Quote:
Originally Posted by DoubleF
Yes and no. The government felt it unfair recently and revised the rates. There's up to 3-11% "leakage" doing corp tax plus dividends. Plus passive income over a threshold is now at a higher rate than personal tax rate. In most situations, it's more tax effective to take it as wages than dividends now.
Good point on the tax deferral part. You'd be surprised how many people don't understand how this concept works for an RRSP and needlessly contribute to it and claim it in the lowest tax bracket.
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Yes, many people completely screw the pooch when it comes to RSPs. That's a conversation for another thread.
As to the first part, yes, the combined corporate and dividend rates can be higher than income tax rates in many cases. And yes, passive income in a corp gets hammered pretty hard - I meant to mention that too. Thanks.