Case Study 04 · Wealth Architecture
Two Incomes. Three Children. Two Investment Properties. No Structure.
Manitoba · 2025 · Married · 3 Children · 3 Properties · No Prior Planning
Manitoba · 2025 · Married · 3 Children · 3 Properties
$210K
Employment Income
T4 · Correction Officer
$310K
Household Income
Combined · Officer + Spouse $100K
~$30K
Annual Tax Saving
With Full Architecture in Place
The Situation
This correction officer and his healthcare spouse earn $310,000 combined — entirely as T4 employment income. Neither can incorporate their salary. Every dollar above $100,000 is taxed at Manitoba's top rate of 50.4%. Two investment properties sit in personal names, generating rental income taxed at that same top rate. Three children have no RESPs — government CESG grants are being left unclaimed every year. There are no Wills, no estate plan, and no structure of any kind. The family's wealth is growing. So is their tax exposure.
Critical Gaps
No RRSP Strategy — Top Rate Exposure
The correction officer's DB pension reduces RRSP room via a Pension Adjustment. The remaining room — ~$16,250 — is not being used. Every unclaimed dollar is a 50-cent tax gift to CRA.
No RESP — 16-Year-Old Deadline Imminent
CESG eligibility is permanently lost if conditions are not met by age 17. An RESP for the eldest child must be opened immediately. $1,500/year in free government grants is being forfeited.
ITA s.146.1 — CRITICAL FIRST STEP
2 Investment Properties Taxed at 50.4%
Rental income from both properties is taxed personally at Manitoba's top rate. A HoldCo and ITA s.85(1) rollover would shift future income to the 27% corporate rate.
No Wills, No Estate Plan — 3 Minor Children
No Wills, no Powers of Attorney, no life insurance strategy. Both investment properties carry growing capital gains exposure under ITA s.70(5) with no funded liability in place.
Tax Comparison — Current Structure vs. Fiscal Architecture Blueprint
| Area | Without Structure | With Architecture |
|---|---|---|
| Personal Tax — Correction Officer on $210,000 (MB 50.4%) | ~$79,000 | ~$69,800 |
| Personal Tax — Spouse on $100,000 (MB ~43.4%) | ~$29,600 | ~$29,600 |
| RRSP Deduction — Correction Officer (est. after Pension Adjustment) | $0 | ~$16,250 sheltered |
| Spousal RRSP Contribution | $0 | ~$8,000 sheltered |
| TFSA — Both Spouses ($7,000 each for 2025) | $0 | ~$14,000 sheltered |
| Rental Income Tax — 2 Properties at 50.4% personal | ~$14,070 | — |
| Rental Income — After s.85(1) Rollover at 27% corporate | — | ~$8,100 |
| RESP — CESG Grants (3 children @ $500/child/yr) | $0 | ~$1,500/yr |
| Estate Exposure — Deemed Disposition at Death (ITA s.70(5)) | Uncapped | Plan in Place |
| Total Annual Family Tax — Employment + Rental | ~$122,670 | ~$92,600 |
| Estimated Annual Tax Saving | — | ~$30,070 |
Red = current cost. Green = with architecture. Figures are estimates based on 2025 rates.
The Architecture Blueprint — 4 Core Levers
RRSP & Spousal RRSP Optimization
Every dollar contributed at 50.4% marginal rate saves 50 cents immediately. Confirm RRSP room from CRA My Account (DB pension reduces room via Pension Adjustment). Maximize correction officer RRSP + $8,000 spousal RRSP contribution — splitting retirement income to the lower-bracket spouse. Spousal RRSP attribution rule: do not collapse within 3 years of last contribution.
ITA s.146(1) & s.146(8.3)
RESP — 3 Children, Maximum CESG Capture
20% federal CESG on first $2,500/year per child = $500 guaranteed grant per child per year. Total family CESG potential: $1,500/year. The 16-year-old requires immediate action — CESG eligibility is permanently lost if conditions are not met by December 31 of the year they turn 17. Open RESPs for all three children now and maximize carry-forward room.
ITA s.146.1 — CRITICAL FIRST STEP
HoldCo + s.85(1) Rollover — 2 Investment Properties
Incorporate a Manitoba Investment HoldCo. Transfer both investment properties via an ITA s.85(1) rollover at adjusted cost base — deferring accrued capital gains and shifting rental income from the 50.4% personal rate to the 27% corporate rate. Annual tax deferral saving: ~$5,970. Manitoba Land Transfer Tax and lender consent apply on each transfer.
ITA s.85(1) & s.125(5.1)
Estate Plan — Wills, COLI & PRE Strategy
Draft Wills and Powers of Attorney for both spouses immediately — three minor children make this non-negotiable. Designate the primary residence as principal residence for all years of ownership under ITA s.40(2)(b). Establish term life insurance on both spouses to fund estate tax liability. As HoldCo is incorporated, add a COLI policy: death benefit credits to the Capital Dividend Account for tax-free distribution to the estate.
ITA s.70(5), s.40(2)(b) & s.89(1)
“Two incomes, three children, two investment properties — and no structure. Every dollar earned above $100,000 is taxed at 50 cents. The Fiscal Architecture Blueprint does not change what you earn. It changes how much of it your family keeps.”
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All Fiscal Architecture Blueprint Diagnostics are conducted under the supervision of Olutosin Oluwasanmi, Managing Counsel, Ellan Law Corporation — a member in good standing of the Law Society of Manitoba. This case study is illustrative and does not constitute legal or tax advice.