Dividend Planning – By Dawn Loeffler

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Dawn Loeffler, BA (Hons), CPA, CA Staff Accountant, Gilmour Knotts
Dawn Loeffler, BA (Hons), CPA, CA Staff Accountant, Gilmour Knotts
Dawn Loeffler, BA (Hons), CPA, CA
Staff Accountant, Gilmour Knotts

Tax Question:

Why it is important to plan your dividends with your Accountant?

Facts:

Mid-winter is a great time to book a dividend planning meeting with your accountant. The purpose of this meeting is to review your anticipated personal income for the year and the position of your shareholder loan account to determine how to plan your dividends or annual bonus to optimize your personal tax position.

 

Discussion:

Corporate owners have the option of receiving their income through salary and/or dividends. This can provide you with excellent opportunities to income split if you and your spouse or other family members own shares in the company and the opportunity to optimize your personal tax position by ensuring you can utilize all your personal tax credits such as donations and tuition.

Meeting with your accountant can alert you to issues with your shareholder loan account that need to be addressed. For example, you may be unaware that you have spent corporate money personally and now owe your company money. Your accountant can advise you when this shareholder loan must be repaid by to avoid having to declare it as personal income (a dividend).

Your accountant can run tax planning scenarios for you to determine how much tax you would owe if you received $XX in dividends and how much your spouse should receive to optimize your joint tax position. Your accountant can also run tax planning scenarios for you to determine if it would be beneficial to declare a bonus to yourself and contribute this to your RRSP and if so how much of a bonus?

A dividend planning meeting with your accountant will help you optimize your tax position and avoid unpleasant surprises during tax season.

Contact us to book your tax planning meeting, to optimize your personal tax position and review your shareholder loan position.

 

Dawn Loeffler, BA (Hons), CPA, CA
Staff Accountant, Gilmour Knotts
Chartered Accountant.
Email: faqs@gilmour.ca
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