Tax Tips 2016: For Corporations And The Self-Employed

From our annual Tax Tips guide, here are the tips and suggestions for Corporation and the Self-Employed for the year 2016.

Tax Tips: If you have your own corporation

1. Consider your optimum salary/dividend mix to achieve less overall tax:

• Salary will qualify you and other family members active in the business for RRSP contributions, Canada Pension Plan (CPP) contributions, and child-care deductions. Dividends will not qualify an individual for these contributions or deductions.
• Dividends, on the other hand, may cost the family unit less in current taxes. Each family member, over 17 years of age and receiving non-eligible dividend income of approximately $32,848 or less, or $55,691 or less of eligible dividends, from taxable Canadian corporations, will pay little or no income tax (a small Ontario Health Tax premium may apply). The tax on split income eliminates the tax benefits of paying dividends to children under 18 years of age.