Investment & Tax Advisory
Guidance on the tax treatment of your investment accounts: RRSP, TFSA and FHSA room, non-registered accounts, and how interest, dividends and capital gains are taxed.
Business owners face a question employees never do: whether to invest personally or inside the corporation. The answer changes the tax outcome significantly. Investment income earned inside a Canadian-controlled private corporation is taxed at a high rate initially, with part of it refundable when dividends are paid out. On top of that, passive investment income above fifty thousand dollars a year begins grinding down the small business deduction on your active business income, which can quietly raise the tax rate on the operating side of your business.
On the personal side, the ordering matters. RRSP contributions reduce taxable income now and are best used in high income years, while a TFSA gives tax free growth with no deduction and suits money you may need sooner. The FHSA adds a deduction and tax-free withdrawal for a qualifying first home purchase. Which account to fund first depends on your income this year, what you expect it to be later, and when you will need the money.
In non-registered accounts, each type of income is taxed differently. Interest is fully taxable, eligible Canadian dividends receive the dividend tax credit, and only part of a capital gain is included in income. Accurate adjusted cost base records, the timing of dispositions, the superficial loss rule, and foreign property reporting on Form T1135 all affect what you report. We review the tax side of your portfolio and work alongside whoever manages it. We do not sell investment products, so the advice carries no commission.
Holding company and structure questions
Questions about holding companies, operating company arrangements and multi-year planning are covered under Complex Tax Planning.
What's Included
- Review of personal and corporate investment accounts and how each is taxed
- RRSP, TFSA, and FHSA contribution room planning
- Passive income review and its effect on your small business deduction
- Capital gains, dividend, and interest income tax planning across accounts
- Coordination with your investment advisor so the tax and portfolio sides agree
FAQ
Should I invest inside my corporation or personally?
It depends on whether you need the money personally now and on how much passive income the corporation already earns. Investing corporately defers personal tax on the money used to invest, but corporate investment income is taxed at a high rate and can reduce your small business deduction. We model both against your numbers.
How are different types of investment income taxed?
In a non-registered account, interest is fully taxable, eligible Canadian dividends are grossed up and receive the dividend tax credit, and only part of a capital gain is included in income. Income earned inside an RRSP, TFSA or FHSA is not taxed while it stays in the account, and withdrawals are treated according to the rules for each account.
Do you sell investments or manage portfolios?
No. We are accountants, not investment dealers. We advise on the tax side and work alongside whoever manages your portfolio. Because we earn no commission on products, the advice is not influenced by what is being recommended to you.
Need help with Investment & Tax Advisory?
Tell A4SB about your accounting needs and we can discuss the support that may be relevant to your situation.