Vancouver, BC -- (ReleaseWire) -- 06/29/2019 --Like many Chartered Professional Accountants in Vancouver, the team at Mew and Company were surprised in the summer of 2017 by the announcement of new tax rules and restrictions planned by the Minister of Finance. Ottawa seemed to feel that existing rules were too generous for CCPC shareholders and intended to scale the perks down considerably. For many, this has meant re-examining strategies around corporate tax planning. For more, go to: https://www.mewco.ca/blog/time-to-reconsider-remuneration-method-for-ccpc-shareholders/

Almost two years after the announcement, and with much drama in the interim, the new tax rules are finally in place. The corporate tax rate for active business income qualifying for the Small Business Deduction ("SBD") is 11%. New tax rules to grind down the SBD when investment income exceeds $50K are also in effect. Finally, the personal tax rate applied to ineligible dividends has increased quietly, but substantially over the past six years.

These changes make it more important than ever for people to revisit corporate tax planning, even though the personal tax season concluded not too long ago.

For many years, the favoured remuneration method for CCPC shareholders was taking out dividends, as opposed to employment income. With CPP premiums high, paying for both the employee and the employer portions, and ineligible dividends getting a better tax rate than employment income, these dividends made sense.

However, personal tax rates on ineligible dividends have been increasing. Along with new TOSI rules that prevent income splitting, personal tax bills have been escalating and receiving ineligible dividends may not be the best option. With the employment income option, CPP premiums are expected to increase substantially in the near future. Whether that future value will equal future benefit is another debate entirely.

To learn more about corporate tax planning, reach out to the Chartered Professional Accountants at Mew and Company in Vancouver. Contact 604-688-9198 to ask questions or schedule a consultation.

About Mew + Company
Mew + Company, Vancouver, is an ideal solution to the taxation problem. With a simple philosophy of building long-lasting customer relationships, the company has been serving corporate clients in a variety of fields—including restaurants, real estate, retail, and the service industry. Investing in their specialist services will undoubtedly be fruitful for all kinds of clients.

To learn more about Mew + Company and discuss their services, log on to https://mewco.ca/

Lilly Woo, CPA, CA, CFE, CFP
Mew + Company Chartered Professional Accountants
604 688 9198
Company Website: https://mewco.ca/