Putting corporation on hold - investing inside corporation for now
Going full time leaves me with the question of what to do with the current retained earnings sitting in the corporation. I could leave them at my Tangerine business account yielding a low rate of return on interest, but I'd like to know if I can purchase some stocks instead (e.g. take 25% of the retained earnings and buy a fixed income ETF, another 25% and put it into a broad market ETF, and leave the remaining 50% in case I go back to being an independent, and I need some start-up capital before regular invoicing kicks in again).
Does anybody have any insights into this?
- Does the corporation become "inactive"?
- If I am purchasing stocks, I see that as an Asset-to-Asset transaction (i.e. using a cash asset to purchase a stock asset), not an Asset-to-Expense (i.e. purchasing stock is not an "expense", so I would not list it as an (non-)operating expense) transaction. So how am I taxed on this? It is not an "expense" but I have "spent" the money.
Say I have revenue of $100,000
Salary of $50,000
Business expenses of $10,000
That leaves me with $40,000 of net income at the end of the year.. If I purchase $15,000 in stocks, am I taxed on $40,000 (the "real value" of my assets for that fiscal year), or on $25,000 (i.e. remaining net income after taking out the $15,000 non-operating expense)?