By applying these simple income tax planning tips, here’s how you can get more money out of your corporation without getting completely killed on taxes.

Everybody wants to get more money from their corporation, but few understand the secret to securing that money without taking a heavy tax toll in the process. Usually, the main reason that people wind up having to endure hefty (but avoidable) taxes is a simple matter of untimely planning. If you’re proactive about how you apply the income tax planning tips below, you can get more money from your corporation while being spared unnecessarily heft tax punishment.

CDA Payments

In the event that your company happens to have a capital dividend account (CDA) balance, you can benefit from it by paying out the tax-free dividends that you may be entitled to. Any tax-free capital gains and capital dividends that your corporation realizes and receives are calculated into the CDA balance, so be sure to look into this to make sure all your bases are covered.

Holding Company Dividends

The holding company that owns your corporation’s shares can be paid tax-free dividends for reinvestment. Holding company dividend payment is something that can generally be done very effectively with active operating businesses that have cash on the table. The cash paid in dividends to your holding company can be used in any way that you see fit once reallocated.

Shareholder Loan Repayment

Any repayments of loans you’ve made to your corporation can be taken completely tax-free. If you establish yourself as the party owed in a shareholder loan, anything you’re repaid for transferring assets to your corporation can be had without any troublesome tax implications.

In summary, three easy ways to get more money from your corporation without hefty tax woes are:

  1. Taking shareholder loan repayments
  2. Tax-free dividend payments to a holding company
  3. Taking advantage of your corporation’s CDA balance by paying dividends to it

With proper guidance in the right direction, doesn’t take much intensive effort to do your due diligence and find out what hidden opportunities for tax relief you may have on the table. If you’d like to learn more about how you might be able to enjoy the potential corporate tax benefits available to you, contact us today to schedule a consultation.

E&E Professional Accountants has years of experience in assisting businesses with their accounting needs. We are founded and managed by an experienced corporate auditor and a former CRA tax auditor. Feel free to contact us for assistance with all your accounting and bookkeeping needs.