Jonathan Sears,

 CPA, CA, BACS

Partner, Sears Chartered Accountants

11 years experience as a licenced Chartered Accountant.

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Transcript:

The next reason I consider incorporating is tax deferral. Generally people who are making large income about let’s say $150,000 dollars or more are looking at a marginal tax rate of 40%. 40% is quite a lot of tax. If it is within the incorporation that this money is being earned it comes down to
15.5% now. So basically you have the difference between 40% and 15.5% which would be 24.5% and that allows you to have a tax deferral until you take that money out of the corporation.

What are the advantages of having a tax deferral? There are 2 things that you can basically do with that money. One, you can grow your business by purchasing capital assets, hiring more people and any other way you think you can grow your business by using that money. The second way if you don’t need that money at all, you can actually invest that money and you can earn investment income and basically you get a snowball effect by having that money within the incorporation because you are starting off with more money that you would have personally.

So remember, for an accountant you can count on, call this CA today.