Incorporating Your Business
If you carry on a business, there are many tax planning opportunities which become available to you by simply incorporating. By transferring your business to a corporation, you become the shareholder and employee of a separate taxable entity. If the corporation qualifies as a Small Business Corporation (SBC), other possibilities arise.
This bulletin discusses some of these benefits and the additional advantages that could apply if your company qualifies as an SBC. Whether you're thinking about incorporating or have already done so, you should consider making full use of these tax planning opportunities.
Here are some of the advantages of incorporating your business:
• Limited liability
Unlike a sole proprietor who is fully liable for the debts of the business, a shareholder is not responsible for debts or other liabilities incurred by the corporation. Of course, a shareholder who personally guarantees corporate debts is liable up to the amount guaranteed, and directors and officers can, in certain circumstances, be held liable for activities of the corporation. In general, however, your personal assets are protected from creditor claims and any lawsuits or other liabilities arising in the corporation.
• Small Business Deduction
Active business earnings of a Canadian-controlled private corporation are eligible for special reduced rates of tax at both the federal and provincial levels.
• Tax deferral on bonuses
By choosing an appropriate year-end, a bonus declared by the corporation can be deducted in its current fiscal year, but not taxed to you until the following calendar year.
• Employee benefits
As an employee of your corporation, you can receive employment benefits that are deductible to the corporation and eligible for special tax treatment in your hands.
• Estate planning
By setting up an appropriate share structure, you can hold and control the corporation while any increase in value accrues to shares held by your children. This will minimize any tax liability arising on your death.
• Probate tax
Transferring your business assets to a corporation can significantly reduce probate tax payable on your death.
• Income splitting
Your spouse and adult children may be able to subscribe for shares of the corporation and receive dividends from the profits of the business. In the case of your spouse, however, you'll need to ensure you don't run afoul of the corporate attribution rules.
As a result of the income-splitting tax that was introduced in the 1999 federal budget, the benefits of splitting dividends with minor children have disappeared. For more information, see "Splitting income with your children" further along in this bulletin.
The above benefits apply to all corporations that carry on business. If your corporation qualifies as an SBC, additional benefits are available:
• Capital gains exemption
If you sell the business in the future or pass it on to your children at death, you can make use of the $500,000 capital gains exemption. You can even lock in this benefit now, by stepping up your shares' tax cost.
• Income splitting
If a corporation is an SBC, your spouse can be a shareholder and receive dividends, without concern for the corporate attribution rules.
• Allowable business investment loss (ABIL) treatment
If your SBC should fail, the loss of your investment in shares or debt may qualify as a business investment loss, one-half of which would be allowable as a deduction against income from all sources, not just against capital gains.
Of course, there are some disadvantages associated with incorporating, such as increased recordkeeping, corporate tax returns and other government filings. However, they may not represent a significant additional cost if your business is already a sizable concern. Incorporation also means you are unable to use business losses to offset your personal income. Therefore, it's generally advisable to defer incorporation until the business is profitable, unless there are potentially large business liabilities which could deplete your personal assets.
Another set of rules to be aware of when deciding whether to incorporate your business is the Personal Services Business (PSB) rules. Generally, if you provide services through your corporation and if not for the corporation you could be considered an employee of the entity to which you provide the services, the corporation may be considered a personal services business — in other words you would be considered an "incorporated employee".
Where certain conditions are met, the PSB rules will apply so income from the PSB will not be eligible for the Small Business Deduction. As well, deductions claimed by the PSB will be restricted. Generally, deductions are limited to salaries paid and employment benefits provided to the incorporated employee, plus certain other expenses that are deductible by an employee. Consequently, to fully benefit from incorporation, you must ensure that your business avoids the PSB rules. In most cases, this means that you have to be an independent contractor and not an incorporated employee. Note that the PSB rules do not apply between associated corporations, as these corporations must share the Small Business Deduction (discussed later).
The remainder of this bulletin provides more details on the advantages of incorporation and of maintaining your company as an SBC.
Advantages of incorporation
The Small Business Deduction
One of the major reasons a business incorporates is to obtain the benefit of the Small Business Deduction. This is a reduction in both federal and provincial tax that is available to Canadian-controlled private corporations (CCPCs) on their active business income up to a set threshold — the small business limit. This limit varies by jurisdiction, as certain provinces have increased their small business limit beyond the federal limit. The chart below provides details of the small business limit by jurisdiction. The corporate tax rate on income up to the federal small business limit is less than 23% in all jurisdictions — much lower than the general corporate rates (see chart at the end of the bulletin).
