From smallbizadvisor:

Shortly after the election was called the Canadian Federation of Independent Business (CFIB) asked the federal party leaders to provide their ideas on how they would help small businesses if elected.

…

As a strictly non-partisan organization, CFIB has highlighted elements of the platforms to help business owners make their own decisions:

Commitments for Small Business (in alphabetical order by party):

• Bloc – a tax credit for small firms hiring youth
• Conservative – an EI hiring tax credit for small firms
• Green – cutting payroll taxes by one-third
• Liberal – an EI hiring credit for youth and the amalgamation of programs for entrepreneurs
• NDP – a cut to the small business corporate tax rate to 9% and hiring credit

Ideas to Small Business the CFIB does not support (in alphabetical order by party):

• Bloc – an increase in CPP premiums
• Conservative – no plan on unfunded public sector pensions estimated at $200 billion
• Green – a hike in CPP maximum pensionable earnings
• Liberal – an increase in CPP payroll taxes and corporate tax hike
• NDP – a massive increase in payroll taxes and expansion of EI benefits

You can read the full article here. Find out more about the Canadian Federation of Independent Business on their website.

**REMINDER: Monday is Election Day**

Don’t forget to vote!

Photo Credit: “don’t be late” by haven’t the slightest on Flickr

Business owners tend to pay themselves enough each year to ensure they can maximize their RRSP contributions. Yet given the tax deferral opportunities available to small businesses, Jamie Golombek concludes that leaving funds in the company may make more sense than taking a salary.

If you’re an incorporated small business owner, chances are you’ve probably been advised at one time or another to pay yourself at least enough salary from your corporation to allow you to contribute the maximum amount to an RRSP. This is because the ability to contribute to an RRSP is dependent on receiving “earned income” in the prior year. Earned income includes salary and bonuses but does not include dividends. Subject to an annual cap, the annual RRSP contribution limit is calculated as 18 per cent of the prior year’s earned income. For example, in 2010, you would have to receive a salary of at least $124,722 to be able to contribute the maximum amount to an RRSP ($22,450) for 2011.

There are potentially two flaws with this reasoning, at least for Canadian-controlled private corporations (CCPC) with taxable income subject to the preferred corporate small business tax rate. First, if you need the cash, depending on your province of residence, you may actually pay more tax on the funds withdrawn as a salary than if the same funds were taxed to the corporation and then withdrawn as dividends. Second, if you don’t need the cash, you give up a significant tax deferral by withdrawing the funds as a salary to be taxed immediately rather than leaving the cash in the corporation to be taxed at a much lower small business corporate tax rate.

These two points are based on what is commonly known as the “theory of integration.”

You can read the rest of Jamie’s article here.