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RBC Wealth Management Services Taxation of business income and methods of withdrawing cash from a Bola Wealth Management Surplus Cash in a Corporation – Part 3 Paul Bola, CFP, FMA Investment and Wealth Advisor / Financial Planner As the owner-manager of your operating company, you may have surplus [email protected] profits accumulating in your corporation. This surplus cash could be in your 905 450 4143 operating company or it could be in your . In either case it is still a corporate structure and the implications are the same. 44 Peel Centre Drive Suite 420A Brampton, Ontario L6T 0E2 Your first reaction may be to figure out how to withdraw the funds from the www.paulbola.ca corporation and pay as little as possible. While this might seem Please contact us like the best solution, other options might be more appropriate depending for more information on your situation and your personal and business needs. about the topics There are many issues to consider when deciding what to do with your discussed in this corporation’s surplus funds. What do you need the money for most? What article. options are available? And what are the tax implications of those options? The third article of the surplus cash series discusses ways you can withdraw the cash from your corporation and the tax consequences of withdrawing the funds.

This four-part series takes you and Methods of withdrawing cash through some of the key issues to from a corporation consider when you have surplus cash in your corporation: Part 4: Retirement and estate solutions using excess funds in a Part 1: Decision tree for addressing corporation surplus cash in a corporation The terms ‘corporation’ and Part 2: Taxation of investment income ‘company’ are used interchangeably in a corporation to refer to a Canadian-controlled private corporation (CCPC). This Part 3: Taxation of Business Income means that the corporation is not 2 | RBC Wealth Management

controlled by a non-resident of personal debt that is non-tax- or a public corporation and deductible and may wish to reduce no class of shares of the corporation this debt using surplus cash in the is listed on a prescribed corporation. exchange. This four part series does not apply to public or to Withdrawing cash from your businesses operating as a corporation or a sole proprietor. If you need the corporation’s surplus If you need the funds for personal use, there are corporation’s surplus The content is for information different ways you can withdraw funds for personal purposes only and does not provide those funds, each with different tax tax or legal advice. It is imperative use, there are different implications. There is likely to be a that you obtain professional ways you can withdraw personal tax cost, depending on the advice from a qualified tax or legal form of payment. The rest of this those funds, each advisor before you act on any of the with different tax article discusses some different ways information provided in this article. your corporation may pay you and implications. This will ensure that your own some of the consequential tax issues circumstances have been properly and incentives that might apply. considered and that action is taken on the latest information available. Reimbursing you for business expenses you paid personally When there’s a personal need for If you personally paid for anything the surplus cash related to your corporation, you When your corporation has excess can get your company to reimburse funds, you may decide that you you for those expenses. Common need them personally more than examples are using your car for the corporation needs them. Some business purposes or entertaining reasons might include: clients with your own money.

Lifestyle expenses — Your cash flow When you use your after-tax dollars may be tight if you haven’t been to pay for business expenses, you paying yourself enough income from don’t have to pay any income tax the corporation or your situation on amounts reimbursed by your has changed and you require more corporation. Your company will get personal funds or you have additional the for the business costs such as a child’s private expense, but it is important to keep education, a vacation, etc. accurate records and receipts.

Income tax — Depending on whether Repaying amounts owed to you the corporation pays you Your corporation may owe you or a regular salary, you may need because: to make income tax instalments

personally. If those instalments are ●● You transferred personal assets to not paid on time, you could incur your corporation and received no penalties and interest. Also, if your cash or shares in return is higher this year than it was in previous years, you may ●● Your company declared a owe more when you file your personal or a bonus and you loaned the income tax return. funds back to your corporation

A major purchase — You may be ●● You personally incurred business planning a major purchase such as a expenses, as discussed above, new car or a second property. but weren’t reimbursed by your company Personal debt — You may have RBC Wealth Management | 3

