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I own a corporation which I am the sole employee. The problem is that my company doesn't make steady income. One month it can make a lot of income, and then it can make nothing for the next couple of months. How would I pay myself? Should I give myself a $1000 salary and then just pay myself bonuses?
Also I played with the CRA payroll calculator, how come the net amount is higher with bonuses?
For example
$1000 salary + $5000 bonus:
Salary or wages for the pay period 1,000.00
Total EI insurable earnings for the pay period 6,000.00
Taxable income 1,000.00
Cash income for the pay period 1,000.00
Federal tax deductions 75.10
Provincial tax deductions 47.73
Requested additional tax deduction 0.00
Total tax on income 122.83
CPP deductions 42.84
EI deductions 17.30
Amounts deducted at source 0.00
Total deductions on income 182.97
Total current bonus payable 5,000.00
Federal tax deductions on bonus 699.89
Provincial tax deductions on bonus 282.28
Total tax deductions on bonus 982.17
CPP deductions on bonus 247.50
EI deductions on bonus 86.50
RRSP, etc., deducted from current bonus 0.00
Total deductions on bonus 1,316.17
Total deductions on salary income and bonus 1,499.14
Net amount 4,500.86
$6000 salary:
Salary or wages for the pay period 6,000.00
Total EI insurable earnings for the pay period 6,000.00
Taxable income 6,000.00
Cash income for the pay period 6,000.00
Federal tax deductions 1,274.29
Provincial tax deductions 766.30
Requested additional tax deduction 0.00
Total tax on income 2,040.59
CPP deductions 290.34
EI deductions 103.80
Amounts deducted at source 0.00
Total deductions on income 2,434.73
Net amount 3,565.27
Any advice, tips, strategies is appreciated! Thanks!
Maybe this thread belongs in taxation, didn't notice that subforum existed.
Also I played with the CRA payroll calculator, how come the net amount is higher with bonuses?
For example
$1000 salary + $5000 bonus:
Salary or wages for the pay period 1,000.00
Total EI insurable earnings for the pay period 6,000.00
Taxable income 1,000.00
Cash income for the pay period 1,000.00
Federal tax deductions 75.10
Provincial tax deductions 47.73
Requested additional tax deduction 0.00
Total tax on income 122.83
CPP deductions 42.84
EI deductions 17.30
Amounts deducted at source 0.00
Total deductions on income 182.97
Total current bonus payable 5,000.00
Federal tax deductions on bonus 699.89
Provincial tax deductions on bonus 282.28
Total tax deductions on bonus 982.17
CPP deductions on bonus 247.50
EI deductions on bonus 86.50
RRSP, etc., deducted from current bonus 0.00
Total deductions on bonus 1,316.17
Total deductions on salary income and bonus 1,499.14
Net amount 4,500.86
$6000 salary:
Salary or wages for the pay period 6,000.00
Total EI insurable earnings for the pay period 6,000.00
Taxable income 6,000.00
Cash income for the pay period 6,000.00
Federal tax deductions 1,274.29
Provincial tax deductions 766.30
Requested additional tax deduction 0.00
Total tax on income 2,040.59
CPP deductions 290.34
EI deductions 103.80
Amounts deducted at source 0.00
Total deductions on income 2,434.73
Net amount 3,565.27
Any advice, tips, strategies is appreciated! Thanks!
Maybe this thread belongs in taxation, didn't notice that subforum existed.