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TAX BULLETIN

  • 2016 Automobile Deduction Limits and Expense Benefit Rates for Business

  • Interest rates for the first calendar quarter

  • EI premium rates and maximums

  • Rates, Thresholds and Amounts Related to Source Deductions and Contributions for 2016

  • Salary vs Dividend:

    Income Tax Bracket       $ 1 Salary vs Dividend 2
    Salary Dividend Advant. Div.
    Company Shareholder Company Shareholder
    Inc  Bef Sal Sal Ben 3 Sal Inc Tx 1 Ben 3 Net Inc Bef Sal Inc Tx Div Div Inc Tx 1 Net
    11 327 100.00 -90.41 -9.59% 90.41 -12.53% -5.87% 73.77 100.00 -18.5% -81.50 81.50 -3.92% 78.31 4.54
    14 281 100.00 -90.41 -9.59% 90.41 -28.53% -5.87% 59.31 100.00 -18.5% -81.50 81.50 -14.49% 69.69 10.38
    41 935 100.00 -90.41 -9.59% 90.41 -32.53% -5.87% 55.69 100.00 -18.5% -81.50 81.50 -19.21% 65.84 10.15
    44 701 100.00 -90.41 -9.59% 90.41 -38.37% -5.87% 50.41 100.00 -18.5% -81.50 81.50 -26.10% 60.23 9.82
    83 865 100.00 -97.30 -2.70% 97.30 -42.37%   56.07 100.00 -18.5% -81.50 81.50 -30.82% 56.38 0.31
    89 401 100.00 -97.30 -2.70% 97.30 -45.71%   52.82 100.00 -18.5% -81.50 81.50 -34.76% 53.17 0.35
    102 040 100.00 -97.30 -2.70% 97.30 -47.46%   51.12 100.00 -18.5% -81.50 81.50 -36.83% 51.48 0.36
    138 586 100.00 -97.30 -2.70% 97.30 -49.97%   48.68 100.00 -18.5% -81.50 81.50 -39.78% 49.08 0.40

1  Extracts from CCH Tax Reference Booklet 2015-2016.

2 Taking into account the company income tax rate of 18.5% in 2016 and the cost of salary benefits 3 , assuming also that $100 before tax is available in the company for distribution to its shareholders owning 40% or more of shares ,  the dividend  is more beneficial. Note also that the advantage of the dividend would be higher for a shareholder owning less than 40% of shares due to the fact that he must contribute to EI.

3 The cost of salary benefits of 5.5873% for the employee and 9.592% for the employer  in 2015 details as follows: QPP 5.325% for the employee and 5.325% for the employer  up to $54 900, QPIP 0.548% for the employee and 0.767% for the employer up to $71 500, QHIP 2.7% for the employer & CNT for the employer up to $71 500 but not taking into account EI of 1.88% for the employee and 2.6% for the employer.