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  1. As a business owner, you may have surplus cash accumulating in your corporation. Is there a business need for the cash? Or do you need the funds personally and wish to withdraw them from your corporation? What is the most tax-efficient way of withdrawing funds?

  2. As a business owner, you may have surplus cash accumulating in your corporation. Is there a business need for the cash? Or do you need the funds personally and wish to withdraw them from your corporation? What is the most tax-efficient way of withdrawing funds? This article discusses various methods

  3. Mar 23, 2021 · Here are some options to consider if you are an owner-manager and have surplus cash accumulating in your Canadian-controlled private corporation (CCPC): Business needs. Is there is a business need for the funds in the short to medium-term?

    • Surplus Cash in a Corporation – Part 3
    • When there’s a personal need for the surplus cash
    • Withdrawing cash from your corporation
    • Reimbursing you for business expenses you paid personally
    • Repaying amounts owed to you
    • Paying a salary or bonus
    • Borrowing to invest
    • Paying a taxable dividend
    • Dividend sprinkling and multiplying the capital gains exemption
    • Paying a capital dividend
    • Conclusion

    As the owner-manager of your operating company, you may have surplus profits accumulating in your corporation. This surplus cash could be in your operating company or it could be in your holding company. In either case it is still a corporate structure and the tax implications are the same. Your first reaction may be to figure out how to withdraw t...

    When your corporation has excess funds, you may decide you need them personally more than the corporation needs them. Some reasons might include: Lifestyle expenses — Your cash flow may be tight if you haven’t been paying yourself enough income from the corporation or your situation has changed and you require more personal funds or you have additi...

    If you need the corporation’s surplus funds for personal use, there are different ways you can withdraw those funds, each with different tax implications. There is likely to be a personal tax cost, depending on the form of payment. The rest of this article discusses some different ways your corporation may pay you and some of the consequential tax ...

    If you personally paid for anything related to your corporation, you can get your company to reimburse you for those expenses. Common examples are using your car for business purposes or entertaining clients with your own money. When you use your after-tax dollars to pay for business expenses, you don’t have to pay any income tax on amounts reimbur...

    Your corporation may owe you because: You transferred personal assets to your corporation and received no cash or shares in return Your company declared a dividend or a bonus that you loaned back to it You personally incurred business expenses, as discussed above, but weren’t reimbursed by your company These amounts often accumulate in the start-up...

    You may consider paying yourself a higher salary or a bonus from your operating company. If your spouse and children help out in the business, consider paying them a reasonable salary for services rendered. This is a great income-splitting strategy that may save your family money if your children or spouse is in a lower tax bracket than you. In add...

    Under the right circumstances, you may consider personally borrowing funds to invest in a non-registered portfolio outside of your corporation to increase your wealth. The financing costs are funded by paying a salary from the corporation. This is a long-term strategy that is ineffective if you need the funds in the short to medium term. You borrow...

    Your corporation may pay you a taxable dividend. The dividend is declared by director’s resolution and must be recorded in the minutes of the corporation. Once a dividend is declared on a particular class of shares, then all shareholders with that class of shares must receive a dividend. A dividend is paid out of the after-tax dollars of your corpo...

    Paying dividends to family members and multiplying the capital gains exemption are tax and estate planning strategies commonly employed in practice by shareholders of private corporations that potentially result in significant tax savings. Both of these strategies involve reorganizing your corporation so that your spouse and/or children own shares ...

    A capital dividend is a tax-free dividend. As with all dividends, there is no deduction for the corporation paying the dividend; however, this type of dividend is not taxed in the hands of the recipient. Your corporation can pay a capital dividend if there’s a positive balance in its capital dividend account (CDA), which is a notional account. The ...

    The integration of corporate and personal goals and tax systems makes this area quite complex, but teeming with opportunities for planning. Because of the complexity, we strongly advise you to involve qualified tax and legal professionals to maximize these opportunities and effectively accomplish your goals. This document has been prepared for use ...

  4. In the meantime, what should you do with any surplus cash accumulating in your corporation? Is there a business need for the cash? If so, could you invest the funds within the corporation? Or do you need the funds personally and wish to withdraw them from your corporation? Are there tax-effi cient ways to withdraw funds out of your corporation?

  5. Mar 30, 2015 · If you are the owner-manager of a private Canadian corporation and have surplus cash accumulating in your company, you may be wondering whether to retain the funds in the company or withdraw them while paying as little tax as possible.

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  7. Oct 25, 2021 · When you have surplus cash in your corporation, the first step is to determine if the business will need the funds in the near future. Perhaps your corporation will need the excess cash to pay tax instalments or make a major business acquisition.

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