Leaving Corporate Savings in Your Company: A Guide - MoneySense

"Maximize your corporate savings to minimize taxes. Learn how to invest and withdraw strategically to save over 40% in taxes."

Hey Chris, let's talk about your plan to withdraw money from your corporate bank account. First off, what's your goal here? If you're looking to invest the money, you might want to consider opening a corporate investment account and transferring the funds into it. This way, the money stays within the corporation and won't be considered a taxable withdrawal. And trust me, the tax savings from leaving corporate savings in the corporation can be more than 40%. That's a pretty compelling reason to keep your business savings within the company.

But before you make any moves, you should know that recent corporate tax changes could impact the taxation of your business income after you invest the funds. For example, if a Canadian-controlled private corporation earns more than $50,000 of adjusted aggregate investment income, its federal small-business limit of $500,000 will be reduced. And don't forget about the provincial or territorial taxes payable as well.

If you have room in your RRSP, you could make a withdrawal from your corporation and offset the tax payable on that withdrawal by making an RRSP contribution. And if you have room in your TFSA, it might be advantageous to make withdrawals from your corporation to fund your TFSA. The upfront tax on your corporate withdrawals can be offset over time by the tax-free growth in your TFSA.

You should also check if your corporation has a capital dividend account (CDA) balance. This may not apply to you if your savings have come from business income alone, as a CDA balance can arise from capital gains realized by a corporation. And don't forget to look into your corporation's refundable dividend tax on hand (RDTOH) balance. This accumulates when a corporation earns investment income, and some of it is refundable in the future if taxable dividends are paid out to a shareholder.

So, Chris, before you make any decisions about withdrawing money from your corporate bank account, make sure to consider all the potential tax implications and investment opportunities. It's a complex landscape out there, but with the right strategy, you can make the most of your corporate savings.

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