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