In light of the proposed tax changes which will affect most dentists at some point or another, we encourage members to speak to their advisors. We have prepared a list of questions which may be helpful.

General Questions:

  1. How much higher will my family’s taxes be after these changes take effect, assuming we continue to take the same level of income?
  2. When do these changes take effect?

Tax Planning Questions:

  1. Should we pay much higher dividends to other shareholders such as my spouse, parents and adult children prior to the end of 2017 given amounts will be subject to reasonableness tests beginning in 2018? If so, how do I determine the optimal/maximum amount of dividends to pay to each family member this year?
  2. Should we crystallize the capital gains exemption (CGE) for shareholders who may not be able to access the exemption in the future?
    1. If so, what are the deadlines to do so?
    2. Will crystallization trigger a tax bill?
  3. Do we need to purify the corporation prior to crystallization?
    1. If so, what are the deadlines to do so?
    2. Will purification trigger a tax bill?
  4. After the family member crystallizes his/her CGE, should he/she remain as an equity shareholder of the corporation?
  5. What happens to shares owned by minor children? Can they also crystallize? Can they still claim the CGE?
  6. What happens to family trusts that own shares? Can a family trust crystallize its share? Can it still claim the CGE?
  7. Are there any benefits to incorporating now?
  8. Are there any benefits of a hygiene service/technical service corporation?
  9. Should I or my family members change our remuneration (i.e. salary vs dividends)?
  10. Are there any other strategies we can take advantage of such as life insurance or individual pension plans/personal pension plans (IPP’s/ PPP’s) to get cash out of the corporation?
  11. Should I sell my practice before December 31, 2018?
  12. Do I need to change any of my wills or estate plans?

Corporate investment related Questions:

  1. Do I have a Capital Dividend Account (CDA)?
    1. Should we file an election to pay out any balance in this account? Should this be done before the end of 2017?
    2. If so, please obtain the balance in this account from the CRA (as overpayments from the CDA are heavily penalized).
  2. Do I need to change the composition of my corporate held investments?
  3. Should I focus on investments with capital appreciation? Dividends? Interest? Rent?
  4. My corporation has excess cash, is there anything I can invest in which won’t affect my CGE?