no worries... just pulling chain.... though I would have to say almost every rig welders truck has been a Ram that I have seen in the patch
Originally Posted by steakman
To answer some questions..
My corporate yr end is Oct 31. didnt have an accountant prior to incorporating..do now.
As for what I paid for this truck..it was well over dbl the $18,500 I sold it for. $18,500 is very FMV for this unit. On the outset it may look high given the mileage..but factor in the added options and modifications...a deal.
I did not have a BN/GST account prior to incorporating.
What I am now doing is taking 2K monthly on the balance owing on the truck.
I have discussed CCA with him and we will do what we can this year...likely wont amount to much, given it will be 4 months all told, but I'll take whatever tax deduction I can.
What I would also be curious about is this. Accountant tells me I can pull 40k annually (10K/qtr) in dividends. But I am unclear whether this is fully tax free or not on the personal side. I do believe that monies is still taxable ont he compnay side at the nomial rate.
For myself, I am not inclined to do so simply because if I have to pay taxes (which we all do), then trying to blatantly screw the Guvmint is not a good thing...CRA can be a nasty bunch and I am fully aware that they have significant power...significant. As such I am going the payroll route..which works just fine for me.
However I'd like to give my wife who holds shares in the company, dividends...say 16-20k annually. She does work and earns 50k annually.
Will these dividends be taxable to her and if so at what rate.?
Last edited by steakman; 2012-08-09 at 07:33 PM.
Yes these dividends will be taxable on your personal returns, for both of you, assuming the dividend is paid out of regular corporate income.
It is perfectly acceptable to pay dividends only. Basically you (or rather your accountant) should run some simulations given your situation, other sources of personal income etc., and determine the right mix of salary and dividends. Usually it is best to start with salary up to a certain point (often to reduce the corps taxable income to zero) and then switch to dividends if you have excess cash in the corp that you need. But this is highly dependant on your situation, income levels in and out of the corp, and your goals. There are advantages and disadvantages to each. For example, you need employment income (dividend income wont count) for creating RRSP contribution room.
Do you and your wife own the same class of shares, or different classes of shares? Hopefully you had a smart lawyer for incorporating who gave you each different classes without restrictions so that you can pay dividends as you wish. If you both own the same class, say 50/50, then you have no choice and any dividends declared must be split 50/50. If you own different different classes of unrestricted shares you can split the dividend amongst the different classes as you wish, essentially picking who to pay the dividend too. This can be really helpful for income splitting and a great fully legal tax reduction strategy.
Last edited by Brenner; 2012-08-09 at 10:36 PM.
Brenner...actually I did not have a lawyer .. but assigned my self 200 "A" Shares, the wife got 100 "B" Both valued the same, and the kids got 10 ea "D" shares. Which reminds me..gotta change our will.!
Originally Posted by steakman
I would make sure that there was some form of consideration exchanged for the shares issued as a lawyer colleague of mine constantly tells me the biggest mistake made in corporations is the corporation not taking consideration for the shares and the corporation may be considered invalid.
The dividends paid are fully taxable. However, if you are only paid dividends from a private Canadian company and have no other income, the first $40,000 will have little to no tax.
That is not really true at all. When you own the private corp you need to consider the total tax paid, both within the corp and on the personal side. That is why I said you, or your accountant, need to run calculations for several scenarios. Start with all salary, then try all dividends, then some of each until you hit the sweet spot. An accountant usually can run this easily in with their tax prep software, with all your other relevant info, to get the best results.
Originally Posted by TaxGuy
Last edited by Brenner; 2012-08-13 at 09:48 PM.
Tax Guy.. By "considerations" I am going to assume that means that the shares are fully & duly paid for ..? ie; actual dollar amounts deposited into the corporations bank account with copies of said cheques and bank deposit slips...??
Done & logged on paper into my 3 ring binder, scanned as .pdf's onto my new MacBook Pro (what a freaking awesome machine..btw.!), and saved in my 2TB backup.!
..all good as long as that is what you meant by considerations eh.?
Last edited by steakman; 2012-08-16 at 07:20 PM.