Should I Invest Inside My Corporation? Factors to Consider

💰Retaining capital within the corporation allows for potential growth as you have more capital to invest.

📈If you're investing for long-term goals or retirement planning, using personal investment avenues like RRSP and TFSA can be more advantageous.

🏢Investing inside the corporation is beneficial for short-term cash needs or excess funds to keep liquidity.

⚖️Consider the legal risks associated with holding investments within the corporation, especially if you have potential liabilities.

💼Watch out for the volume of investment income produced within the corporation, as it may affect the small business deduction.

What factors should I consider when deciding whether to invest inside my corporation?

—Some key factors to consider include the amount of capital you retain, the tax rates on investment income, the purpose of the investment, the legal risks, and the volume of investment income you produce within the corporation.

Is it better to invest inside my corporation or use personal investment avenues?

—It depends on your specific situation and goals. Retaining capital within the corporation allows for potential growth, while personal investment avenues like RRSP and TFSA can offer advantages for long-term goals or retirement planning.

When should I consider investing inside my corporation?

—Investing inside the corporation is beneficial for short-term cash needs or excess funds to maintain liquidity. It can also be considered when you have legal protection or want to separate business and personal investments.

What are the risks of holding investments within the corporation?

—Legal risks should be considered, especially if you have potential liabilities. Holding investments within the corporation may expose them to legal claims. It's important to consult with a professional to understand the implications.

How does the volume of investment income affect taxation within the corporation?

—The volume of investment income produced within the corporation may impact the small business deduction. Once the passive income exceeds certain thresholds, the deduction may be reduced or eliminated. It's crucial to monitor and plan accordingly.

00:00This video discusses the factors to consider when deciding whether to invest inside your corporation.

02:10The amount of capital you retain is an important factor. Retaining more capital allows for potential growth.

04:10Tax rates on investment income vary between personal and corporate investments. Personal investments may have lower tax rates in some cases.

05:40The purpose of the investment can influence the decision. Investing inside the corporation is beneficial for short-term cash needs or excess funds.

07:00Legal risks should be considered when holding investments within the corporation, especially if there are potential liabilities.

08:40The volume of investment income produced within the corporation may impact the small business deduction, so it's important to watch for thresholds.