COMMERCE 4SC3 Lecture Notes - Lecture 4: Dividend Tax, De Facto, Passive Income
6 Feb 2019
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Sbd big deal because clients hate paying tax (would rather pay 14% over 27. 5%). Cra has ways to prevent companies from getting this and one of those ways is through association which means companies have to share the sbd. They"re not associated unless there"s cross-ownership of 25%. May want to have separate companies to reduce legal liability; if one store gets sued, the other one doesn"t get pulled down with it. If both companies are 500k or under abi, each will get a small business deduction. Makes them more marketable to sell (i. e. if 1 franchise costs k, it"s cheaper to buy separate rather than together when it"ll cost million: cra wouldn"t question it if the people aren"t related. However, if the people are related, they"ll try to see if there"s association in fact". They"ll try to show that one spouse has influence over the other spouse"s company operations and thus there"s association.
