Tax Planning Using Private Corporations

Chart 1
General and Small Business Corporate Income Tax Rates
  2000 2017 2017 (Small Business)
United Kingdom 30.0 19.0 19.0
Canada 42.4 26.7 14.4
Italy 41.3 27.8 27.8
Japan 40.9 30.0 21.4
Germany 52.0 30.2 30.2
France 37.8 34.4 15.0
United States 39.3 38.9 19.8
Chart 2
Total Tax Index, 2016
  Total Tax Index, 2016
Canada 52.4
United Kingdom 64.5
Germany 97.9
United States 100.0
Japan 108.2
Italy 110.5
France 136.6
Chart 3
Time to prepare and pay taxes (hours), 2016
Time to prepare and pay taxes (hours), 2016
United Kingdom 110
Canada 131
France 139
Japan 175
United States 175
Germany 218
Italy 240
Chart 4
Trend in Taxable-Active-Income-to-GDP Ratio, by Type of Business
Canadian Controlled Private Corporations (CCPCs) Public Corporations and Private Corporations other than CCPCs Individuals with Self-employment Income
2002 3.2% 5.5% 3.8%
2003 3.3% 6.1% 3.6%
2004 3.6% 7.1% 3.6%
2005 3.9% 6.9% 3.5%
2006 4.3% 7.3% 3.5%
2007 4.7% 6.8% 3.5%
2008 5.0% 6.7% 3.3%
2009 5.3% 7.2% 3.4%
2010 5.3% 6.7% 3.2%
2011 5.7% 7.1% 3.0%
2012 6.2% 7.1% 3.0%
2013 6.4% 7.1% 2.8%
2014 6.7% 7.1% 2.8%
Chart 5
Combined Federal-Provincial-Territorial Statutory Top Marginal Personal Income Tax and Corporate Income Tax Rates, General and Small Business Rate
Top Combined Federal-Provincial-Territorial Personal Income Tax Rate Combined Federal-Provincial-Territorial General Corporate Income Tax Rate Combined Federal-Provincial-Territorial Small Business Rate
2000 46.0 42.4 20.1
2001 46.0 40.5 19.6
2002 45.6 38.0 19.3
2003 45.6 35.9 19.0
2004 45.6 34.4 18.7
2005 45.6 34.2 18.6
2006 45.6 33.9 18.3
2007 45.5 33.9 18.2
2008 45.4 31.4 15.7
2009 45.4 30.9 15.8
2010 45.3 29.4 15.5
2011 45.3 27.7 15.3
2012 45.9 26.1 15.2
2013 46.9 26.2 15.2
2014 47.1 26.2 15.2
2015 47.5 26.7 15.2
2016 51.6 26.7 14.7
2017 51.6 26.7 14.4
Chart 6
'Non-Eligible' Dividends Reported on T1 Returns, By Age of Filers ($million)
Age 2006 2010 2014
0 0 X X
1 0 X 0
2 0 0 0
3 1 0 0
4 1 0 0
5 1 1 0
6 1 0 0
7 1 0 0
8 1 1 0
9 1 0 0
10 2 1 1
11 1 1 1
12 2 1 1
13 2 1 1
14 3 1 1
15 3 1 1
16 3 1 1
17 4 2 3
18 91 137 158
19 98 162 192
20 99 167 207
21 94 160 210
22 90 153 205
23 86 132 187
24 78 129 182
25 70 124 174
26 76 119 179
27 79 123 193
28 81 134 225
29 92 153 255
30 110 171 300
31 127 193 359
32 146 225 413
33 186 259 458
34 195 299 488
35 231 322 541
36 258 373 583
37 280 392 616
38 293 438 645
39 327 462 685
40 350 517 723
41 376 530 737
42 450 526 766
43 459 539 804
44 503 563 814
45 483 594 822
46 564 662 793
47 507 654 799
48 562 671 822
49 576 659 849
50 535 708 932
51 593 676 914
52 505 722 900
53 485 669 896
54 482 650 924
55 479 689 907
56 514 619 852
57 555 600 848
58 478 573 836
59 498 537 832
60 482 565 788
61 471 549 776
62 422 545 724
63 407 537 676
64 401 513 675
65 319 422 630
66 326 382 566
67 291 342 504
68 247 325 469
69 247 267 387
70 214 266 379
71 226 264 321
72 189 209 282
73 187 165 235
74 180 169 217
75 193 145 180
76 186 151 163
77 159 136 143
78 166 131 144
79 135 147 131
80 113 119 122
81 136 96 120
82 88 102 105
83 75 75 94
84 74 99 83
85 73 78 76
86 45 58 68
87 37 52 50
88 25 42 52
89 23 40 50
90 39 34 42
91 15 26 36
92 10 12 25
93 8 14 15
94 8 7 15
95 6 7 8
96 2 7 8
97 5 2 8
98 4 3 3
99 2 1 3
100 1 2 2
Chart 7
Comparison of After-Tax Passive Investments Returns for an Individual Investing After-Tax Proceeds on $100,000 of Earnings, Directly or Through a Corporation (interest income, 3 per cent return), over a Specified Investment Horizon
Return on personal savings account Return achieved from holding savings in a private corporation
10 Years 6,900 12,551
20 Years 14,825 28,458
30 Years 23,927 48,651
Chart 8
Tax Advantage of Retaining Business Income in a CCPC for Personal Savings Purposes
Year Saving in personal taxable account Saving in TFSA Saving in CCPC
1 46,470 46,470 85,000
2 48,396 49,026 89,377
3 50,376 51,752 94,002
4 52,423 54,659 98,900
5 54,547 57,763 104,094
6 56,758 61,076 109,609
7 59,065 64,615 115,469
8 61,477 68,397 121,703
9 64,004 72,440 128,339
10 66,653 76,764 135,407
11 67,454 81,389 141,508
11 (After Distribution)   86,382
Note: This chart shows the after-tax value of the investment in each over a 10-year investment horizon for an investment held in a Tax-Free Savings Account, a personal taxable account or in a CCPC. The value of the investment held a CCPC at the end of the horizon is shown both as its after-corporate-tax amount, as well as the after-personal-tax amount when then investment is distributed to the individual.