Sunday, 2 December 2012

Ontario's New 2% Income Tax Increase

The Ontario government introduced an additional 2% tax on personal taxable incomes over $500,000  (2013  $509,000) rendering such income to a top rate of tax of about 48.%, (2013  49%) while if you earned your income ,be it investment income or business income, in a corporation the combined corporate and personal tax rate will not increase beyond 46%.  This would be specially useful for income earned from investments.  You can achieve this by transferring your invesments into a corporation suitably orgainized to split income between family members. Also, you defer realizing capital gains on the unrealized gain on the investments transferred. In addition to saving 2% (effectively over 3% when you factor in Ontario surtax)  tax you can also, with careful tax planning, optimize income splitting, generate earned income by paying a reasonable salary to shareholders, avoid clawbacks on certain non-refundable tax credits and old age security. Check my website for personal tax rates and combined personal corporate and personal tax rate.


http://www.tavana.ca/taxrate/showtax.asp

Get more tax information and Q&A letters from our website www.tavana.ca

This blog is for general information only and cannot replace professional advice.
The reader is invited to contact the writer to discuss the contents of the newsletter.
Readers are advised to seek professional advice before acting on the material
in this newsletter

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