Paying yourself – taxation on salary vs dividends

June 22nd, 2016

You’re the sole owner of a small business. Your business yielded a profit this year. If you pay yourself a salary1, the company will pay no taxes (salaries are deductible as company expense), and the the money paid to you will be taxed according to your personal tax bracket. If you pay yourself dividends, the corporation will be taxed; then, the dividends paid to you will be taxed. Canadian dividends are taxed at a reduced rate, since the company was already taxed on the earnings.

So which method of payment will leave more money in your pocket?
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Middle-class tax cut?

December 1st, 2015

Early in their second month in office, the newly elected liberal party of Canada implemented their campaign promise marketed as “the middle-class tax cut”.

The so called middle-class tax cut is a $670 tax savings to anyone making more than 90k and up to 200k. These kind of salaries are over and beyond the salaries earned by the bottom 80% of Canadian.

As it happens, the new MP salaries falls within this range ($170,400; The MPs also awarded themselves a salary increase on March 2016).

Here are the fine details: Starting in the 2016 tax year, the federal tax rate on income between $44,700 and $89,401 will fall from 22% to 20.5%. At the same time, the rate on income $200,000 and over will rise from 29% to 33%.

Any tax savings from a tax cut to any specific income tax bracket trickles up to the higher income tax brackets. To see why, look at Canada Revenue Agency Individual tax rates page.

So this tax cut will save you $670 if you’re making between $89,400 and $200,000. Tax savings will still benefit those with incomes of up to about $217,000. At this point the tax cut of the middle tax bracket will balance the tax rise of the high tax bracket. But if you make $51,366 a year, it will save you merely $100. And if you make $44,700 or less, it won’t save you a penny.

Further reading:

The truth about Trudeau’s tax cuts: How Trudeau’s plan takes from the rich and gives to the almost-as-rich
John Geddes, Maclean’s magazine

How most Canadians will be left out in the cold by Trudeau’s proposed tax cut Jamie Golombek, National Post

In memory of a Red-shafted Northern Flicker

July 20th, 2015

This young Flicker left the nest merely a few weeks ago. Reason of death: unknown. The feathers were scattered all over the place. From the top left: chest and ventral feathers, tail feathers, 4 underwing coverts, one black breast-band feather; left wing, uppertail coverts, right wing; primary coverts, various back feathers.

Notice the molt limit, with P4 fresh and shorter, and P5 still half encased in its sheath.
The tip of the outer-most 5 primaries is more pointed than the rest of the primaries (as in juvenal feathers).

Bullock’s Oriole nesting @ Brunswick Point

June 20th, 2015

Bullock’s Oriole male at the nest

Bullock’s Oriole female at the nest

Tropical Kingbird @ Brunswick Point

October 18th, 2014

Tropical Kingbird

How to see a Sora and a Virginia Rail

October 9th, 2014
  1. Go to the North-West corner of Reifel Migratory Bird Sanctuary.
  2. Stand on the platform overlooking the pond and peer at the reeds.
  3. Wait.

I didn’t need to wait long. A couple of Soras showed up first, followed by an elegant Rail.

Virginia Rail
Virginia Rail

Franklin and Bonaparte at Locarno Beach

September 21st, 2014
Franklin's Gull

First year Franklin’s Gull

Bonaparte's Gull

Bonaparte’s Gull

Ash-throated Flycatcher in Delta

September 17th, 2014
Ash-throated Flycatcher

Ash-throated Flycatcher

The distribution region of the Ash-throated Flycatcher doesn’t extend this much north, but this young individual stayed in Boundary Bay for over a month, to the delight of all bird chasers.

Blackie Spit

September 1st, 2014

Long-billed Curlews spend their winters in and around Mexico and along the Pacific coast. The most northern Curlew along the Pacific chose Blackie Spit as his wintering habitat. He is accompanied by one to seven Marbled Godwits, whose distribution is similar.

Long-Billed Curlew and Marbled Godwit

Long-Billed Curlew and Marbled Godwit

Caspian Tern

Caspian Term

Barred Owl at Stanley Park

August 29th, 2014

Stanley Park had a breeding pair of Barred Owls this year.

Barred Owl

Barred Owl (seen near Lost Lagoon)