A CCPC is a Canadian corporation that is not controlled by public corporations, non-residents, corporations with a class of shares listed on a prescribed stock exchange, or any combination of these. If you are a Canadian resident and you incorporate your business federally or provincially, the company will be a CCPC.
The small business limit must be shared by associated corporations — that is, corporations which are under common control and ownership. Therefore, if you hold businesses in separate corporations, your corporate group will only be entitled to the low tax rate on total income up to the small business limit.
It should be noted that for large CCPCs, the Small Business Deduction will be reduced. The reduction is based on the corporation's taxable capital for purposes of the Large Corporations Tax (LCT) for the prior taxation year. If a corporation's taxable capital exceeds $10 million, the corporation is subject to at least a partial reduction in the following year. Once taxable capital exceeds $15 million, the corporation is subject to a full reduction. In addition, the $10 million and $15 million thresholds must be shared among a group of associated corporations.
| Jurisdiction |
Small Business Limit |
| |
2005 |
2006 |
2007 |
| Federal |
$300,000 |
$300,000 |
$300,000 |
| British Columbia |
$400,000 |
$400,000 |
$400,000 |
| Alberta |
$400,000 |
$400,000 |
$400,000 |
| Saskatchewan |
$300,000 |
$300,000 |
$300,000 |
| Manitoba |
$400,000 |
$400,000 |
$400,000 |
| Ontario |
$400,000 |
$400,000 |
$400,000 |
| Quebec |
N/A |
$400,000 |
$400,000 |
| New Brunswick |
$450,000 (1) |
$475,000 (3) |
$500,000 (5) |
| Nova Scotia |
$350,000 (2) |
$400,000 (4) |
$400,000 |
| Prince Edward Island |
$300,000 |
$300,000 |
$300,000 |
| Newfoundland and Labrador |
$300,000 |
$300,000 |
$300,000 |
| Yukon |
$300,000 |
$300,000 |
$400,000 |
| Northwest Territories |
$300,000 |
$300,000 |
$300,000 |
| Nunavut |
$300,000 |
$300,000 |
$300,000 |
(1) The small business limit was increased from $425,000 effective July 1, 2005
(2) The small business limit was increased from $300,000 effective April 1, 2005
(3) The small business limit will increase from $450,000 effective July 1, 2006
(4) The small business limit will increase from $350,000 effective April 1, 2006
(5) The small business limit will increase from $475,000 effective July 1, 2007
There are two benefits to claiming the Small Business Deduction:
1. Tax savings
Usually, there is some element of double taxation in earning income through a corporation. The income is subject to corporate tax, and any dividends paid out of after-tax earnings are subject to personal tax in the shareholders' hands. Although the dividend tax credit for individuals alleviates this somewhat, there would still be more total tax than if you had just earned the income directly. For income eligible for the Small Business Deduction, there will actually be a savings in most provinces. The dividend tax credit is generally sufficient to offset the lower corporate tax after the Small Business Deduction. Also, if the dividends are then paid to adult family members with little or no other income, the personal tax will be much lower than if paid to you. The chart below indicates the total tax paid by earning the income directly versus earning it through a corporation eligible for the Small Business Deduction or a corporation taxed at the top corporate rates. The figures assume that income taxed in the corporation is then paid out as a dividend and taxed in the shareholders' hands at top personal rates.
2. Tax deferral
The above comments assume the after-tax corporate earnings are immediately paid out as a dividend. If, instead, the funds are left in the corporation, the additional personal tax is deferred. The low corporate tax rate leaves greater after-tax dollars in the corporation to pay expenses and reinvest in assets.
If the corporation's active business income exceeds $300,000, it may be advisable to have the corporation pay the excess to you as a bonus. The bonus would be deductible to the corporation and taxable in your hands. Income over the small business limit will be taxed at higher corporate rates and any dividends paid will be subject to personal tax. The combined corporate and personal tax on income in excess of the annual limit greatly exceeds the personal tax payable on the bonus, as shown in the chart below.
The total tax in Ontario would actually be greater for income over its small business limit. Ontario "claws back" the benefit of the provincial Small Business Deduction if taxable income exceeds $400,000 at a rate of 4.667%, in 2005.
