For Corporation | Sun Trust Financial

Optimizing Tax Strategies to Boost After-Tax Profits

At SunTrust Financial, we understand the critical importance of tax efficiency in maximizing corporate profitability. Our tailored strategies are designed to help Canadian Controlled Private Corporations (CCPCs) navigate the complexities of tax planning, and optimize after-tax income.

Key Considerations for CCPCs in Canada:

1. Maximizing Small Business Deduction (SBD):

For corporations earning up to $500,000 in active business income, the small business tax rate (e.g., 11% in BC) offers significant tax savings.
Effective structuring ensures that your corporation fully benefits from this preferential rate, maximizing retained earnings.

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2. Balancing Salary and Dividends for Business Owners:

Paying excessively high salaries can trigger steep personal tax rates for business owners, eroding overall wealth.
On the other hand, retaining too much after-tax income within the corporation may result in higher dividend tax rates when funds are eventually distributed.
We help you strike the right balance between salary and dividends, optimizing personal and corporate tax outcomes.

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3. Managing Passive Investment Income:

Did you know that passive income can affect your corporation's tax rate? For Canadian-Controlled Private Corporations (CCPCs), passive investment income over $50,000 annually reduces the Small Business Deduction (SBD) limit. For every $1 above this threshold, the SBD is reduced by $5. Once passive income hits $150,000, the SBD is completely eliminated, meaning your corporation loses access to the lower 11% tax rate in BC.

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Investing retained earnings in non-operating business assets (e.g., portfolios) can expose your corporation to the highest marginal tax rate on passive income.
We offer strategies to structure investments tax-efficiently, ensuring your retained earnings work harder for your business without undue tax burden.

4. Maximizing Small Business Deduction (SBD):

Proper planning ensures that retained earnings are allocated effectively to support business growth while minimizing tax liabilities upon distribution to shareholders.

Do you know the tax-free account for a CCPC ?

A Capital Dividend Account (CDA) is a notional account available to a Canadian-Controlled Private Corporation (CCPC). It offers significant tax advantages, particularly for shareholders, by allowing the distribution of certain types of income on a tax-free basis.