Is it a matter of checking the following:
Dividend -- Small corp tax + personal tax
Salary -- Personal tax + ei + cpp + corp's side of ei and cpp
And just figuring out what combination seems to produce the best result?
Jul 15th, 2015 10:40 pm
Jul 19th, 2015 4:09 pm
Jul 19th, 2015 7:21 pm
Jul 20th, 2015 12:50 am
Jul 20th, 2015 9:32 am
Jul 23rd, 2015 4:43 pm
Yeah. Typically small business tax + dividend = personal income tax. But there is the CPP and EI matching. Other things like RRSPs personally (to a limited extent). I'll run through some runs with software and excel to see what it comes up as.TopTaxGuy wrote: ↑Jul 19th, 2015 4:09 pmGenerally, and I say the a little loosely, there is no difference because corporate and personal taxes are integrated. This means that as long there is little difference between salary and dividends when drawing from a corporation.
The only real net savings with dividends and CPP premiums since dividends do not attract CPP.
Depending on the amounts involved, the province of residence, and other personal income, the calculation can produce some savings.
Best for the DIY is to use tax software and calculate the differences. Be sure to factor in the CPP if payng a salary.
Jul 23rd, 2015 5:06 pm
Calculated it myself. The deferral advantage is a miniscule 0.12% for 2014 & 2015 if you pay the 15.5% SBD and keep the funds in the co and pay it out as a ineligible dividend the next year, which is the only type of dividend you can pay on earnings that enjoyed the SBD rate. However, if you invest it at, say, 6% within the company in equity that is not sold until about a dozen years later and then pay the corporate tax and then pay it out as an eligible dividend (since it is part of the GRIP pool, ie that you paid full tax on) then the effective tax saved through the deferral when adjusted for the RDTOH the firm gets back is in the order of about 40% more after 15 years. If the money just sits there an collects no interest or does not grow then the deferral is worth 0.12% no matter how long it sits in the co. This is all assuming you are in the $150K-$220K marginal tax bracket.eonibm wrote: ↑Jul 20th, 2015 9:32 amFor 2015 in Ontario do you know the exact % deferral advantage for a shareholder of a CCPC where the CCPC enjoys the small business deduction (ie SBD which provides a 15.5% tax rate up to $500K in active business income in 2015 I believe) retaining the income subject to the SBD in the corporation and later paying it out as a dividend later assuming the dividend taxation rates when later paid out as in 2015?
Jul 28th, 2015 2:25 pm
Aug 20th, 2015 1:00 pm
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Sep 1st, 2015 12:59 pm
Sep 5th, 2015 11:54 am
Sep 24th, 2015 11:51 am
Sep 24th, 2015 12:53 pm
See my post #337. You will not minimize taxes by incorporating unless you 1) leave the income in the corporation for a very long time AND 2) invest it either back into the company as working capital or invest it to produce returns in something like an investment portfolio, real estate etc. If you pay the money out in the short term, either as income in the year you earn it and then as dividends in the years after there is no advantage to incorporating (except about 0-3% in some years but that has to be balanced by the fact that you have to pay $1-$2K or more for accounting fees and corporate tax preparation to an accountant). However, you may want to incorporate for the limited liability it provides and/or the ability to sell your shares in the corporation.thebest1 wrote: ↑Sep 24th, 2015 11:51 amHello,
Trying to understand if I or we should incorporate or stay as partners.
Have a regular T4 income in a rural community and I got married in March 2015 my partner is also a regular T4 income.
Have started a side business with two partners where we split the profits equally we have not incorporated so far we have done about 45K in revenue in 2015. We have collected HST but we are holding all of it in a separate account. The next step is too set up our HST number. Is it better to do that as a corporation or partners. We all have 9-5 jobs and we want to minimize our tax would it be wiser to incorporate and then pay ourselves dividends?
I also have a third income where I sell online advertising for a website and have earned 13.5k in USD this is just for me. Is it worth me considering my own corporation who owns shares in my business partnership that way I could let all the profit sit in the company including my third income.
Any and all advice is appreciated.
I am completely lost as to how I should structure this income to minimize taxes and minimize red flags to avoid an audit.
Any and all advice is greatly appreciated!
Sep 30th, 2015 8:30 pm