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.

Get more tax information and Q&A letters from our website

This blog is for general information only and cannot replace professional advice.
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Readers are advised to seek professional advice before acting on the material
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