Vern Krishna of TaxChambers LLP discusses tax
planning for business at year-end in a featured article for
Canadian Current Tax.
Canadian-controlled private
corporations (CCPCs) that carry on an active business in Canada are
taxable a special low rates, in 2017, the first $5000,00 of income
from such active business income (ABI) is taxable at a combined
federal and provincial rate of about 15%. Income above
$500,00 is taxable at about 27.5 per cent. Hence, it is
important to plan for shareholder and corporate taxation before the
year end to maximize rates of return, and minimize the overall tax
burden.
Taxpayers who employ their spouse or adult children in their
CCPC should pay them salaries if they have a low marginal tax rate.
This form of income shifting can reduce the total tax burden on the
family, and put money into the hands of children to pay for their
education and other expenses. Paying family members a salary also
allows them to build up their