There may be situations in which it makes sense to tax income in excess of $300,000 in the corporation. In particular, it may be beneficial in those provinces that have increased their small business limit beyond the federal threshold of $300,000.
Even with the more recent tax reductions, where income over $300,000 is taxed in the corporation, the combined corporate and personal tax (if the after-tax income is paid to the shareholder as a dividend) will be higher than the personal tax that would have been payable assuming the individual had earned the income directly. However, if the after-tax income can be left at the corporate level, a tax deferral will still be available. Provided that the funds are invested over a long enough term, the additional personal tax cost can be outweighed by the tax deferral due to the time value of money. Your BDO advisor can help you decide whether you should allow income to be taxed in your corporation or whether you should pay out the excess income as a bonus.
Tax deferral on corporate bonuses
As noted above, you would generally bonus out earnings over $300,000. You may also want a bonus or a regular salary to provide you with earned income for an RRSP contribution in the following year, and for Canada/Québec Pension Plan contributions in the current year.
When bonusing out corporate income, a deferral is available. A bonus is deductible to the corporation in the year it is accrued, if it is paid within 180 days of the corporation's year-end. If the corporation's year-end falls within the last half of the calendar year (i.e. July 6th or later), the bonus could be paid to you in the following year. Salary withholdings for income tax, CPP and EI (where applicable) would need to be made shortly thereafter, depending on the corporation's remittance schedule, but the income tax would have been deferred for six months.
Employee benefits
Any after-tax income retained by the corporation represents approximately 78 to 85 cents of each dollar earned (depending on your province of residence). As your employer, the corporation could use these funds to provide you with benefits more efficiently from a tax perspective than by giving you salary or dividends with which to pay for the benefits personally. Some common employment benefits include:
• A company car
This is especially advantageous where a leased car is primarily for personal use. The corporation can deduct the lease payments up to certain limits, but only two-thirds of the amount is treated as a taxable benefit to you. Company cars, however, are not for everyone. For more information, see our bulletin Automobile Expenses and Recordkeeping.
• Health care premiums
Premiums paid by the corporation to a private health insurance plan for you will be deductible to the corporation and not a taxable benefit to you, provided that certain conditions are met. To qualify for this special treatment, you must have received this benefit by virtue of your employment and not by virtue of your shareholdings. When applying this test, the Canada Revenue Agency (CRA) may conclude that you received the benefit as a shareholder if similar coverage was not extended to other full-time employees who are not shareholders.
• Car allowance
As an employee, you may receive a tax-free car allowance if you use your own car when performing your duties. The CRA normally considers the allowance reasonable if it does not exceed the rates it sets annually. For 2005, the rate is 45 cents/km for the first 5,000 km of business travel, and 39 cents/km for business travel over 5,000 km. The rates are each 4 cents higher for kilometers driven in the Yukon, Northwest Territories and Nunavut. The allowance is beneficial because you only have to track the distance travelled on business.
• Individual pension plan
Rather than contributing to an RRSP, another retirement savings option is available to owners of incorporated businesses, including professionals who have incorporated. Under the rules for defined benefit pension plans, it is possible to set up an individual pension plan or IPP for business owners. Under an IPP, the benefits are set by reference to your salary, and contributions are made to build sufficient funds to fund this defined pension benefit. For many individuals (generally, in their 50s or older), the use of an IPP can allow for greater contributions when compared to an RRSP. Additional benefits of an IPP include the ability to make up for poor investment performance and the possibility of making lump-sum contributions for past service. As well, historically, IPPs have provided greater protection of assets from business risks. However, with the introduction of Bill C-55 in June 2005 on bankruptcy reform, the treatment of RRSPs will be more consistent with the treatment of pension plans once Bill C-55 becomes law.
• Retiring allowances
When you retire from the corporation, either on a sale to third parties or a transfer to your children, the corporation could pay you a retiring allowance eligible for a rollover to an RRSP. The CRA has established guidelines as to what constitutes a reasonable amount.
The eligible amount which can be transferred to your RRSP has been capped. The amount can't be increased after 1995, but there's no restriction on the payment of eligible amounts already earned. Ask your BDO tax advisor for details.
Estate freeze
On death, you're deemed to dispose of all your capital assets (for instance, your business assets) at their fair market value. If the assets have increased in value, this will cause capital gains and possibly a recapture of previously claimed depreciation. The resulting taxes could be so high that your executor may have to sell off the business to pay the liability. Although it's possible to transfer assets at tax cost to your spouse on death, your spouse will face the same issue on the eventual transfer to your children. Therefore, it's wise to take steps to minimize the tax arising on death. This type of planning is referred to as estate planning.