These amounts often accumulate in in most provinces the provincial the start-up phase or low cash-flow business limit is also $500,000, except periods when your company has for Manitoba and Nova Scotia. insufficient funds to reimburse you. When the corporation repays the It is important to note that this loan, the repayment is not taxable. small business limit is reduced for corporations or corporate groups Paying a salary or bonus with taxable capital employed in You may consider paying yourself a Canada of greate r than $10 million higher salary or a bonus from your and it is completely eliminated for operating company. If your spouse corporations/corporate groups with and children help out in the business, taxable capital employed in Canada consider paying them a reasonable in excess of $15 million. This is In general, the first salary for services rendered. This regardless of their taxable income. $500,000 of ABI is a great income-splitting strategy For taxable capital between $10 and $15 million the business limit earned by a CCPC is that may save your family money if your children or spouse is in a lower is phased out. What this means is taxed at the favourable that where a corporation’s taxable small business rate. than you. In addition, a salary or bonus is considered earned capital is greater than $15 million, all income for the purposes of generating their income would be taxable at the RRSP contribution room or qualifying higher general corporate and earnings if you ever decide to establish they would not have access to the an Individual Pension Plan (IPP). favourable tax rates on income below the small business limit. When to pay yourself A salary paid by your company is How it works deductible for the corporation; Let’s look at a couple of examples however, any salary received by you to illustrate the tax implications of is taxable at your personal marginal paying a salary — first assuming tax rate. Therefore, it may make more that your operating company earns sense for your company to pay you more than the small business limit, a salary if it is paying tax at the high and then assuming that it earns less general rate as opposed than the small business limit. We will to the small business rate. This only assume that your corporation pays a applies to an operating company salary of $40,000 and we will ignore that is earning an income from its any other or costs that may business operations, known as active apply to the corporation as a result of business income (ABI). paying a salary.

In general, the first $500,000 of If your corporation earns more than ABI earned by a CCPC is taxed at the small business limit and assuming the favourable small business rate. that the combined federal and This threshold is known as the provincial high general corporate tax small business limit. The combined rate is 31%, paying a $40,000 salary federal and provincial small will result in a tax savings to your business rate varies by province corporation of approximately $12,400. from approximately 11% to 19%. Any income earned by the CCPC above On the other hand, if your the small business limit is taxed at the corporation earns less than the small higher general corporate rates which, business limit and assuming the again, vary by province from 25% combined federal and provincial to 31%. The higher corporate rate is small business rate is 15%, paying almost double or more than double a $40,000 salary will result in a the small business rate. The federal tax savings to your corporation of small business limit is $500,000, and approximately $6,000. 4 | RBC Wealth Management

In either case, the salary you funds to invest in a non-registered receive is taxable personally at your portfolio outside of your corporation marginal tax rate. If we assume that to increase your wealth. The financing your marginal tax rate is 50%, you costs are funded by you, receiving a would owe approximately $20,000 salary from the corporation. This is a in personal tax. In other words, the long-term strategy that is ineffective total corporate and personal tax if you need the funds in the short to rate on earning a salary from your medium-term. Under the right corporation would be 50%, which is circumstances, your personal marginal tax rate since This strategy requires that you you may consider the corporation would not pay taxes borrow funds personally and invest personally borrowing on the amount paid to your as a salary in non-registered assets such that funds to invest in (i.e. they would claim a deduction). the interest paid on the borrowed a non-registered funds is tax-deductible. You then portfolio outside of This example illustrates that there is pay yourself a salary equal to the a tax cost to withdrawing cash in the interest cost. The corporation gets your corporation to form of a salary or bonus from your a deduction for paying you a salary increase your wealth. corporation. In addition, the level and you have an income inclusion of corporate income will influence personally that is offset by the whether you should withdraw interest deduction so there is no net cash as a salary or bonus or use an personal tax impact. Over the long- alternative method. term, the funds will be drawn from the corporation with no tax-cost and Note that from the Canada Revenue your non-registered investments will Agency’s (CRA’s) point of view, hopefully grow in value. paying a salary to the shareholders of a holding company that earns This is a leverage strategy, which is only investment income (passive risky and not suitable for all investors. income) must be reasonable based You need to fully understand the on the facts of each particular case. concept of “borrowing to invest” and In making this evaluation, they may the related risks before implementing look at the duties you perform and such a strategy. Speak with a qualified the time expended in carrying out tax advisor to ensure that this strategy those duties, the experience and meets your needs and circumstances. skills necessary to perform your duties and the remuneration paid by Paying a taxable d ividend other businesses of a similar size to Your corporation may pay you a their employees who render similar taxable dividend. The dividend is services. In any case, since a portion declared by director’s resolution and of the tax paid on is must be recorded in the minutes of refundable to the corporation when the corporation. Once a dividend taxable dividends are paid out to is declared on a particular class of the shareholders, it may make more shares, then all shareholders with sense in certain circumstances to that class of shares must receive a pay a dividend as opposed to a salary dividend. to recover the refundable portion of Part I or Part IV tax already paid. You A dividend is paid with the after-tax should discuss with your qualified dollars of earned in your corporation. tax advisor whether it is reasonable That means that the income earned in your circumstances to pay a salary in your corporation is first taxed in from your holding company. the corporation at its corporate tax rate and then the after-tax funds Borrowing to invest are paid to you as a dividend. You Under the right circumstances, you then pay personal tax on the taxable may consider personally borrowing dividend at your marginal tax rate. RBC Wealth Management | 5

