The monthly figure is the same monthly amount that would carry a mortgage of about $510,000 at 5% over 25 years.
A snapshot of one year, using your figures and published Ontario tax rates. It is not a forecast; no future years are projected.
Your income is being kept in a corporation rather than earned personally. This one is closed.
| Small-business rate in Ontario | 11.20% |
| Top personal rate if earned personally | 53.53% |
Incorporating defers tax rather than erasing it. The second level arrives when money comes out to you, which is the next leak.
Money you moved out of the company and then did not spend was taxed on the way.
| Drawn out and left unspent | $30,000 after tax |
| Taken as | dividends, taxed at 47.74% |
| Company had to release | $57,405 to deliver it |
| Tax paid to move it, this year | $27,405 |
Tax on money you actually needed to live on is not counted here. That is simply the cost of living. This is only what it cost to move out money that then sat unspent.
Money the company invests is taxed at a much higher rate than money it earns.
| Your company earned from investments | $10,000 |
| Corporate tax at 50.17% | $4,573 |
| Comes back when dividends are paid | −$3,354 |
| Tax that does not come back | $1,219 |
| Cost this year | $1,219 |
Some of that tax is refunded, but only once taxable dividends are actually paid out. Until then it sits with CRA rather than working for you.
Money sitting in cash keeps its balance but loses what it can buy.
| Held in cash or near-cash | $350,000 |
| Inflation applied | 2.10% |
| Purchasing power lost this year | $7,350 |
No money leaves the account. The number on the statement stays the same; what it buys does not.
Replacing these with your real numbers will change the result. That can be done on the call.
Donny will walk through this with you on the call: what each number is made of, which ones are worth your attention, and what questions to take to your accountant. Nothing here is a recommendation; it's a picture of where things stand today.
| Combined small-business rate | 11.20% |
| Combined general corporate rate | 26.50% |
| Corporate tax on investment income | 50.17% |
| Refundable portion of that tax | 30.67% |
| Small-business limit | $500,000 |
| Investment income before the grind begins | $50,000 |
| Province applies the grind provincially | No |
| Personal marginal rate applied | 47.74% |
| Inflation applied to idle balances | 2.10% |