CPP & and EI for Business Owners | MoneyScope 14

Meet with PWL Capital: https://pages.pwlcapital.com/en-ca/co... 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! Timestamps: 0:00:00 Intro 0:04:01 CPP 0:04:43 CPP Contribution Amounts 0:07:00 Do Business Owners Get a Bad Deal? 0:14:12 Wasted CPP Premiums 0:16:14 Is CPP a Tax, or an Asset? 0:22:00 Longevity Risk 0:27:16 Inflation Risk 0:32:41 Sequence of Returns Risk 0:39:52 CPP as an Investment 0:45:59 CPP and Tax Integration 0:52:08 Quantifying CPP Returns for Business Owners 1:02:26 Putting CPP/Salary in Context of Real-Life Planning 1:14:39 EI for Incorporated Business Owners 1:16:56 EI Premiums 1:18:43 EI Special Benefits 1:20:27 When EI Opt-In Makes Sense 1:40:12 Debrief 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 Ep. 7 Portfolio Design & Management — moneyscope.ca/2024/02/09/episode-7-portfolio-design-management Fraser Institute — fraserinstitute.org Papers Mentioned: ‘Five Examples of Direct Value Creation and Capture in the Pension Fund Industry’ – papers.ssrn.com/sol3/papers.cfm?abstract_id=4616266 Paper that looks at how well Canadian pension funds have hedged real long-term liabilities Paper on how CPP lets you take more risk with your other investments