Shareholder Remuneration Strategies

Recent changes to corporate tax rates have changed the rules of thumb followed for decades on how to remunerate owner-managers. The ability to defer tax by leaving funds in a corporation rather than take a bonus or a dividend is very enticing. Yet, this must be balanced against the family’s cash needs and other matters (such as making an RRSP contribution).

An overall evaluation of how to remunerate an owner-manager and family is complex and multi-dimensional. We take a broad approach, looking at multiple factors such as corporate and personal tax rates, bonuses v. dividends, AMT, income splitting and the new rules that restrict such planning, RRSP contributions, the capital gains exemption, and certain creative strategies which can be considered.

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