Quote:
Originally Posted by Enoch Root
Yes, but this doesn't avoid tax, it only defers it. Once you take the money out of the corp, in order to have it and spend it personally, you pay the remaining tax.
And for those that aren't familiar with this, corps pay a corporate tax rate, then, when rolled out to personal shareholders, they pay a dividend tax.
corp tax + dividend tax = personal income tax (approximately).
Also, as someone else mentioned, there is no estate tax, however, death is a deemed disposition and capital gains taxes become due (except for the spousal rollover of course, which also is a deferral , not an avoidance).
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If you can defer tax for 30+ years that's a mega advantage. My biggest issue is that you can also defer tax on passive income not related to the business. If middle class wage employees can't do that, why can business owners, lawyers, consultants, real estate agents, etc...
Edit $500k of passive income is tax free. Still very significant and likely well beyond what most Canadians have saved.