire with confidence — minimizing taxes while preserving wealth for personal use, family, and legacy goals.

Here’s what to consider in the final years before exiting your business or winding down operations with tips from a financial advisor in Calgary that specializes in retirement planning for business owners.

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1. Start with a Personal Cash Flow Plan

Before any tax move, understand your retirement needs:

• How much will you need monthly, post-tax?
• Will your income come from dividends, corporate withdrawals, or asset sales?
• What lifestyle are you funding — and for how long?

We build custom retirement cash flow models that account for:

• Personal and corporate income
• CPP, OAS, and investment returns
• Tax brackets and clawbacks
• Inflation and longevity

This creates a clear wealth management roadmap before making irreversible decisions.

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2. Use Your Corporation Strategically

Many Calgary business owners have retained earnings inside a corporation.

Rather than winding down the corporation at retirement, you may want to:

• Convert it into a retirement income engine
• Use it to hold investments in a HoldCo
• Pay out income strategically (dividends vs. salary)
• Maintain corporate-paid life insurance

Your corporation can become your private pension plan — with more control and tax efficiency.

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3. Plan Your Exit Tax Efficiently

If you’re selling the business:

• Consider the Lifetime Capital Gains Exemption (LCGE)
  
  • Up to $1,016,836 in 2025 tax-free on the sale of qualifying small business shares
• Review share structure and asset eligibility well in advance
• Use an estate freeze or family trust to shift future growth tax-free to family members
• Structure earnouts or staged payouts to smooth income

A sale without financial planning could trigger hundreds of thousands in unnecessary taxes.

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4. Pay Yourself Smarter in Retirement

You have options for drawing income:

• Eligible and non-eligible dividends
• T4 salary from remaining active work or consulting
• Capital dividends (via the Capital Dividend Account)
• TFSA and RRSP withdrawals

We design integrated wealth management and retirement strategies that coordinate:

• Tax rates across all income sources
• CPP/OAS deferral planning
• Minimizing OAS clawback and preserving GIS (if applicable)
• Income smoothing to stay in lower brackets

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5. Wind Down Corporate Assets Thoughtfully

If you no longer need the corporation:

• Trigger capital gains gradually to minimize bracket jumps
• Use corporate-owned life insurance to extract funds tax-efficiently
• Consider pipeline planning to convert retained earnings into capital gains at death
• Plan for post-mortem tax exposure on corporate assets

These strategies require long lead time and alignment with your estate plan and important to discuss your specific situation with a qualified financial advisor in Calgary.

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6. Coordinate with Your Estate Plan

Business assets often make up the largest share of a business owner’s estate.

Planning for:

• Who will inherit the corporation or its assets
• How taxes will be paid (without forced asset sales)
• If charitable giving, family trusts, or private foundations fit your goals

can help preserve your legacy and avoid unnecessary stress for your family.

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Build a Retirement Plan That Works for You — and After You

At MRG Wealth Management, we specialize in helping Calgary business owners near retirement transition their wealth tax-efficiently — while aligning their financial plan with lifestyle, family, and legacy goals.

As your Personal CFO, we bring together corporate planning, investment strategy, and tax expertise to help you retire on your terms.

Book a Retirement Strategy Session and let’s map out your next chapter.

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