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Chapter13 - Shareholder Manager Remuneration Chapter 13 By...

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Unformatted text preview: Shareholder Manager Remuneration Chapter 13 By James B. MacNeill Shareholder Manger Remuneration Deferral Vs. Tax Savings See Exhibit 131 on Page 690 Bonuses Used to Reduce Corporate Income Down to $300,000 Salaries Should Be Reasonable Must Be Paid Within Time Limits (Section 78) Should Be Documented Accrued Bonuses Found at Section 78 Must Be Paid Within 180 Days Consider YearEnds Commencing After August 1st If Not Paid Within 180 Days, Amount is Added Back to Income Shareholder Benefits and Loans Found at Subsection 15(1) Shareholders' Loans Found at Subsection 15(2) Shareholders' Loans Are Income Exceptions Ordinary To To To If Course of Business Subsection 15(2.2) Purchase a Dwelling in the Capacity as an Employee Purchase an Automobile Used in Work Acquire Previously Unissued Shares Paid Back Within One Year Cannot Be Part of a Series of Loans and Repayments Imputed Interest Found at Subsection 80.4 Uses Prescribed Rate Income Splitting Reasonable Salaries Paid to Family Members Fringe Benefits Private Health Insurance Group Sickness and Accident Insurance Retiring Allowance Subsection 60(j.1) Company Car as a Fringe Benefit Based on Business Use Salaries Vs. Dividends Dividends Could Trigger RDTOH Freshen Up CNIL Account Factors Federal and provincial tax rates Personal tax rates Personal tax credits and deductions CPP and RRSP Holding Companies Taxfree use of inter corporate dividends Serves to meet diverse shareholders' interests Tax deferral on dividends Estate freezing Qualified Small Business Corporation QSBC Found at Subsection 110.6 Qualify for the $250,000 capital gain exemption SBC Definition Found at Subsection 110.6 CCPC 90% of assets used in an active business Business carried on primarily in Canada Test applies to related corporation Single Corporation Must qualify as an SBC at time of disposition 24month holding period During the preceding 24 months, assets used primarily in an active business Stacking of Corporations Apply rules to each corporation in a chain As long as parent meets the 90% test, then subsidiary need only meet the 50% test in 24 preceding months Capital Gains Deductions Least of : 1) Unused CGE 2) TCG less net capital loss and ABILS 3) Cumulative limit less CNIL account CNIL Essentially investment losses over investment income Cumulative Loss of CGE Must file a return Must be a resident of Canada Must report gains Antiavoidance provision Section 245 GAAR Shareholder Manager Remuneration Chapter 13 By James B. MacNeill ...
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