Business Owners

For owner managers renumerated by either taxable dividends or salary from their corporations earning active business income, a corporate flow through will generate a significant CDA credit that can then pay out tax free dividends to the owner manager without personal tax, and at the same time reduce their corporate tax liability.

Sheltering Active Business Income

For shareholders and/or owner managers of Canadian-Controlled Private Corporations (CCPCs) renumerated by way of either taxable dividends or salaries from their corporations earning active business income, a corporate flow through will generate a significant CDA credit that can be used to pay tax free dividends to the owner manager without personal tax and at the same time reduce corporate tax liabilities.

Sheltering Passive Income

Corporations earning passive income in excess of $50,000 are punitively taxed. These entities can shelter that excess tax by purchasing Flow-through Shares and then distributing the sheltered corporate income, free of personal tax, to the shareholder(s) via the Capital Dividend Account (CDA) generated from the transaction.

For corporations with ongoing high levels of highly taxed passive income there is a CDE (Canadian Development Expense) strategy that is most useful. Click here for a detailed explanation of how and why CDE may be a better choice for your CCPC.

Whether the Corporate Solution is suitable for your private corporation will depend on your corporation’s circumstances (including historical income (active and passive), RTDOH and retained earnings). Your company must also qualify as an Accredited Investor.

Before committing to a transaction, we always arrange a liquidity provider – typically, an institutional investor that wants to own the shares – to purchase the shares from our participant at a predetermined price. The buy and sell take place on the same day and the proceeds of sale are sent back to the participant typically within a few days of closing.

Note: This is NOT an investment; merely a “Bought Deal” transaction, in which you own the shares for no more than a minute. When the transaction closes you are left with tax benefits and the proceeds of sale.