Originally Posted by sirex
if you do it right, by incorporating you can pay your self dividends rather than a salary. which means you pay practically no tax on $80,000.
Originally Posted by ScotcH
Totally incorrect. The corp pays the tax. Dividend is payed out after tax. They amount to the almost the same thing in the end if you are the only employee.
Scott you are 110% WRONG, this option is the story of my life, I take a dividend on a 6 figure salary for several years now and the savings is HUGE. The ONLY down side is no CPP contribution which I have the discipline to invest my savings for the future much better. On $80k dividend a year with nominal write offs such a $$$$ charity cont. and other expenses you would pay very low $XXXX in tax.
The company pays roughly $10k, you $2k so $12k is much better than $20k+, no?
To say a dividend does not work out better defeats the whole opton of a dividend, it is created to save in taxation. It works out better because of my explination above. The corporate tax rate and dividend rate combined are lower than the personal take bracket rate at that level.
And just for fun one day I sat down with my accountant to discuss my cpp and if I were not to take a dividend and paid into the cpp instead I would have to live to be 98 years old just to get the money back. Soooo money now and invest or hope I live to 98 years old and cpp still even exists.