ADMN 4710H Chapter Notes - Chapter 11: Sole Proprietorship, Dividend Tax, Property Income
30 Mar 2020
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Primary types of income for tax purposes for individuals/corporations. What is a corporation: an artificial person, can get into legal agreements with other persons/entities, can own properties (ex. Buildings, equipment, goodwill, patents: can have creditors, suppliers, customers, employees, contractors. Separate entity from its shareholders, properties owned by corporation is not owned by shareholder: can change ownership (sell shares) Income flows to corporation and then to shareholders: ownership is confirmed by the shares of corporation held by shareholders, corporation pays dividends to shareholders from after tax profit. Why an individual wants to incorporate a sole proprietorship business: advantages: Financing (raise capital), looks professional, limited liability, long life: tax deferral (15% - 27%, cash flow for reinvestments (lower than t1 tax, employment benefits disability insurance, registered pension plans, capital gain deduction (when individual sells the shares) Lives forever (shareholders can be changed: disadvantages:
