Can Form 8815 Wages 2023-2024

Should you take out money in the form of salary or dividend from your company? Today, we will first talk about the pros and cons of the two. Then, I'll walk you through a couple of examples. After that, I will tell you what you should think about before making the final decision. In the end, we will talk about some important factors for you to consider going forward. Let's get started with salary. First, the advantages of salary are that the amount declared as salary is deductible to the corporation, reducing the taxable income. You're also able to contribute to your autoresponder salary, and there is an opportunity to split income with other family members who are employees of the company, reducing overall tax liability. Lastly, you're eligible for full CPP benefits after retirement. The disadvantages of salary are that it is taxed at a higher rate than dividend. You have to pay CPP, so your cash flow takes a hit. Additionally, there is admin time spent on payroll and issuing required defaults as required by the CRA. Now, let's talk about the advantages of dividend. There are three types of dividends: non-eligible, eligible, and capital dividend. Dividends are taxed at a lower rate than salary. You don't need to make CPP deductions or remittances, and you can pay yourself a dividend by simply writing a check. The disadvantages of dividends are that they are not deductible to the corporation, and they are paid from the after-tax profits of the corporation. You don't get any room for RSP contributions, and you're not able to claim certain tax deductions and credits like childcare expenses or the employment tax credit. You also need to spend time updating corporate minute books and preparing directors' resolutions. Now, let's walk through our first example. We have two guys, Michael...