Less than one week
Financial Modelling 1: Training sessions are scheduled in two, two hour blocks.
Financial Modeling is a consulting and planning process which integrates a producer’s personal and business financial information. Modelling can test a variety of financial strategies such as business restructuring, exit, succession, tax minimization and personal retirement plans and their potential impact upon a producer’s future standard of living and net worth.
Financial Modeling generates comprehensive projections that are substantive and auditable, and will sustain the scrutiny of a producer’s accounting professional. Training leverages those reports to illustrate, compare and clarify core financial strategies and their implementation as they apply to a producer’s individual situation.
Training enhances a producer’s financial skillset, empowering producers to make better informed financial decisions, improving their ability to communicate effectively with lenders and accounting professionals, and increasing confidence when faced with significant and complex financial transitions.
2 Hour Block A: Cash Flow Tables
Personal Cash Inflow tables; Taxable and non-taxable income streams; sources and assumptions.
Sources of current and future personal taxable revenues referencing tax returns, farm financial statements, entitlements (CPP/OAS) and personal investment returns and withdrawals (RRIFs, TFSAs etc.). Concepts of income indexing and the implications of delaying or receiving entitlements earlier than age 65.
Reconciling wages (and/or drawings), dividend and/or shareholder loan extraction assumptions detailed in your personal financial models from farming operations, to your farm’s business financial models and pro-forma financial statements.
Review personal current and projected future incomes and discuss how the integration of farm and off-farm taxable income streams (if applicable) combine with non-taxable income cash flows such as redemption of shareholder loans, capital gains dividends, principal withdrawals from savings accounts, and sale of a principal residence to provide cash flows to sustain a producer’s current and future standard of living.
Verify that the “Total Cash Inflows Column” is the sum of all the taxable and non-taxable incomes in the prior columns. Compare the personal cash inflow table income assumptions with the producer’s historical tax returns and farm financial statements, and also review the prepared pro-forma financial statements and tax returns.
Personal Cash Outflow tables; Tax Deductible and Non-Deductible personal expenditures; sources and assumptions.
Review producer’s sources of personal (non-business) taxable-deductible expenditures associated with his/her tax return, such as RRSP contributions, donations, deductible interest on investment properties and tax deductible tuition and medical expenditures.
Discussion of income tax, marginal tax brackets and indexing, tax credits, Old Age Security claw back, and OAS claw back thresholds.
Taxation of dividend income, taxation of interest income and capital gains. Capital gains exemptions, the effect of Alternative Minimum Tax and AMT credits against future tax.
Discussion of non-deductible expenditures such as gifts to family members, additions to savings accounts, personal loan principal and interest payments and life insurance premiums.
Review how personal expenditures (groceries, vacations and personal vehicles, family home improvements/relocations etc.) modelled reconcile with the projected expenditures provided in a budget previously prepared by the producer.
Review concepts of inflation and how that impacts future personal expenditures, and how the models convert those values into “Today dollars” representing their projected future standard of living.
Reconcile Total Cash Outflows Column to the Total Cash Inflows Column; how a producer can review and confirm to their satisfaction all projected personal incomes, expenditures and assumptions, and amounts added to or withdrawn from personal savings and investments.
2 Hour Block B: Savings and Estate Tables
Personal Savings Tables: reconciling contributions and withdrawals demonstrated in the Savings Tables to cash flows demonstrated in the Cash Outflow tables. Review Personal Cash Inflow Tables and assumptions relevant to extracting cash resources (wages/dividends/sale of assets/shares etc.) from farming operations.
Discussion of investment concepts related to dollar cost averaging during accumulating savings phase and reverse dollar cost averaging (sequencing of returns) during retirement and savings withdrawal phases.
Registered Investments: Qualified registered investments, Fundamentals of RRSPs, RRIFS & Pension plans; tax deductible RRSP contributions, tax deferral on investment returns, taxable withdrawals.
Contribution assumptions, rates of return assumptions on registered investments (inflation based or linear), retirement income and withdrawal streams and the effect on rates of return assumptions (reverse dollar-cost averaging). Timing of RRIF/pension withdrawals, the effect of indexed marginal tax rates, RRIFs and minimum withdrawal schedules. Mini RRIFs and pension income tax credits.
Non-Registered Investments: Cash and cash like instruments; contribution assumptions, rates of return assumptions on non-registered investments (inflation based or linear), retirement income and withdrawal streams and rates of return assumptions. Stocks, mutual funds, tax effective investing; Incorporated Mutual Funds & Return of Capital investment funds.
Tax-Free Investment Accounts: Qualified TFSA investments, non-deductible contributions & non-taxable investment income, withdrawal streams and rates of return assumptions (reverse dollar-cost averaging), contribution limits, unused contributions, over contributions, timing of withdrawals, TFSAs and estates; exempt contributions, successor holder and beneficiaries.
Personal Estate tables; reconciling valuations demonstrated in the estate tables to farm financial pro-forma statements (ie: statement of retained earnings), tax on final returns, spousal rollovers of registered investments to surviving spouses, tax deferral on assets.
Estimates of tax on registered investments on final returns, rollovers of qualified farm property, rollovers of family farm shares, life insurance benefits, farm land and other property. Reconciling farm asset values in Estate tables to farm Pro-forma financial statements.
Producers interested in tax minimization and business re-structuring strategies as they relate to their personal financial environment.
Producers interested in integrating personal retirement planning with farm exit and/or succession planning.
Producers wishing to improve financial management skills and their understanding of financial reporting to better communicate with lenders, accounting professionals and partners.
Method of Instruction:
Since financial modeling prepares reports based upon a producer’s private personal and business financial information, training is delivered on-site or on farm, or online if a producer's computer hardware & connections allow.
Attendees include the producer and spouse, and if appropriate successors may be invited to attend.
Instructors include the trainer (with Financial Planning designations and AgExpert Analyst Certified Advisor training, and if required may include a co-trainer such as the producer’s accounting or other financial professional.
Availability of Program:
Field Fruit and Vegetables
Greenhouse, Nursery, Landscape and Floriculture
Other & Non-Traditional
Poultry and Egg
Tree Fruit and Vine
Subject of Training:
Financial Management (includes production economics)
Language of Instruction:
For program information contact:
Raymond Riel CFP CLU CHS CEC
Last Updated: 2014-12-17