If your assets are held through a corporation, you can use a common estate planning technique called an "estate freeze." This is a method of capping or "freezing" the value of your assets, while allowing future growth to accrue to other family members.
In an estate freeze, you transfer your business assets to a new corporation in exchange for preferred shares. A special election form will be required to avoid realizing capital gains or income on the transfer. The shares received should have a value equal to the value of the assets transferred. This can be accomplished by making them redeemable by the corporation and retractable by the shareholder for this amount. The shares should also be voting, to allow you to control the corporation, and should bear a reasonable, non-cumulative dividend, to provide you with the possibility for future income. Finally, the shares should be non-participating. Therefore, all future increases in value of the corporation's assets will accrue to the common shares. These shares can be issued to other family members for a nominal amount.
The result is that your estate is frozen at its value at the time of the freeze. Your maximum tax liability on death can be determined and provided for. Any increases in value that arise after the freeze will only be subject to tax when the common shareholders, your children, for example, sell their shares or when they die.
You can carry out an estate freeze at the time you incorporate your business. However, you should be careful not to freeze your estate too early in life — you may require greater funds for retirement or your intentions as to who should benefit from the freeze or who will succeed you in the business may change. At a minimum, you should ensure the share structure you set up for the corporation will allow for a future estate freeze.
If you've already incorporated your business, you can still perform an estate freeze at any time. This can be done by either transferring your shares to a holding company for preferred shares as described above, or exchanging your common shares for preferred shares in your existing company. As above, special elections will generally be necessary to avoid tax on the transfer. Consult your BDO tax advisor for further details.
There are a number of pitfalls in carrying out this type of planning which you must be careful to avoid. For instance, when you transfer assets to a corporation of which your spouse or minor children are shareholders, there could be an imputed interest penalty to you under the corporate attribution rules. This problem can be avoided if your spouse is not a shareholder. For minor children, the trust agreement can state that the child is not entitled to income or capital until they reach age 18. The problem can also be avoided if the corporation is an SBC (see below).
Probate tax
When you die, your executors will either sell your assets or transfer them to your beneficiaries according to your will. Third parties usually require assurance that the will used by your executors is the final will containing your most recent instructions. Letters probate (or a "probated" will) provide this assurance. Some provinces charge a flat amount for probating a will while others (including Ontario and B.C.) charge an amount based on the value of an estate's assets. For example, Ontario charges a tax of 0.5% on the first $50,000 of an estate's value plus 1.5% on the excess. When calculating the value of an estate, only debts secured by an estate asset can be deducted. This means that if you own an unincorporated business, all the business assets would be subject to probate tax, while unsecured liabilities such as trade payables would not be allowed as a deduction.
If your business is held by a corporation, the value of your shares would be subject to probate tax rather than the underlying business assets. Since all liabilities would be considered in determining the value of your shares, probate tax could be substantially less if you have a large amount of unsecured debt.
If the shares of your corporation will be transferred to members of your family, it may not even be necessary to obtain probate, producing even greater savings. Consult your BDO tax advisor for further information on probate tax.
Income splitting
If you run your own business, there are a number of possibilities for income splitting. Many of these apply whether or not the business is incorporated. For instance, you could pay your spouse or children reasonable salaries for work performed in the business. Or you could pay your spouse a guarantee fee if he or she has pledged assets or otherwise guaranteed the debts of the business. If your business is incorporated, other possibilities arise, such as paying your spouse a director's fee for services performed in that capacity.
The estate planning structure discussed above also allows for income splitting. For instance, your spouse and adult children could subscribe for shares in your corporation and be paid dividends. The advantage here is the ability to have the dividends taxed in the hands of more than one person, which generally means that the overall tax on the dividends is lower. With the use of more than one class of shares, it would be possible to pay the dividends to selected individuals or a group of individuals.
You should ensure that family members pay fair market value for any shares issued to them. This should not be a problem if you have just done an estate freeze, since the common shares will generally have only a nominal value. Also, family members must acquire the shares with their own funds. If you provide the funds to them, any dividends they receive would be taxed in your hands.
If you've transferred property or made low-interest loans to the corporation, there could be problems with the corporate attribution rules.
Income splitting is made simpler if the corporation qualifies as an SBC (subject to the income splitting tax). This is discussed further below.
