Happy Holidays and Great beginning for 2017!
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Happy Holidays and Great beginning for 2017!

From your friends at

M.I.A.G.E. Business Solutions Inc.

Your Business and Tax Advisors!
The Holiday Season is a perfect time to reflect on our blessings and seek out ways to make life better for people around us!
Happiness comes when you believe in what you are doing, know what you are doing and love what you are doing. May this kind of happiness surround you all year long!
Here are some tax tips for starting your new year on the right track!

Year-end Tax Planning

  • Pay yourself and family members: reasonable salary can be paid to your family members. This is especially beneficial if family members have little or no other sources of income. If they are shareholders of the corporation, dividends can be used to distribute money from the business to them. Be cautious how to distribute the dividends between family members, as some punitive tax rules may apply. Therefore, you need to consult your tax advisers.
  • Optimize your salary versus dividend mix: it is common for owner-managers of CCPCs to pay themselves a combination of both salary and dividends. Also, where profits are left in the business (to be distributed at a future date as a dividend), the additional personal tax on the dividend will be deferred.
  • Repay outstanding shareholder’s loans: To help finance the start-up or growth of your business, you may have loaned funds to your company in the form of a shareholder’s loan. Now that your corporation is profitable, it may be a good time to consider having the company repay all or a portion of this loan. Any amount that you receive in settlement of your shareholder loan will be a tax-free distribution, similar to a return of capital. You could also consider having your company start paying you interest on your shareholder loan (this interest will be deductible in the corporation but it will be considered as taxable investment income in your hand personally)
  • Pay a capital dividend: Capital dividend account (CDA) is a notional balance that most commonly represents the non-taxable (currently 50%) portion of any capital gains (or similar receipts) that a private corporation has realized on the disposition of capital assets and of eligible capital property. A positive balance in a corporation’s CDA can be distributed to Canadian resident shareholders as a tax-free dividend, ensuring that the non taxable portion of the company’s capital gains (and similar receipts) do not subsequently become taxable in the hands of the shareholder. 
  • Consider the use of a holding company: the creation of a holding company could be a useful way to shift money out of your operating company and, in doing so, defer the realization of personal tax (payable on dividends subsequently paid to you) to a later time. A holding company can also be beneficial for the purposes of securitizing the corporation’s retained earnings, income splitting, and purifying your operating company to help ensure future access to the capital gains exemption by non-corporate shareholders.

Other tax facts for 2017


There have been some changes in the taxation of small businesses since the last federal budget (March 22, 2016) and the last provincial budget (March 17, 2016). Small businesses in Quebec benefit from a tax reduction on the first $ 500,000 of taxable income from an active business. This tax reduction, called the small business deduction, had the effect of reducing the federal and Quebec tax rates. So, in combination, a tax reduction to 18.5% (10.5% + 8.0%) for 2017.

Canada's Budget - March 22, 2016 - Effective January 1, 2017, the federal tax rate for the first $ 500,000 of taxable income is 10.5%.

The Budget of Québec - March 17, 2016 - As of January 1, 2017, the provincial tax rate applicable to the first $ 500,000 of taxable income is only 8% if the sum of the hours worked by the employees exceeds 5,500 hours, Equivalent to just over 3 full-time employees.

Small businesses in Quebec will not benefit from the small business deduction if the sum of hours worked by employees is less than 5,500 hours. Indeed, they will see their Quebec tax rate rise from 8 to 11.8%, an increase of 3.8% on the first $ 500,000 of taxable income. By the combined effect, new tax measures will see its tax rate rise from 18.5% to possibly 22.3% from 1 January 2017. (10.5% + 11.8%).


On October 25, 2016, the Minister of Finance of Québec announced the elimination of the health contribution as of 2017. Consequently, starting January 1, 2017, you will no longer be required to withhold the health contribution on the remuneration you pay to an employee or a beneficiary.


Effective January 1, 2017, the rate applicable to remuneration subject to the contribution related to labour standards (formerly the “contribution to the financing of the CNT”) is reduced from 0.08% to 0.07%.

Also, for 2017, the portion of the remuneration in excess of $72,500 (instead of $71,500) is not subject to the contribution related to labour standards. 

Copyright © *2016* *MIAGE Business Solutions Inc.*, All rights reserved.

Our mailing address is:

6600 route Transcanada, suite 750, Pointe-Claire, Qc, H9R 4S2


Mrs Mahtab Saghafi, Senior Finance and Tax Advisor
Tel: 514.426.7200

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MIAGE BUSINESS SOLUTIONS INC · 6600 Transcanada Highway, Suite 750 · Pointe-Claire, Qc H9R 4S2 · Canada

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