A Different Way of Looking at Things

Tax Strategies Only Apply to Corporations and Only When You're Making Enough Money That You Can Leave Some in Your Corporation

Your corporation pays approximately 11% in tax depending on which Province you're in, whereas you pay approximately 50% depending which Province you're in. The only way to pay less tax is to only take what you need to survive personally, leave the rest in your corporation and invest in tax strategies that will get the money out vertually tax free...

Here are a few qualifying questions...

  1. Are you married? 
    Does your spouse have a job that's not with your company? 
    How much are your personal bills?
    Is your spouse's salary enough to cover all your personal bills?

    1. If your spouse makes enough to cover your personal expenses, you can take an ineligible dividend of $21,164.00 tax free income
    2. The only tax that will be paid is 11% by the corporation: $0.00 tax Personally and 11% by the corporation
    3. Whether your spouse has a job or not, they should be a shareholder of your company, with a different class of shares so that you can pay them a dividend in the future, as well charge their travel expenses to your Annual General Meeting
    4. If your spouse works for the corporation you can both take an ineligible dividend of $21,164.00

  2. Do you have any children?
    How old are your children?

    1. At 12 years old you can put them on your payroll in some provinces - must have their own bank account and be paid at regular intervals as other employees
    2. Charge them room and board - you don't have to show as income because it's reimbursed expenses
    3. Make them pay their own RESP - $2,500 and the government gives them $500 annually
    4. Make them pay their own tuition - you get a write off and they only have to pay CPP/EI and income gets written off against tuition
    5. Make them non-voting shareholders so that you can charge their travel expenses to your Annual General Meeting

  3. Why do most accountants want you to pay yourself by T4 salary? 
    To maximize your contribution to Canada Pension Plan (CPP)...

    1. Pay approximately $7,000 per year - accountant says 50% paid by your company - but that's still your money
    2. Pay for 40 years = $7,000 x 40 = $280,000 invested anywhere else = $2,000,000
    3. What happens of you die? The accountant says $2,500 death benefit... but it's taxable! Maybe $1,800
    4. How much do you get at age 65? $13,000 per year - but it's taxable! Maybe $9,000 after tax
    5. Life expectancy in Canada is 80 years old... that's $9,000 x 15 years = $135,000 BUT you invested $280,000 and it's worth $2 Million?
    6. CPP is one of the worst investments possible for business owners

  4. Should I invest the money that's in my corporation? 
    You can, but be very careful

    1. Interest bearing investments are taxed at 46.7% in some Provinces

  5. So if the Canada Pension Plan and Corporate Investments don't make sense, what is a good corporate investment for retirement?
    A Corporate Pension Plan

    1. Invest $20,000 to $30,000 or more per year into your own Corporate Pension Plan
    2. Your Corporate Pension Plan has two components: Life Insurance and Pension (Cash Surrender Value)
    3. Initially insured for approximately $1milion or more (Depends on age, health, premiums, etc.)
    4. After 8 years you can get $100,000 or more tax free (Depends on age, health, premiums, etc.)
    5. Conditions apply. Consult a licensed agent

  6. What are other ways of getting money out of my corporation tax free?
    Borrow money for up to two years
    Borrow money to buy a house

    1. Must pay the Prescribed Interest Rate of 1%
    2. Other conditions apply

Contact us today for a free consutation to find out which of these ctartegies is right for you.