It appears that the same income is rate in the corporation, this type of taxed twice, once in the corporation income cannot be paid out as eligible and then again personally in your dividends. Investment income earned hands when funds are withdrawn as by an operating company is taxed a dividend. However, the Canadian in the same manner as investment tax system is designed so that the income earned in a holding company, combined corporate and personal where the investments are not income tax paid on income earned incidental to the business. In general, through a CCPC and distributed to investment income includes interest, you as shareholder should equal the taxable capital gains, rental income, The Canadian tax income tax that you would have paid royalties and foreign income. Your system is designed if you earned that income personally corporation can also pay eligible so that the combined outside of your corporation. This is dividends to the extent of eligible corporate and personal known as “integration”. However, dividends it receives. income tax paid on integration is not perfect and the income earned through integrated tax rate is quite different Therefore, your corporation can a CCPC and distributed depending on whether your potentially pay both eligible and non- to you as shareholder corporation is earning ABI below the eligible dividends. In general, eligible should equal the small business limit, ABI above the dividends can be paid from ABI earned in the corporation in excess income tax that you small business limit or investment income. of $500,000 and any eligible dividend would have paid if you income received by your corporation. earned that income To further complicate matters, Non-eligible dividends can be with personally outside of eligible dividend rules were investment income earned in the your corporation. introduced to apply to dividends paid corporation and ABI that was subject after 2005 by a Canadian corporation to the small business rate. to a Canadian resident shareholder where the dividend is designated as Non-eligible dividends are subject to a an eligible dividend. dividend gross-up of 18% beginning in 2014 (25% before 2014) and a federal Eligible dividends are subject to an dividend of approximately enhanced dividend “gross-up” of 38% 11% (13% before 2014) of the grossed- and a federal dividend tax credit of up dividend. There is also a provincial approximately 15% of the grossed-up dividend tax credit available, which dividend. There is also a provincial differs for each province. dividend tax credit available, which differs for each province. Because of the complexity of these calculations, we advise you to consult Your corporation can pay eligible your qualified tax advisor to track dividends to the extent that its the various types of income earned income is taxed at the high general and the company’s ability to pay you corporate tax rate. Although eligible vs. non-eligible dividends. investment income is taxed at a high

Combined Tax rate Eligible corporate if income Corporate Non-eligible dividend and personal earned tax rate dividend rate rate tax rate personally ABI up to 15.00% 36.00% 45.60% 50.00% $500K ABI > $500K 31.00% 32.00% 53.08% 50.00% 6 | RBC Wealth Management

