Extract Money Tax Free
There are 3 ways to extract money from your corporation tax free.
- Capital Dividends
- Return of Capital
- Shareholder Loan
1. Capital dividends
If your corporation has a capital gain, only half of its taxable, the other half can be paid to the shareholder tax free
2. Return of capital
When you subscribe for shares of your own corporation, you are paid a proportionate amount of money. Through return of capital, you can receive that money tax free.
3. Shareholder Loan
This is a temporary solution because as a shareholder you have one year to pay back the loaned amount starting from the end of that calendar year. Although the money has to be paid back, a shareholder loan does give a shareholder access to the tax free money in the meantime
If you have any questions about the steps to extracting money from your business tax free call BBS Accounting CPA today!