Risk & Business Magazine Benson Kearley IFG Fall 2015 | Page 27

to the 20% to 25% range depending on the
provincial jurisdiction. This compares to
the personal maximum marginal tax rate
of approximately 45%. If a Corporation
meets the definition of a Qualified
Small Business Corporation then capital
gains of up to $750,000 will be exempt
from tax upon disposition of shares.
Cons
Corporations are subject to much
more legislation – both federal and
provincial, compared to other business
structures. This can result in the
expenditure of time and money.
Corporate losses cannot be passed on
to be used by shareholders personally.
Which Structure is ‘Best?’
This is a question that can only be
properly answered after reviewing and
analyzing a particular situation, but a
few rules of thumb can be offered:
Michelle Cowell is a Senior Investment
Advisor with HollisWealth Insurance
Agency Ltd.

Proprietorship

This typically makes sense when a
person is starting out in business, does
not need a lot of capital and wants
to keep establishment costs low. As
well, any expected losses while the
company becomes established can
be assumed by the owner/manager
personally for tax purposes.

Partnership

If two or several like-minded people
have a business goal and can agree on
the relative contributions, this may be
appropriate. Any expected losses of the
partnership can be assumed personally
by the Partners. Unlimited liability
will exist but in many jurisdictions
the ‘Limited Liability Partnership’
for professionals, such as lawyers and
doctors, will serve to reduce this.

Corporations

Generally when a company has become
established and expects to be able to
generate profits and secure financing,
the tax advantages and limited liability
of Incorporation are very attractive.

Important Information
Information contained herein is
provided for information purposes
only and should not be relied upon
exclusively as estate, tax planning
or investment advice, nor should it
be construed as being specific to an
individual’s investment objectives,
financial situation or particular
needs. You should a