The table above demonstrates that Since a shareholder does not have to be integration of the corporate and involved in the day-to-day operations personal tax system is definitely of the business and dividends are not perfect. It also illustrates that not subject to the “reasonability” test when this corporation earns less unlike salaries and bonuses, paying than the small business limit and dividends to family members that the shareholder needs to withdraw are shareholders, either directly or funds from the corporation, it may be indirectly, can be a useful income- better to pay dividends rather than a splitting mechanism (sometimes salary or bonus since the combined referred to as “dividend sprinkling”). tax rate of doing so is 45.60% as opposed to 50.00% if they received However, you should proceed The first $500,000 of a salary or bonus. (Remember, this with extreme caution if you are ABI earned by your assumes the shareholder is taxed at implementing this strategy. It is company is taxed at the highest marginal tax rate.) In this imperative that no dividends be paid to minor children as they are subject the favourable small example, if the corporation earns more than the small business limit, to “kiddie tax”. Kiddie tax applies when business rate and a minor child receives a dividend from any income earned in the reverse is true. In most provinces the relationship illustrated in the a private corporation. The dividend is excess of $500,000 table above exists but you should taxed at the highest dividend tax rate is taxed at the higher check your particular province in the regardless of the child’s marginal tax general corporate rate. separate tables provided. Of course rate and cannot be offset by the basic these decisions should not be made personal exemption. in isolation and without the advice of Another pitfall to watch out for is a qualified tax professional. corporate attribution. Corporate Investment income attribution applies when property is The taxation of investment income loaned or transferred to a corporation earned in a corporation is discussed and a spouse or minor child benefits in Part 2 of this series of articles. from this transfer. Corporate As mentioned in Part 2 of this attribution does not apply in the case series, if your corporation has a where the company is a small business refundable dividend tax on hand corporation (i.e., 90% or more of its (RDTOH) balance, it can recover the assets are used in an active business). refundable taxes paid by paying out a The $800,000 (subject to indexation) taxable dividend. capital gains exemption available on the disposition of qualified small Dividend sprinkling and multiplying business corporation shares (QSBC) the capital gains exemption can be multiplied if you and your Paying dividends to family members family members own shares of your and multiplying the capital gains corporation, directly or indirectly. The exemption are tax and estate planning definition of QSBC shares is beyond strategies commonly employed in the scope of this article. If you need practice by shareholders of private further information please contact corporations that potentially result your qualified tax advisor. Each in significant tax savings. Both of individual shareholder is entitled these strategies involve reorganizing to claim a capital gains exemption. your corporation so that your spouse Instead of only being able to claim and/or children own shares of $800,000 of a capital gains exemption, the corporation, either directly or a family of four can claim $3.2 indirectly through a family trust. The million, resulting in an additional step-by-step procedures to implement tax saving of $800,000 (assuming a any of these strategies are beyond marginal tax rate of 50.00%). the scope of this article however the strategies are introduced below. RBC Wealth Management | 7

For these two strategies (dividend any capital dividends that the sprinkling and multiplying the corporation pays. capital gains exemption) to work, the dividends and capital gains must ●● It is increased by life insurance be paid or made payable to your proceeds in excess of the policy’s other family members. The funds adjusted cost base. taxed in their hands will not legally It is possible for the CDA to be belong to you anymore. Therefore, it negative. A capital dividend is a should be your intention for them to tax-free dividend. have these funds. A capital dividend is declared by a directors’ resolution and by filing a These strategies are complex and prescribed election (Form T2054) there are numerous traps and with the CRA on or before the earlier pitfalls, both from a tax and legal of the date the dividend becomes perspective. Consequently, we payable or is paid. advise you to get both legal and tax professionals involved to ensure Once a capital dividend is distributed you accomplish your goals and to shareholders, the CDA is reduced avoid unnecessary headaches when by the amount of the capital dividend implementing these strategies. paid. Generally, it is beneficial to immediately pay a capital dividend Paying a capital dividend whenever the CDA is positive so A capital dividend is a tax-free that the opportunity is not lost in dividend. As with all dividends, there cases where the corporation realizes is no deduction for the corporation a capital loss in the future. As paying the dividend; however, this mentioned above, you can only pay type of dividend is not taxable in the a capital dividend up to the positive hands of the recipient. balance in the CDA. Your corporation can pay a capital Reducing the paid-up capital dividend if there’s a positive balance The paid-up capital (PUC) of your in its capital dividend account (CDA), shares represents the consideration which is a notional account. The CDA the corporation has received in does not appear on your company’s return for the shares its issued (this financial statements, nor does it have may not be the same as the adjusted to be disclosed anywhere. However, it cost base). For example, if you should be closely monitored to allow contribute assets worth $20,000 to you to take advantage of any tax-free your corporation, you could receive capital dividends. Some corporate tax shares with a PUC of $20,000. You software packages allow you to calculate would have used after-tax personal and track the CDA balance annually. dollars to buy the assets originally, so The capital dividend account is you should be able to get that money affected by the following: back from your corporation without triggering further tax. ●● It is increased by the non-taxable portion of capital gains realized by In general, the PUC amount is the the corporation. value assigned to the shares as disclosed on your company’s balance ●● It is reduced by non-deductible sheet. A large value may indicate that capital losses realized by the you can remove some cash from the corporation. corporation on a tax-free basis.

