As of 2018, dividends paid to family members of the owner of a Canadian private corporation will be taxed at the highest marginal tax rate, which could be as high as 40% in some provinces. As a result, there is no longer a tax benefit from dividend sprinkling. Unless the shareholder receiving the dividend can show specific labour or capital contributions to the business’s operations.
As of 2018, dividends paid to family members of the owner of a Canadian private corporation will be taxed at the highest marginal tax rate, which could be as high as 40% in some provinces. As a result, there is no longer a tax benefit from dividend sprinkling. Unless the shareholder receiving the dividend can show specific labour or capital contributions to the business’s operations.
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