With the income splitting tax that applies to certain income received by minor children, most benefits from splitting income with a minor child have disappeared. See "Splitting income with your children" below.
Advantages of an SBC
Thus far, we've presented tax planning ideas which apply to all CCPCs. If a corporation is an SBC, there are further advantages.
What is an SBC?
A corporation qualifies as an SBC if:
• It's a CCPC; and
• All or substantially all of its assets are used in an active business carried on primarily in Canada. The CRA interprets this to mean that assets representing at least 90% of the fair market value of all assets are used for business purposes.
A CCPC holding only shares or debts of other companies may qualify, provided those other companies are also SBCs.
Some corporations reinvest all their profits back into the business, so meeting the asset use test does not pose a problem. Other corporations invest surplus funds in investments which are not required for business purposes. If the fair market value of these investments exceeds 10% of the fair market value of all assets, the corporation will not be an SBC. You can ensure that your corporation continues to qualify by reinvesting any excess funds in business assets or by removing them from the corporation, through payment of dividends, salary or repayment of shareholder loans.
Note the word "small" in the definition of a "small business corporation" is a misnomer. There are no size restrictions for being an SBC.
Capital gains exemption
From 1985 to 1994, Canadian residents were able to claim a special deduction to reduce or eliminate tax on up to $100,000 of capital gains. If the gain arose on the sale of shares of an SBC, an additional $400,000 was often available. Although the 1994 federal budget eliminated the general $100,000 exemption for dispositions after February 22, 1994, you can still claim a $500,000 exemption against capital gains from qualifying shares of an SBC.
To qualify for the $500,000 exemption, you must meet the following conditions:
- The corporation must be an SBC at the time of the sale.
- More than 50% of the corporation's assets (on the basis of fair market value) must have been used in an active business carried on primarily in Canada throughout the 24-month period immediately before the sale.
- The shares must not have been owned by anyone other than you or someone related to you during the 24-month period immediately before the sale.
Note that the corporation only needs to be an SBC at the time of sale — that is, at least 90% of its assets must be business assets. Therefore, you may need to remove some non-business assets before the sale to qualify. There are a number of ways this can be done, depending on the circumstances. For the two years before the sale, you need only have more than 50% of the assets used for business purposes. You should monitor the corporation's status to ensure this test is met.
Many individuals prefer to trigger a disposition of their shares at a time when they're certain that the shares qualify for the enhanced exemption. This removes the need to monitor the company's status and locks in the exemption.
This can be done by transferring your shares back to your corporation or to a holding company and electing to realize a gain on the transfer. The shares taken back will have a stepped-up cost, thereby reducing any future capital gain when you sell the shares to a third party, or on death. You should keep in mind that while you can step up the tax cost of your shares, you cannot take back cash or other non-share consideration when triggering a gain, as this could produce unfavourable tax consequences. Your BDO tax advisor would be pleased to provide further details on how to realize your capital gains exemption now.
The enhanced exemption only applies to shares of an SBC and not to the sale of assets of an active, unincorporated business — another reason to incorporate your business now. An eventual sale or a deemed disposition upon death may be eligible for the enhanced exemption. At the time the assets are transferred, the SBC can be organized to allow an estate freeze and family income splitting, as discussed below.
Estate planning through an SBC
Estate planning is made easier if the corporation is an SBC. As noted previously, if you transfer property or make a low-interest loan to a corporation of which your spouse or minor children (a son, daughter, niece or nephew under 18 years of age) are shareholders, an imputed interest penalty will be included in your income. The penalty is interest at the CRA's prescribed rate on the amount of the loan or the value of the property transferred to the corporation. It is reduced by any interest and by 5/4ths of any dividends you actually receive from the corporation.
Depending on the method you choose for an estate freeze, a share transfer may be caught by the corporate attribution rules.
The corporate attribution penalty does not apply for any period throughout which the corporation qualifies as an SBC. Therefore, if you ensure that your company always meets the 90% test for business assets, you can carry out an estate freeze without concern for the corporate attribution rules.
Splitting income with your spouse
Splitting income with your spouse is also made easier if your corporation is an SBC. If you ensure that your corporation maintains its status as an SBC, the corporate attribution rules will not apply.
