Please find the first part of the article in our previous post.
There are various ways to smooth income over several years to ensure an individual is maximizing access to the lowest marginal tax rates.
- Taking more or less earnings out of the corporation (in respect of owner-managed companies).
- Realizing capital gains/losses by selling investments.
- Deciding whether to claim RRSP contributions made in the current year or carry forward the contributions.
- Withdrawing funds from an RRSP to increase income. However, care should be given to the loss in the RRSP room based on the withdrawal.
- Deciding whether or not to claim CCA on assets used to earn rental/business income.
Dividends paid to shareholders of a corporation that do not “meaningfully contribute” to the business may result in higher taxes due to the “tax on split income” rules.
Please see the next part of the article in our next post.
*The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this text accepts any contractual, tortious, or any other form of liability for its contents.
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