Is it Better to Receive Management Fees or Salary from Your Corporation? Watch Video

Comments 15

1. You mention that via salary, taxes are automatically withheld each paycheque. As the owner, withheld by whom?

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   1. Hi Darryl, the employer is supposed to deduct payroll taxes from salary / wages paid to employees. The deducted amounts are remitted to the CRA.

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2. Our company closed down….All accounts with CRA were closed. There are still small assets in the company as well as some money in the bank account. How to I write these off and take the cash? If I take the cash how do I record that on my T1?

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3. I have been watching your videos .you are a wise person how much does it cost to get personal advice from you ?

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   1. Hi Donald, thank you for your positive feedback. The fee for a 30 minute paid consultation for tax advice is $110 + tax. We can conduct the consultation on the phone, in-person or on SKYPE. Please let me know how you would like to proceed.

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4. Great info thanks. I really enjoy your posts and video! If I were to pay myself a management fee would I need to also provide a T4A?

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   1. Yes, management fees paid to an individual should be reported on form T4A.

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5. Hi, quick question with management Fees. As a owner of rental corporation, is it possible to have corporation pay the vehicle (auto) costs (claim it on business) and then just take a management fee from the corporation (will not take any expenses when this income is added to the personal tax)? Thanks

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   1. Hi Kultar,
      This is no longer possible. The CRA will likely treat management fees paid to the owner as salary, and as such, your company could be penalized for failure to deduct payroll taxes.

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6. Is management fee count as a payroll expenses?
   Thank you.

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   1. Hi L A,
      A management fee is not a payroll expense.

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7. Hi alan
   Always enjoy your tips. right now i receive rental income from 2 properties. I would like to split the income with my spouse (no income) who stays at home with the kids, but helps with the property management. I am not registered as a business. I am not sure which is the best strategy to help reduce our taxes.
   Can i just pay here one time management service fee instead of paying her a salary (which is what i keep seeing online). If i pay her a management fee does she need to be registered as business?
   Example: Let’s say my rental income less all other expenses are $6000. She would receive $3000 for her services which i pay 1/2 at the start of the new tenant lease and the remaining at the end of the year, when the tenant(s) move out. Essentially she is issuing me a receipt for her services that i pay for. Should the receipt include GST/QST ? Is it even required ? Can she issue a receipt if she is not registered as a business?
   She will declare this income for tax purposes? What does she need to show other then that receipt?
   Thanks

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   1. Hi SS,

      If she only works for you and does not provide property management services to other customers, she cannot charge ‘management fees’ to you. She will be considered a part-time employee, and so you must open a payroll account under your name and pay her wages net of the payroll tax. Also, you will have to remit payroll taxes to the CRA.

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8. Hi there, thanks for this. As the owner of my company, if I pay myself management fees, do I have to charge HST on my invoices?

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   1. Hi Chris,

      Yes, you must charge HST if the management fees are $30,000 or more.

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