tag:blogger.com,1999:blog-4402283548766807872.post7196348979082130703..comments2024-03-20T02:26:06.500-04:00Comments on The Blunt Bean Counter: The Salary vs Dividend Dilemma 2017 Version - What Small Business Owners Need to KnowThe Blunt Bean Counterhttp://www.blogger.com/profile/11358868550072516313noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-4402283548766807872.post-65647941952422500872018-03-11T10:16:17.954-04:002018-03-11T10:16:17.954-04:00Hi Anon
Integration works in all cases with maybe...Hi Anon<br /><br />Integration works in all cases with maybe some small variances. If you start with $100 and pay say 26% general tax you have $74 left. If you pay the $74 as an eligible dividend at 39%, you pay another $28 or so, so total tax paid is 55%, not 65.84%. Same for CCPC. You start with $100, pay $15 tax and then pay 45% or so on the $85 remaining as an ineligible dividend so tax of $38 or so again making the total tax around 53% or so. The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-77128241947831964712018-03-10T12:00:40.985-05:002018-03-10T12:00:40.985-05:00Hi Mark,
I am trying to understand where you obta...Hi Mark,<br /><br />I am trying to understand where you obtained the payable tax rate. When I look at the chart in taxtips, the rate for the Canadian eligible dividends is of 39.34%. This would make a total payable personal and corporate tax of 65.84%, which is way higher than the highest marginal tax rate on income. <br /><br />In such a case, I do not see sense of incorporation since the integration does not work.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-5273421353311296792017-03-31T21:38:28.122-04:002017-03-31T21:38:28.122-04:00I am really not a great discount and present value...I am really not a great discount and present value guy,I always have someone run the numbers for me. I think you would need both an expected rate of return and inflation rate, but if you know a good math person, ask themThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-14526642670666046502017-03-31T17:15:06.118-04:002017-03-31T17:15:06.118-04:00@Mark
How would one go about deciding if the defer...@Mark<br />How would one go about deciding if the deferral is worth it when taking into account the future value. i.e if I have $100 left after corporate tax that I could take out, how much would it be worth in 15 yrs from now. Will that be lower than the after tax value of $100.<br /><br />Is inflation rate the right way to go about?Rajith Attapattuhttps://www.blogger.com/profile/09807573626341828740noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-14263267507837900132017-03-26T23:02:21.901-04:002017-03-26T23:02:21.901-04:00Hi Unknown
CPP is ignored because as Jamie says i...Hi Unknown<br /><br />CPP is ignored because as Jamie says in his paper, you could probably do better investing on your own, but many people want to pay it to receive the pension in the future. I would say the majority of my clients choose to take enough salary to max their RRSPs and pay the CPP.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-11033532669786867262017-03-26T18:40:35.864-04:002017-03-26T18:40:35.864-04:00Hi Mark - I'm curious to hear why you haven...Hi Mark - I'm curious to hear why you haven't included CPP in your analysis.<br /><br />I understand your calculations and how there is a negligible difference between Salary vs. Dividends; however, the balance shifts in favor of the Dividend option when you account for CPP (because CPP is present in Salary but not via Dividend). That was my understanding, at least.<br /><br />If you could be so kind as to clarify/comment, it would be appreciated.Anonymoushttps://www.blogger.com/profile/09645607318139916561noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-44909351847373015552017-02-24T19:33:38.952-05:002017-02-24T19:33:38.952-05:00Hi Anon
When you pass away, unless the shares are...Hi Anon<br /><br />When you pass away, unless the shares are left to your spouse you are deemed to sell the shares of your corporation. so not correctThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-88188299407664146272017-02-23T14:53:16.723-05:002017-02-23T14:53:16.723-05:00Hi Mark,
I think there's another reason to le...Hi Mark,<br /><br />I think there's another reason to leave money in the corporation. When a shareholder passes away, all personal investments will be taxable right away. However, his corporation will just be transferred to the beneficiary who will continue to benefit from the tax deferral.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-41358652056948683292017-02-21T20:05:09.473-05:002017-02-21T20:05:09.473-05:00Good question, there is no easy answer and the tim...Good question, there is no easy answer and the time it would take to run even some of the various permutations and combinations would be excessive. Ever wonder way I wait until Jamie does a paper to post on this topic :) It is because I dont have the time or manpower to run all these permutations or the ability to write a computer program to do so. But seriously, I think it is part art. Know your clients personality and spending habits and for most people that pushes me to having them make RRSP contributions, unless I can get them dividends at low rates. The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-3320002768597753562017-02-21T09:08:52.134-05:002017-02-21T09:08:52.134-05:00Hi Mark,
Great overview. I'm also a big fan o...Hi Mark,<br /><br />Great overview. I'm also a big fan of Jamie's articles.<br /><br />I'm in public practice and we strive to do this type of analysis for our clients. It's too time consuming because of all the variables such as EHT (which you mention), CPP, and the Canada Child Benefit. Also, not all clients are at the top rate.<br /><br />How can anyone actually quantify these outcomes for their clients?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-41645859609872661592017-02-16T20:48:39.610-05:002017-02-16T20:48:39.610-05:00Hi Nathan
There is concern, I just dont know how ...Hi Nathan<br /><br />There is concern, I just dont know how real. We are doing some planning to crystallize gains for certain clients who want to protect themselves.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-80449249408370324832017-02-16T05:04:01.866-05:002017-02-16T05:04:01.866-05:00Any thoughts on the talk of the government elimina...Any thoughts on the talk of the government eliminating or reducing the exempt portion of capital gains, or even possibly the dividend tax credit? The latter is hard to believe, as it would be somewhat nonsensical, but people are talking about it at least: http://www.theglobeandmail.com/globe-investor/personal-finance/taxes/upcoming-budgets-could-roll-back-tax-breaks-on-dividends-capital-gains/article33993757/<br />Anonymoushttps://www.blogger.com/profile/13903169117125578441noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-54519208524512073962017-02-13T21:45:59.826-05:002017-02-13T21:45:59.826-05:00Hi Martin:
Yes, you are correct, that could be th...Hi Martin:<br /><br />Yes, you are correct, that could be the case. Unfortunately, I only have so much time to write between my real job and life, so i do not get into that issue very much in my RRSP post.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-43772473295988042752017-02-13T07:49:40.565-05:002017-02-13T07:49:40.565-05:00Thank you for the clear summary.
One potentially i...Thank you for the clear summary.<br />One potentially important addition. Deferral can lead to absolute tax savings through "income splitting with your future self", i.e. withdrawing dividends in future years when your income will be lower, therefore your personal tax rate lower. Perhaps you will cover this in your comparison with RRSPs?Martin Perglerhttp://www.balrisk.comnoreply@blogger.com