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    #1

    Taxes

    Option one for the well to do, pay yourself 80 grand in dividend and 60 grand in wages. Or option 2 pay yourself 140 grand in dividends only. How much does the gov't get???. Both incomes equal at 140 grand. Also other scenario pay yourself only 80 grand in dividend or only 80 grand in wages. How much does the gov't get here. I think most farmers are totally out to lunch on this one. Can I hear some answers.? Before I tell the trueth?
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    #2
    You guys must think about this one cause every accountant I ever talked to said and advised that why the hell do you pay yourself a wage and not just a dividend and every year I explain why. Then they stumble on a few a reason.

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      #3
      Ok I don't have time for this shit so I will give answer first. 80 div with 60 wage pays the gov't 36,012. 140 div alone pays the gov't 29,776. All great until one realizes that your farm pays an extra 80 times 13 percent for a total of 10,400 in corporate tax cause its considered corporate income. Which actually surpasses the saving in the personal (extra tax). Its very similar for the 80 wage and 80 div. only. Now one should look at the accountants say we should not worry about cpp for a retirement plan or any part of our retirement plan. If I pay myself a wage of 60 grand plus the 80 div. I am way ahead cause my cpp contribution plus my total tax payable is actually less than if I paid it in total all dividend. Plus when I retire I have a cpp payment where if I get only a dividend I have no cpp. So I don't understand accountants promoting all dividends. What I am saying is total tax corporate and personal is higher than the personal plus cpp payments. Can anyone verify anything different?
      Been trying to tell the accountants for years and they don't seem to add up the numbers.

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        #4
        I have a job and some under the table
        projects. Money made on the farm stays
        on the farm. But I do know that you want
        to watch your tax brackets on wages then
        top up with dividends. Dividend income
        is equal to corporate tax plus 15%(I
        think that's still the rate).

        Comment

          #5
          Who said accountants are promoting dividends? Maybe your FBC kids that come to your place....

          We have disagreed on this one before. Any dividend paid out of your corporation is NOT additional income to your corporation. The only reason an adjustment to the corporate income would have to be made is of you included the dividend as an expense somewhere in your scribler books.

          Everything else in your comments I would generally agree with.

          Comment

            #6
            I have a job and some under the table
            projects. Money made on the farm stays
            on the farm. But I do know that you want
            to watch your tax brackets on wages then
            top up with dividends. Dividend income
            is equal to corporate tax plus 15%(I
            think that's still the rate).

            Comment

              #7
              I could see someone being better off with dividends if you can manage your corporate income within the $500,000 business limit. In this scenario, you will have the least amount of personal tax to pay once its outside the corp. At the end of the day, the rate you pay between the dividend and the tax paid on the earnings of the cash flow from the corp is about 1% less combined verses a straight wage.

              From my accountant's guidance, and in our scenario, almost all of my land is outside my corporation because I used the family farm partnership structure which generated a 1.5 million shareholder loan by using our capital gains exemption differently. This allows me to pay rent of at least $82,000 between my spouse and I and then $80,000 of dividends over that.

              In this way, we get to have $500,000 of earnings in the corp and $80,000 at low rate personal earnings.

              As far as retirement option, I would sooner avoid paying a lot of CPP since I would rather fund an RRSP. Rental income creates RRSP deductions so I contribute $5000 each to an RRSP.

              If for some unfortunate reason Hopper you die and don't have a surviving spouse or dependent children at that time, your estate gets $2500 for all the CPP you contributed.

              If you want to talk about bad planning, maybe consider that one. Not saying not paying no CPP, I just wouldn't be worried about maxing out CPP. There are disability benefits with CPP also.

              Comment

                #8
                Someone is changing the rule to - live rich, die rich. Maybe that's an offshore rule.

                No fuss, no muss. KISS. $150K cash method - $50K taxes. You can handle it, and I'd have smooth pavement.

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