Should I Declare a Year-End Bonus or Pay Dividends from Company Profits to Myself? Watch Video
Allan Madan, CPA, CA
With the end of the year approaching, business owners must make important decisions quickly to reduce Read More…
Disclaimer
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CPA, CA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
After reading a lot of your articles, I am thinking of incorporating my business. I have a lot of questions though:
1) How can I access $30k of tax-free dividends
2) Can I give myself allowances that will be tax-free for me and tax-deductible for the corporation? How? Are reimbursements taxable?
3) What is passive vs. active income?
4) How do shareholder loans work? Can I give myself a shareholder loan for the year then pay it back and then issue another one to be able to use the money without having to declare any salary for me for my day to day expenses?
5) Is there any benefit to paying into CPP for self-employed individuals? Old Age security and GIS is available to them at the age of 65.
6) What combination or bonus, salaries, dividends and allowances are the best way to take money out of a corporation?
Hi , love the blog
I have a question about how to tax the dividen withdraws. I plan on making around 80-120k for the year. Pay myself a salary of 45k
And then take 30-50k In dividens at random amounts and times throughout the year depending on cash flow etc.
How do I calculate the tax for the dividens on the personal side. Do I have to send remittances for it throughout the year?
Thanks
Hi Steven,
I recommend that you use a personal tax calculator. The calculator I prefer is Simple Tax Calculator: https://simpletax.ca/calculator
If you have a small business with taxable profits of less than $500,000 in the year, then the dividends paid to you are classified as ‘ineligible dividends’. You must specify the dividend type (eligible or ineligible) in order to calculate the correct amount of taxes payable.