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INVESTMENT EXECUTIVE
The business’s value could continue to drop after the refreeze
Wealth Advisory Services in Winnipeg. For example, she says, “You can’t pay a big dividend on common shares to reduce the value of the company below the value of the preferred [shares], to then do a refreeze.”
Matsuba suggests working with a quali- fied business valuator so the valuation “withstands some degree of scrutiny” from the Canada Revenue Agency (CRA), he says. “The last thing we want is [for] the CRA [to] impose taxable benefits on people because value has been shifted inappropriately — we certainly have seen that situation.” (See sidebar on corporate attribution, page 10.)
The corporation should keep records detailing how the valuation was calculated, Matsuba says. He also recommends clients include a price-adjustment clause with the corporate documents related to the refreeze (or freeze) to allow the valuation to change without adverse tax consequences should the CRA challenge the valuation.
Another important consideration is timing: the business’s value could con- tinue to drop after the refreeze.
Your client could do another refreeze, although “you have to evaluate whether the benefits outweigh the costs,” Hu says. “If there is a significant decrease in value that is supportable today, there is no rea- son why you shouldn’t consider [a freeze or refreeze].”
The cost of a freeze or refreeze depends on the client’s situation, Hu says. A refreeze may cost less if the family had set up a trust already, for example.
Matsuba estimates legal fees for a refreeze would be $3,000 to $5,000. Add in valuation fees, other advisory fees and taxes, and the total cost could be roughly $10,000, he says.
if your client needs more value
After a freeze, if your business-owner client requires more value than is provided by the preferred shares (for retirement, for example, or to use the lifetime capital gains exemption), they could consider a “thaw.”
“A business owner — especially in this climate — might find that eventually they’ll need more value to live on,” Hu says. “Or they want to take back control or take on more growth of the company.”
“[Perhaps] the company has increased or sustained its value during Covid, and now [the client] needs more money and doesn’t want the current shareholders to have it,” Dawson says.
To accomplish the business owner’s objectives, the freeze shares are “thawed” in return for new common shares. The busi- ness owners would either convert some pre- ferred shares back to common shares or undo the freeze completely, Matsuba says. Proper valuation remains important when issuing the new common shares to avoid creating a taxable benefit for the sharehold- ers, he adds.
Alternatively, if a business had issued common shares to a discretionary family trust, business owners who need more funds and are trust beneficiaries could “allocate shares out of the trust to themselves as long as [they are] residents of Canada,” Dawson says.
Costs for a thaw would be comparable to a refreeze, because the transactions are similar. “You’re exchanging your exist- ing shares,” Hu says. But the cost ultim- ately depends on the client’s objectives, she says. IE
BYB December 2020 Optimizing your home office
11
Tips for maintaining
your work/life balance, minimizing distractions and keeping physically fit while you work from home
l BY MADDIE JOHNSON
earlier this year, many financial
advisors were forced to work from home for the first time. The second wave of Covid-19 means working remotely is likely to last well into 2021. Now might be the time to optimize your home office for the long haul if you haven’t already.
Many modern workspaces are designed with employee productivity in mind, but most home offices aren’t designed for productivity. There are sev- eral strategies you can use to boost your productivity while also maintaining a work/life balance — even if space is at a premium in your home.
designate your workspace
If you worked in an office before the pan- demic, you were used to having a dis- tinct separation between your work and your home. You should try to recreate that separation as much as possible by designating a physical workspace in your home, says Kirsten Marshall, prin- cipal designer with Palmerston Design Consultants Inc. in Toronto.
Marshall says the ideal workspace should be sectioned off from the rest of your home, in addition to being com- fortable and functional. Your workspace should be “somewhere you can go every morning and somewhere you can leave at the end of the day,” she says.
Your workspace doesn’t have to be a separate room if you don’t have the space; it can be something as simple as a corner of the kitchen. But it should feel separate from the rest of your home, Marshall says.
Nathalie Bureau, president of Professional Organizers in Canada in Toronto, says it’s important to find a place in your home that “puts you into action.” At the very least, she suggests, you should choose somewhere other than your bedroom.
If you work in a room that isn’t a dedi- cated home office, pack up your work items — laptop, notepad, etc. — in the evening to signify the end of your work- day. If you don’t have a company laptop and do your job from a personal com- puter, make sure to close all the tabs and applications you use for work as soon as you’re done for the day.
