[Saintor]

I saw some old threads but maybe something changed in the last 5-10 years.

Out of my RRSP & TFSA, I have money that I want to do something with (other than buying a Bentley and a Ferrari lol). RRSP and TFSA are all taken of. And also, a corporation (although I work for a different company). I am mid-50s, taxed at the highest bracket, divorced and our children are on their own. I manage all my investments (80% funds / 20% stock) "myself". Projected retirement in 5-10 years.

Some sites say that it is not worth the effort but others like this ONE say the contrary.

What is your take? I'd like to hear particularly from people/accountants with corporate experience. A demonstration with figures would be even better.

 

[james4beach]

Have you asked your CPA for their advice? They will know your situation much better than us randoms.

I would imagine that a lot of it could depend on particular tax situations.

 

[Mechanic]

I wouldn't buy a Bentley and a Ferrari, you can only drive one. And besides, I would get a Porsche instead.

 

[Saintor]

I wouldn't buy a Bentley and a Ferrari, you can only drive one. And besides, I would get a Porsche instead.

Pffff.... Porsche are for poor people who can't afford Bentley and Ferrari.

 

[MarcoE]

What is your take? I'd like to hear particularly from people/accountants with corporate experience. A demonstration with figures would be even better.

I'm not exactly sure what you're asking. But yes, you can invest money inside a corporation, same as you can invest in a personal taxable account. Where is your cash located now? Inside the corporation? And you're asking if you can invest it there?

One thing to keep in mind: When a corporation earns dividends (e.g. from investing in stocks), the dividends are taxed at a high rate from the first dollar (no tiers). Non-eligible dividends are taxed at about 50% if I recall correctly. The corporation can receive a tax refund if you pass the dividends out to you (or another shareholder) using the RDTOH mechanism. Since you're already at the highest tax bracket personally, though, it might not make a difference for you.

 

[Synergy]

As mentioned above, I wouldn't worry about the tax rates if you are already in the highest personal tax bracket. You could structure your investments towards capital gains in order to take advantage of tax free capital dividends. Treat the corporation like an RRSP, plan to draw down the funds when your tax rate is much lower. In the meantime I see no harm in investing funds that are already in there.

Get some tax advice, you may be better off retiring much sooner!

 

[Retiredguy]

(Copy and paste from link below)

Years ago, the use of a Canadian Investment Holding Company was considered an attractive tax planning technique. In the past, the use of a Canadian Investment Holding Company allowed for both the deferral of taxes and the payment of less total tax compared to holding investments personally in a non-registered account. However, tax changes at the federal and provincial levels over the past several years have more than eliminated any of these advantages. This publication outlines the major advantages and disadvantages of using an investment holding company for investments and it identifies the situations where the use of an investment holding company may still be beneficial.

T42001-HoldingCos_E (rbcwealthmanagement.com)

 

[Numbersman61]

(Copy and paste from link below)

Years ago, the use of a Canadian Investment Holding Company was considered an attractive tax planning technique. In the past, the use of a Canadian Investment Holding Company allowed for both the deferral of taxes and the payment of less total tax compared to holding investments personally in a non-registered account. However, tax changes at the federal and provincial levels over the past several years have more than eliminated any of these advantages. This publication outlines the major advantages and disadvantages of using an investment holding company for investments and it identifies the situations where the use of an investment holding company may still be beneficial.

T42001-HoldingCos_E (rbcwealthmanagement.com)

I would caution the use of the document included in the link. It does not have a publication date but the examples shown relate to income in 2005. I believe the publication is likely 15 years old - many tax changes since then.

 

[Retiredguy]

I caution anyone coming to CMF for answers to such questions to begin with!

Here's a more current link / article 2017.

d8e38c08-ba1c-448e-96e8-16caec606042 (rbcwealthmanagement.com)

(Excerpt) "Although there may no longer be a tax benefit to investing through a holding company, the use of an investment holding company may serve various other purposes, such as creditor protection."