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  • Aug 29th, 2014 6:51 pm
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Deal Addict
Aug 28, 2007
1849 posts
245 upvotes
Calgary
AS HomerHomer pointed out, payroll isn't a big deal.

Given you have a new born, you could consider making them all shareholders (preferably with their own class of non-voting shares). You have to read your articles of incorporation to see. Lawyers should have done this when they set it up but many don't bother.

Holding shareholders & directors meetings to grant them shares is a 15 minute effort with a few pieces of paperwork. Then you can give your wife any amount whatsoever and she pays tax at year end. Unfortunately, you have to wait until the child shareholder is 18 before you can dividend them any money or else it is attributed back to you anyways. Works perfectly when they need tuition!
Deal Addict
Feb 5, 2010
2764 posts
175 upvotes
Wanted to get your thoughts on the non-payroll option (self employed).

If my wife whom has a sole prop business (non-registered) and will be helping run a few events/seminars for my business.

Can't she simply invoice me for her services, I pay the invoice, and she declare the income? I would think in this scenario there would be no EI/CPP deductions involved and is another way to pay her outside of payroll.
Member
User avatar
Nov 10, 2009
427 posts
30 upvotes
Hamilton
Yes she can.

Abel4Life wrote:
Aug 16th, 2014 7:37 pm
Wanted to get your thoughts on the non-payroll option (self employed).

If my wife whom has a sole prop business (non-registered) and will be helping run a few events/seminars for my business.

Can't she simply invoice me for her services, I pay the invoice, and she declare the income? I would think in this scenario there would be no EI/CPP deductions involved and is another way to pay her outside of payroll.
Dame Edna: I think of a talk show as... well... a monologue interrupted by total strangers.
Deal Fanatic
Aug 21, 2007
5066 posts
284 upvotes
Markham
Anonymouse wrote:
Aug 23rd, 2014 7:01 pm
I am doing some consulting. If my wife and I are both professionals in the same field, can we incorporate and income split by paying her through dividends? If she takes the earnings out through a dividend, we save about $10k due to a difference in our dividend tax rates. (At least, provided that rate is set according to wage income, and dividend income is not added before determining the bracket.)
yes...there is no restriction on who you make a shareholder or why...and as a shareholder, they can be paid any amount of dividend without having to be reasonable

keep in mind that due to changes in dividend gross up and tax credit mechanism, the amount of income that can be earned tax free has gone down quite a bit...it used to be about 40k in dividends (if no other income) could be earned tax free...i believe that is now down to closer to 25k
Jr. Member
Jun 7, 2010
187 posts
16 upvotes
Anonymouse wrote:
Aug 23rd, 2014 7:01 pm
I am doing some consulting. If my wife and I are both professionals in the same field, can we incorporate and income split by paying her through dividends? If she takes the earnings out through a dividend, we save about $10k due to a difference in our dividend tax rates. (At least, provided that rate is set according to wage income, and dividend income is not added before determining the bracket.)
If I may add, depending on your scenario, if you are a sub contractor working through an agency i.e. 9-5 consultant with 1 client at a time, you may be opening yourself to PSB risk if you are issuing dividends.
Deal Fanatic
User avatar
Nov 18, 2002
6950 posts
581 upvotes
Toronto
Anonymouse wrote:
Aug 29th, 2014 1:52 pm
Full time job working for company A; consulting on the side for company B in a city 200 km away. No agency involved. Hoping this won't attract a PSB classification - I have spoken to my accountant about it and she doesn't think it will be a problem barring some kind of huge CRA crackdown. The fact that there is only one client right now doesn't work in my favour, of course.
It's extremely reasonable to expect most small businesses to start with a single client so I wouldn't sweat it for the first couple of years. Beyond that be cautious.
Deal Fanatic
User avatar
Nov 18, 2002
6950 posts
581 upvotes
Toronto
Abel4Life wrote:
Aug 16th, 2014 7:37 pm
Wanted to get your thoughts on the non-payroll option (self employed).

If my wife whom has a sole prop business (non-registered) and will be helping run a few events/seminars for my business.

Can't she simply invoice me for her services, I pay the invoice, and she declare the income? I would think in this scenario there would be no EI/CPP deductions involved and is another way to pay her outside of payroll.
Absolutely. It's called subcontracting. You can hire the services of anyone. No dividents or payroll involved. I'm no expert but would imagine good for partners with little to no income.

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