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How Top Advisors Seek Portfolio Excellence with a After-Tax Edge

“Our portfolios are almost 100% tax-efficient, and this is very important to us in Quebec. For the past decade, tax rates for corporations and individuals in the province have increased every year,” he says. As an example, in 2012 the maximum non-qualified dividend tax rate for individuals was 36%; This year it is 48.7%.”

The rules around taxation, Poliquin says, have developed differently in Quebec than in Ontario. Given its progressive system of corporate taxation, the government of Quebec is lowering the tax rate on the first $500,000 of profits earned within the corporation, and offsetting this with a higher tax rate on dividends paid at exit.

However, it has not changed the tax rates on revenue from the portfolio held within the corporation. With corporations having a net effect on their high-income clients, Poliquin says, their after-tax income has decreased.

“Honestly, a lot of people in our industry in Quebec are doing finance, but they’re not doing taxes, so people aren’t seeing it,” he says. “At our firm, we analyze every investment from a post-tax perspective, and I think this has been a reasonably successful approach that is very important for us to stay ahead of.”

In Poliquin’s view, his firm’s services are needed more than ever. With his tax-efficient approach, an entrepreneur who planned to retire this year 10 years ago would potentially be able to avoid the negative surprise of an additional 12 percentage points added to tax rates for non-qualified dividends. In addition, he says the firm has developed a fund of alternative investments designed to reduce investors’ exposure to traditional bonds, but replace lost fixed income with an alternative yield of about 7%.

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