Is it time to pay a Dividend?

The good news is that corporate income tax rates are generally on the decline in Canada.

The bad news is that, as a consequence of the decline in corporate income tax rates, personal income taxes on dividends from Canadian corporations will be increasing. Phased-in reductions to the gross-up and dividend tax credit mechanisms will effectively raise personal income taxes on both eligible and ineligible dividends received from Canadian corporations.

As a result of the pending increases to the top personal tax rates on dividends and in particular, eligible dividends, Canadian corporations that may distribute dividends in the next few years should consider paying such dividends before the end of 2009. In the case of eligible dividends, there will still be an opportunity for significant tax savings on dividends paid in 2010 . . . Read the bulletin . . .

GST Storm hits Bay Street

The Federal Court of Appeal recently upheld a decision of the Tax Court of Canada in the Queen v The Canadian Medical Protective Association (“CMPA” ) that “discretionary” investment management services are “financial services” and therefore exempt from GST. Accordingly, it was held that the CMPA was entitled to its claim for a refund of all GST paid on amounts invoiced by its investment managers.  Read the bulletin . . .

    

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