It's also worth noting that your spouse does not have to make a contribution to the corporation to receive dividends. This issue was a concern until the Supreme Court of Canada ruled on the Neuman tax case in 1998. In that case, Mr. Neuman's wife received dividends that were much larger than the contribution she made to the corporation paying the dividends. In fact, all of the income received by the corporation was from dividends paid by a management company. The income of the management company was from a law firm in which Mr. Neuman was a partner.
The CRA had argued that Mr. Neuman had diverted income that should have been taxed on to Mrs. Neuman and therefore, another attribution rule should apply. Consequently, Mr. Neuman was assessed tax on the dividends received by his wife. The Supreme Court ruled that the attribution rule did not apply.
Splitting income with your children
The Supreme Court's decision in Neuman was also good news if you split income with your minor children by paying dividends from your corporation, as the CRA's main tool for attacking these arrangements was the same attribution rule that the Supreme Court rejected in the Neuman case. Unfortunately, the good news was short-lived for these arrangements.
In the 1999 federal budget, an income splitting tax was introduced on certain types of income received by minor children — including dividends received from a private corporation. The tax is applied at the top personal rate for individuals, without the benefit of personal tax credits (other than the dividend tax credit). This tax effectively eliminates most of the benefits provided by splitting income with your minor children and applies to dividends paid after 1999. Beginning in 2003, the government extended the income splitting tax to catch rental income, interest income, and any other property income earned by a trust or partnership from a family business and received by minor children.
For more information on income splitting, see our Income Splitting bulletin.
Allowable Business Investment Loss
If your corporation qualifies as an SBC and the business should fail, you may be allowed to deduct an ABIL rather than a capital loss for the loss of your investment in shares or debt of the SBC. An ABIL is calculated in the same manner as an allowable capital loss in that only one-half of the loss is allowed as a deduction. The difference is an ABIL can be claimed as a deduction against other types of income as opposed to a capital loss which can only be applied against capital gains. If you have previously claimed a portion of your capital gains exemption, the ABIL may be converted into an ordinary capital loss to the extent you claimed the exemption.
Summary
As you can see, there are still a number of tax planning opportunities available to you if you carry on business in corporate form and you maintain your corporation as an SBC. See your BDO tax advisor for further details on how you can use these planning ideas in your situation.
| Corporate Tax Rates on Active Business Income (1) |
Comparison of Tax Rates on Active Income (2) |
|
Small Business Rate (%) |
General Corporate Rate (%) |
Business or Salary Income Earned Personally (%) |
Active Income Earned in Corporation and Net Income After Tax paid out as a Dividend
|
| |
|
|
|
With SBD( %) |
Without SBD (%) |
| British Columbia |
17.62 |
35.62 |
43.70 |
43.64 |
55.95 |
| Alberta |
16.12 |
33.62 |
39.00 |
36.32 |
49.60 |
| Saskatchewan |
18.12 |
39.12 |
44.00 |
41.32 |
56.37 |
| Manitoba |
18.12 |
37.12 |
46.40 |
46.84 |
59.18 |
| Ontario |
18.62 |
36.12 |
46.41 |
44.12 |
56.14 |
| Quebec |
22.02 |
31.02 |
48.22 |
47.61 |
53.65 |
| New Brunswick |
15.12 |
35.12 |
46.84 |
46.75 |
59.29 |
| Nova Scotia |
18.12 |
38.12 |
48.25 |
45.19 |
58.58 |
| Prince Edward Island |
19.62 |
38.12 |
47.37 |
45.31 |
57.90 |
| Newfoundland and Labrador |
18.12 |
36.12 |
48.64 |
48.68 |
59.96 |
| Yukon |
17.12 |
37.12 |
42.40 |
40.82 |
55.10 |
| Northwest Territories |
17.12 |
36.12 |
43.05 |
41.69 |
55.06 |
| Nunavut |
17.12 |
34.12 |
40.50 |
41.12 |
53.20 |
(1) Rates used are as at July 1, 2005.
(2) Individual is in top personal tax bracket in 2005.
(3) Ontario Rate does not include the corporate small business deduction clawback. Rate would be at 59.35% if active business income is subject to the clawback. |
For more information, call your local BDO office or contact our National office at:
Telephone: 1-800-805-9544 Fax: (416) 367-3912 e-mail: info@bdo.ca
This bulletin is a publication of BDO Dunwoody LLP on developments in the area of taxation. This material is general in nature and should not be relied upon to replace the requirement for specific professional advice. The information in this bulletin is current as of August 19, 2005.
© 2005 BDO Dunwoody LLP
