When you pay yourself a salary, that is deducted as an expense for the company (and therefore not taxable for the company). It is only taxed for you as an employee. You get to retain the rest of the profit in the company (less the 19% or so company tax) which you can use to build up your investment. Yes, eventually you may need to take the profit out (as dividend), at which point you pay income tax (less the company tax already paid - at least that is how tax on dividend is structured). The advantage is being able to defer the tax (not avoiding it), much like a registered retirement plan.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Cheapest Taxes for Canadian Trader
- Thread starter PaulRon
- Start date
When you pay yourself a salary, that is deducted as an expense for the company (and therefore not taxable for the company). It is only taxed for you as an employee. You get to retain the rest of the profit in the company (less the 19% or so company tax) which you can use to build up your investment. Yes, eventually you may need to take the profit out (as dividend), at which point you pay income tax (less the company tax already paid - at least that is how tax on dividend is structured). The advantage is being able to defer the tax (not avoiding it), much like a registered retirement plan.
Quote from TheShaman:
Allthough corporate tax is much lower than personal income tax, you end up getting double taxed as a corporation, so when you pay yourself the money it gets taxed again... so i can't see how incorporating could save you that much more tax than say if you declared yourself as self-employed, both you can deduct expenses, so same thing.
don't know in canada, but in the usa, you are only double taxes as a C corp, not as an LLC or S Corp.
Also in the USA, trading is cap gains, and filing as unemployed makes the most sense. IF Canada works this way, then nice, but someone seemed to say trading $$$ was income...
Quote from neke:
When you pay yourself a salary, that is deducted as an expense for the company (and therefore not taxable for the company). It is only taxed for you as an employee. You get to retain the rest of the profit in the company (less the 19% or so company tax) which you can use to build up your investment. Yes, eventually you may need to take the profit out (as dividend), at which point you pay income tax (less the company tax already paid - at least that is how tax on dividend is structured). The advantage is being able to defer the tax (not avoiding it), much like a registered retirement plan.
neke's correct, i've been going through a lot of this lately. your company gets paid the full month, and then pays you a portion say 5k/month so 60k/yr you get personally taxed on the 60k the coroporation gets taxed on say the other 140k (make it 200 to be easy). At 200k you'd end up paying the cdn gov't the top tax bracket in personal income tax. Incorporated you pay somthing like 19% on the first 500k (dont remember exact figure), so you're ahead. But like neke said, you're just deferring it.
Quote from PaulRon:
Will be turning fulltime trader soon and am looking into the cheapest possible way to pay taxes on my earnings... whether this is starting a proprietorship or incorporating myself or just paying capital gains tax... Any fulltime Canadian traders with insight? Thanks
Your profits will be income not capital gains. Only if you make some SERIOUS dough should you consider incorporating. Randy in Windsor
ps: please check out my site beatingtheSP500.com