●● It is increased by any capital You can reduce the PUC by having the dividends received by the directors declare and pay a dividend corporation and decreased by as a return of capital then reducing 8 | RBC Wealth Management

the paid-up capital on the balance personal income for year 1. sheet accordingly. In situations where you are subject to It is possible that the PUC for tax the income inclusion, you will get a purposes is different from the PUC deduction on your personal tax return for accounting purposes, and this in the year you repay the loan. It is not calculation can be quite complex. possible to avoid these rules if you In addition, reducing the PUC of the borrow funds, repay it within the time corporation and paying out a tax-free frame allowed, but then immediately dividend can have other negative tax re-borrow the funds. This is known The Income Tax Act consequences. Consequently, you as a series of loans and repayments, contains very specific should consult with a qualified tax and this would not avoid the income rules limiting the professional to determine if reducing inclusion rule. ability of a shareholder the PUC is appropriate in your to borrow funds from particular circumstances. There are four exceptions to the their corporation. income inclusion rules (there are Determining the most appropriate others but they are outside the method or combination of methods scope of this article). However, these to withdraw corporate funds is not exceptions apply only if the loan is easy. It involves an understanding of made to you in your capacity as an the general corporate tax structure, an employee and not as a shareho lder. understanding of your corporation’s In addition, at the time the loan is tax details and an understanding made, bona fide arrangements must of your and your family’s specific be made to repay the loan within a personal tax details. You should reasonable time. always consult a qualified tax professional for this type of planning. The first exception to the income inclusion rules is a loan made to Shareholder loans an employee/shareholder that You may be asking, if I need to access owns less than 10% of the shares money from my corporation, why not of the corporation. The other three simply borrow it? exceptions apply to loans for very specific purposes: the purchase of a The Income Tax Act contains very home, the purchase of a car for use in specific rules limiting the ability of a carrying out the duties of employment, shareholder to borrow funds from their the purchase of treasury shares of the corporation. The general rule is if you corporation. To reiterate, for all these borrow funds from your corporation four exceptions to apply, the loan must and the loan is not repaid within one have been made to the shareholder in year after the end of your corporation’s their capacity as an employee and not fiscal year-end in which the loan was because of their shareholdings. made, then the amount borrowed is included in your personal income in If you meet the exceptions or the loan the year you borrowed the money. is repaid in time so that there is no income inclusion, you may still have a For example, if your corporation’s deemed interest benefit that is taxable year-end is December 31 and you to you if the loan is a no- or low- borrowed money on November 1 of interest bearing loan. The shareholder year 1, you would have to be repay loan rules are complex. Speak with that loan by December 31 of year 2, a qualified tax advisor if you wish to to avoid the income inclusion in your borrow from your corporation. RBC Wealth Management | 9

Conclusion The integration of corporate and personal tax systems are quite complicated but there are many opportunities for planning. Because of the complexity, we strongly advise you to involve qualified tax and legal professionals to maximize these opportunities so that you may effectively accomplish your goals.

The shareholder loan rules are complex. Speak with a qualified tax advisor if you wish to borrow from your corporation. 10 | RBC Wealth Management

2016 corporate, integrated and personal tax rates on active business income

The following tables illustrate the 2016 corporate tax rates on active business income (ABI) below and above the small business limit, including the integrated corporate and personal tax rates when the income is distributed to the shareholders as a dividend (these tables assume that the shareholders are at the top marginal tax rate).

Corporate Non-eligible Eligible Combined corporate Tax rate if income Province tax rate dividend rate dividend rate and personal tax rate earned personally ALBERTA ABI up to $500K 13.50% 40.25% 48.32% 48.00% ABI > 500K 27.00% 31.71% 50.15% 48.00% BRITISH COLUMBIA ABI up to $500K 13.00% 40.61% 48.33% 47.70% ABI > 500K 26.00% 31.30% 49.16% 47.70% MANITOBA ABI up to $450K 10.50% 45.74% 51.44% 50.40% ABI 450K - 500K 22.50% 45.74% 57.95% 50.40% ABI > 500K 27.00% 37.78% 54.58% 50.40% NEW BRUNSWICK ABI up to $500K 14.12% 45.81% 53.46% 53.30% ABI > 500K 28.50% 34.20% 52.95% 53.30% NL and LABRADOR ABI up to $500K 13.50% 41.86% 49.71% 49.80% ABI > 500K 30.00% 40.54% 58.38% 49.80% NWT ABI up to $500K 14.50% 35.72% 45.04% 47.05% ABI > 500K 26.50% 28.33% 47.32% 47.05%

