How new dividend tax rules affect biz owners (www.advisor.ca) In Canada, we try to tax business income the same whether it’s earned as salary or as dividend income.
Active business income earned within a corporation should be taxed so the combined corporate tax paid on income, plus the personal tax paid on dividends, is taxed the same as personal salary income. Mechanisms such as the dividend tax credit help with that goal. But actual tax rates don’t always line up with that goal.
In fact, in most provinces, it’s more advantageous in 2013 to earn active business income through a corporation than to earn it personally…
