The Money Scope Podcast Ep 10: Investing in a Canadian Corporation
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Mar 29, 2024 Clear breakdown of what defines a Canadian corporation and why opco/holdco splits matter. Practical discussion of liability, real estate rules and using corporate assets. Deep dive into passive versus active income, passive income limits and how tax integration and refundable tax accounts work. Practical notes on eligible versus non‑eligible dividends, capital dividend accounts, insurance and estate planning.
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Don't Fear The $50k Headline—Plan Instead
- Don't panic about the $50,000 passive-income headline; moderate earners can often hold much more passive capital before the limit bites.
- You can manage impact by paying yourself more, spending, or using registered accounts and charitable giving.
Notional Accounts Track Tax, Real Accounts Hold Assets
- Notional accounts are accounting mechanisms that track refundable taxes and distribution capacity, while real accounts hold actual corporate assets.
- Understanding notional accounts is essential to tax-efficient corporate investing and dividend planning.
RDTOH Enables Refunds To Avoid Double Taxation
- RDTOH records refundable corporate tax on passive income so corporations can recover some tax when paying dividends.
- Tax integration uses gross-up and dividend tax credits to try to align corporate and personal taxation.