NOVA SCOTIA ABI up to $350K 13.50% 46.97% 54.13% 54.00% ABI 350K - 500K 26.50% 46.97% 61.02% 54.00% ABI > 500K 31.00% 41.58% 59.69% 54.00% Note: The combined corporate and personal tax rate for active business income earned above the $500,000 threshold assumes that the entire amount can be paid out as an eligible dividend. RBC Wealth Management | 11

Corporate Non-eligible Eligible Combined corporate Tax rate if income Province tax rate dividend rate dividend rate and personal tax rate earned personally

NUNAVUT ABI up to $500K 14.50% 36.35% 45.58% 44.50% ABI > 500K 27.00% 33.08% 51.15% 44.50% ONTARIO ABI up to $500K 15.00% 45.30% 53.51% 53.53% ABI > 500K 26.50% 39.34% 55.41% 53.53% PEI ABI up to $500K 15.00% 43.87% 52.29% 51.37% ABI > 500K 31.00% 34.22% 54.61% 51.37% QUEBEC ABI up to $500K 15.00% 43.87% 52.29% 51.37% ABI > 500K 31.00% 34.22% 54.61% 51.37% SASKATCHEWAN ABI up to $500K 12.50% 39.91% 47.42% 48.00% ABI > 500K 27.00% 30.33% 49.14% 48.00% YUKON ABI up to $500K 12.50% 39.91% 47.42% 48.00% ABI > 500K 27.00% 30.33% 49.14% 48.00%

Note: The combined corporate and personal tax rate for active business income earned above the $500,000 threshold assumes that the entire amount can be paid out as an eligible dividend. 12 | RBC Wealth Management

This document has been prepared for use by the RBC Wealth Management member companies, RBC Dominion Securities Inc. (RBC DS)*, RBC Phillips, Hager & North Investment Counsel Inc. (RBC PH&N IC), RBC Global Asset Management Inc. (RBC GAM), Royal Trust Corporation of Canada and The Royal Trust Company (collectively, the “Companies”) and their affiliates, RBC Direct Investing Inc. (RBC DI) *, RBC Wealth Management Financial Services Inc. (RBC WMFS) and Royal Mutual Funds Inc. (RMFI). *Member–Canadian Investor Protection Fund. Each of the Companies, their affiliates and the Royal Bank of Canada are separate corporate entities which are affiliated. “RBC advisor” refers to Private Bankers who are employees of Royal Bank of Canada and mutual fund representatives of RMFI, Investment Counsellors who are employees of RBC PH&N IC, Senior Trust Advisors and Trust Officers who are employees of The Royal Trust Company or Royal Trust Corporation of Canada, or Investment Advisors who are employees of RBC DS. In Quebec, financial planning services are provided by RMFI or RBC WMFS and each is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RMFI, Royal Trust Corporation of Canada, The Royal Trust Company, or RBC DS. Estate & Trust Services are provided by Royal Trust Corporation of Canada and The Royal Trust Company. If specific products or services are not offered by one of the Companies or RMFI, clients may request a referral to another RBC partner. Insurance products are offered through RBC Wealth Management Financial Services Inc., a subsidiary of RBC Dominion Securities Inc. When providing life insurance products in all provinces except Quebec, Investment Advisors are acting as Insurance Representatives of RBC Wealth Management Financial Services Inc. In Quebec, Investment Advisors are acting as Financial Security Advisors of RBC Wealth Management Financial Services Inc. RBC Wealth Management Financial Services Inc. is licensed as a financial services firm in the province of Quebec. The strategies, advice and technical content in this publication are provided for the general guidance and benefit of our clients, based on information believed to be accurate and complete, but we cannot guarantee its accuracy or completeness. This publication is not intended as nor does it constitute tax or legal advice. Readers should consult a qualified legal, tax or other professional advisor when planning to implement a strategy. This will ensure that their individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax rules, and other investment factors are subject to change. This information is not investment advice and should only be used in conjunction with a discussion with your RBC advisor. None of the Companies, RMFI, RBC WMFS, RBC DI, Royal Bank of Canada or any of its affiliates or any other person accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. ® Registered trademarks of Royal Bank of Canada. Used under license. © 2016 Royal Bank of Canada. All rights reserved. NAV0029 (07/16)