24
lacible | Août 2017
FEATURE ARTICLE
2. Capital gains only (annual taxation)
Table 2 shows that if the money accumulates for
20 years in the corporation, the net after-tax value
will be $11,325.
The results show that it is very beneficial to pay
yourself a dividend to contribute to an RESP. As
for a TFSA or RRSP, we are indifferent. It isn't
surprising that the TFSA and RRSP results are the
same, since an RRSP with equal rates of deduction
and taxation on withdrawal will generate the same
result as a TFSA. It is a disadvantage to withdraw
money to pay a debt (at a rate of 5%) or make a
non-registered investment.
3. Capital gains only (buy and hold)
Table 3 shows that if the money accumulates for
20 years in the corporation, the net after-tax value
will be $12,910.
In this situation, it is always more beneficial to leave
the money in the corporation, except to contribute
to an RESP.
Corporation RESP TFSA Debt RRSP Personal
Opening balance $5,000 $4,095 $3,150 $3,150 $5,995 $3,150
Duration
20 30.00% 47.46%
Rate of return
6.60%
Tax rate
50.17% 47.46%
Net rate 4.94% 6.60% 6.60%
5.00%
6.60% 5.03%
Balance $13,127
RDTOH $1,664
Total $14,790
CDA $5,424
Dividend rate
37.00% 10.00% 47.46%
Dividend tax ($3,466) Projected
net
Projected
net
Projected
net
Projected
net
Projected
net
Net
$11,325 $13,547 $11,310 $8,358 $11,310 $8,412
Table 2 – Capital gains only (annual taxation)
Corporation RESP TFSA Debt RRSP Personal
Opening balance $5,000 $4,095 $3,150 $3,150 $5,995 $3,150
Duration
20 30.00% 47.46%
Rate of return
6.60%
Tax rate
50.17% 47.46%
Net rate 6.60% 6.60% 6.60%
5.00%
6.60% 6.60%
Balance $17,952
RDTOH ($1,263)
Total $16,689
CDA $6,476
Dividend rate
37.00% 10.00% 47.46%
Dividend tax ($3,779) Projected
net
Projected
net
Projected
net
Projected
net
Projected
net
Net
$12,910 $13,547 $11,310 $8,358 $11,310 $9,135
Table 3 – Capital gains only (buy and hold)