Marshall says it’s important to invest in functional home-office equipment. You may even be eligible to get some of your home-office expenses reimbursed by your employer without incurring a taxable benefit.
“Something I would look at first is investing in a really comfortable chair — one you can sit in for long hours that won’t harm your body,” Marshall says.
Situating your desk somewhere with
natural lighting is important, especially during the winter months, Marshall says. If you spend much of your day on Zoom, use a desk lamp to make yourself visible. Marshall also suggests adding a rug to your home office for sound absorption.
set a schedule
You should be clear about when you’re working and when you’re not, Bureau says. “The more you plan your schedule, the more you will be able to focus on your work,” she says. “Make sure to communi- cate [your schedule] to the people you live with.”
Sticking to a schedule will not only inform those around you of when you’re working, it will help you stay accountable, Bureau says. If you have children at home, staying organized is even more crucial. Have a plan to keep children occupied when they get home from school. If you have small children, organize your sched- ule to get work done when they take naps.
Don’t forget to schedule breaks in your day either. “Set a reminder to break for lunch and take a few minutes in the morning and afternoon as well,” Bureau says. “If you know the laundry is going to distract you, plan to throw it into the machine during your morning break.”
Monica Bodurka, co-founder of The Leadership Wellness Group in Toronto, says many of her clients have been work- ing longer hours
minimize clutter. “Clutter raises your [level of] cortisol, which is your stress hormone,” she says.
Other ways to minimize distractions include turning off notifications on your phone and limiting your use of social media to help keep you out of that “stress zone,” she adds.
Bureau says an essential-oil dif- fuser can help boost your energy, mood and brain function, and playing white noise or quiet music can help with your concentration.
take care of yourself
The second wave of Covid-19 probably means your home is not only doub- ling as your office, but also as your gym. Scheduling time to maintain your physical health is important, says Heather Wilson-Phillips, founder of The Fitness Empire Inc. in Toronto.
“That feeling of checking something off of your list is gratifying,” Wilson- Phillips says. “The same goes for your fitness and wellness. When you put [fit- ness] into your schedule and you check it off, that feeling of accomplishment car- ries on throughout the rest of the day.”
Even with limited time and space, Wilson-Phillips says, there are several sim- ple ways to make sure you are taking care of your body while at home. First and fore- most, she says, be kind to your body while
during the pan- demic, but feel less productive because they’re no longer rushing to leave work and get home.
Have a schedule that establishes boundaries between your work and personal time
you are working. Invest in a proper desk chair, a stand- ing desk or a stabil- ity ball.
A stability ball can help increase your core strength and improve your posture. A stand- ing desk also can be beneficial, and it doesn’t have to be
Having a sched-
ule that estab-
lishes boundaries
between your
work and personal
times can help you maintain work/life balance, Bodurka says: “There is a really big opportunity in working from home because you actually have a little more control over your schedule.”
expensive: you can build your own by set- ting a small table or stack of books on top of your desk, bar top or kitchen counter.
Wilson-Phillips recommends a com- bination of standing and sitting to keep your muscles activated. She says she begins each workday standing for a cer- tain amount of time before she sits down.
As for exercise, Wilson-Phillips rec- ommends finding something that works for you.
“There are so many things that we can use around our home that are going to help us be more active,” she says. “[Exercise] can be simple: start the day off with a stretch or a five-minute workout. Once you begin doing it [daily], you will realize the benefits and want to continue.”
A strategy Bodurka uses with her cli- ents is to challenge them to incorporate walking meetings into their workdays. Try to pick a one-on-one meeting that doesn’t require being close to your com- puter and go for a walk while you talk on the phone.
“People [trying that strategy] were finding they were getting more creative ideas. They were having fun,” Bodurka says. “When they got back, they felt relaxed even though they had just had a meeting.” IE
Bodurka suggests you maintain a rou- tine. Try to treat weekdays just as you did before: wake up at the same time every morning, eat breakfast and get ready for work. You may not need to dress as formally as you did in the office, but the simple act of getting dressed is a signal that it’s time to get up and get working.
minimize distractions
One of the best things you can do to minimize distractions, Bodurka says, is to create a calm atmosphere and
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