Comments for The Professional Edge

Comment on Income Splitting With A Professional Corporation Can Save You Thousands by Brian

Brian — Sun, 05 May 2013 14:12:26 +0000

Hi John: You are right. There is a $1400 advantage with dividend vs. Salary. Thanks for taking your time to write these very helpful articles. I was aware of incorporation advantages; tax deferral, future withdrawal at lower rate, family trust for income splitting, but having a hard number really helps. I think the income split advantage will be even higher with the upcoming personal tax increases in BC. I would like to see an article on using smith manoeuvre for people with high savings in the corporation but limit their withdrawals from the corporation to avoid high taxes. In that case, I think it makes sense to be aggressive on the personal side.

Comment on Income Splitting With A Professional Corporation Can Save You Thousands by John Moore

John Moore — Fri, 03 May 2013 19:30:15 +0000

Hi Brian – my aplogies for delay in responding – with April 30 being the filing deadline for tax returns, I was a little preoccupied.

I assume you are referring to the 3 family members scenario. You are correct that there is only a savings of $36,000 if regular income of $300,000 is split 3 ways. But there is a slight advantage to earning dividends vs salary. In BC, corporate tax on $300,000 of active business income is $40,500. If the after tax dollars are then paid as 3 equal dividends to the 3 family members, there is about $10,000 in tax for reach family member. Total tax, personal and corporation is $70,500 compared to $111,000 if the $300,000 is earned directly by one person – a $40,000 savings

Comment on Income Splitting With A Professional Corporation Can Save You Thousands by Brian

Brian — Tue, 30 Apr 2013 13:01:57 +0000

Enjoyed your articles. When I plugged in the numbers, the total tax for 300K would be $111K. For 100K, it is 25K. So the overall saving is 36K for income splitting rather than 40K listed in your table.

Comment on BCMA T4A Slip and Income Tax Returns by John Moore

John Moore — Thu, 28 Mar 2013 19:55:51 +0000

The T4A amount should be before GST/HST.

CRA would have set you up for HST because you exceeded the small supplier threshold of $30,000.

The question is, were you being paid HST in 2012? Did the company you were working for know that you had to be charging HST? If not, you will need to invoice them for the HST so that you can remit to the government with your 2012 HST return.

Comment on BCMA T4A Slip and Income Tax Returns by Daniel

Daniel — Thu, 28 Mar 2013 02:59:14 +0000

Hi John,

I have a professional income in the movie industry. Last year made ~ 35K and CRA registered me for HST. I was wondering if the T4A I got this year includes HST or is it specific to my professional income, pre-tax? I did not keep track of my pay stub and do not know if all the payments add up to the T4A? And I have other union deduction.

Long story shot, is HST allowed to be part of T4A?

Danny

Comment on Income Splitting With A Professional Corporation Can Save You Thousands by John Moore

John Moore — Fri, 15 Mar 2013 15:34:32 +0000

Thanks for your comment.

Unfortunately, with tax season in full swing, I’ll have the wait until May to complete my first post re: saving in a corporation.

Comment on Income Splitting With A Professional Corporation Can Save You Thousands by Ewa

Ewa — Fri, 15 Mar 2013 07:00:06 +0000

This is fantastic information! Thank you for sharing. My kids are still too young for income splitting, and my husband earns a salary higher than my corporate earnings, so I’m looking forward to the next post about saving and investing.

Comment on BCMA T4A Slip and Income Tax Returns by John Moore

John Moore — Thu, 14 Feb 2013 19:23:08 +0000

There are only a few prenumbered boxes on the T4A slips - you fill in the empty boxes with the numbers you need. Additional information is available on the CRA website.

Comment on BCMA T4A Slip and Income Tax Returns by Amanda

Amanda — Thu, 14 Feb 2013 15:57:08 +0000

I want to fill up other income on T4A slip, but I can’t find the box. Could you please tell me which one is the box 28?

Comment on Incorporation Benefit – Income Splitting by Weekly News Links : The Retiring Boomer

Weekly News Links : The Retiring Boomer — Sun, 11 Nov 2012 23:22:43 +0000

[...] Incorporation Benefit – Income Splitting can keep thousands in your pocket. [...]

Comment on Incorporation – Taxation of Salary and Dividends by Mo Jangda

Mo Jangda — Mon, 05 Nov 2012 20:54:13 +0000

Thanks for the insight and helpful post, John!

Comment on Incorporation – Taxation of Salary and Dividends by John Moore

John Moore — Mon, 05 Nov 2012 20:50:07 +0000

They get reported on your personal tax return through information slips.

Salary will have source deductions taken off and remitted to Canada Revenue Agency, and will be reported on a T4 slip. Dividends are reported on a T5 slip.

If it’s your company, you can determine the amount of dividends and/or salary to be paid to you – usually in consultation with your accountant :)

Comment on Incorporation – Taxation of Salary and Dividends by Mo Jangda

Mo Jangda — Mon, 05 Nov 2012 01:05:39 +0000

Is there a difference between what can qualify as a dividend vs. salary or is it just how it’s reported on your return?

Comment on 2012 BCMA CPRSP Entitlement by jaotte

jaotte — Tue, 30 Oct 2012 23:40:51 +0000

Thanks. I’ll ask for a receipt and go from there. So glad BCMA negotiated this, too bad the other provinces haven’t!

Comment on 2012 BCMA CPRSP Entitlement by John Moore

John Moore — Tue, 30 Oct 2012 21:29:06 +0000

You can fill out the form. There’s a box to tick indicating that your RRSP is with another financial institution, and then attach a copy of your RRSP receipt. Just make sure you put the right RRSP account # , etc… on the application so that they pay it to the right account.

If you don’t have an RRSP receipt, the bank should be able to run one off for you. Otherwise, there is a statement of contribution form available from the BCMA that you can get the bank to fill out for you.

If you are already fully contributed for 2012, I would wait until January to get it processed. The CPRSP payment will get included in your income in the year it is paid to your RRSP. If you get it processed now, you’ll have to include that amount in this year’s income. If you wait until January, the income inclusion will be on your 2013 tax return.

There is a box in the top right hand corner of the application to check if you want it processed in 2013.