Financial Statements Basics: Part 5, with Jason Pereira | E087

Notional Accounts.

Today is the 5th part of the continuation of a series that Jason is doing on understanding financial statements. On this episode, Jason will be talking about various accounts such as notional accounts and capital dividend accounts. He will be explaining further about RDTOH, refundable dividend tax on hand and safe income in this series on understanding your Financial Statements. Jason explains what are notional accounts? These are accounts that exist in your financial statements. They have to be tracked by your account separately and reported to CRA. Some of them, not all of them yet, but they are all being reported. 

Episode Highlights:

  • 00:39: First is corporate tax rates, and the second is the concept of integration. Corporate tax rates on the first $500,000 of income. Federally, you will pay 9% as a small business on active business income, that is income earned when operating your business and earning income from business activities, not from investing.

  • 01:10: Different provinces have different amounts. Today, on top of that, anywhere from zero to 4%, depending on what province. One will actually apply that zero percent rate up to 600,000, but for all intensive purposes, the half $1,000,000 mark represents a small business's income. 

  • 01:37: Any income earned beyond that gets taxed at what is known as the general rate and the general rate is 15% federal plus a percentage added provincially. There are no zeros. Clear as low as 8% in Alberta and as high as 16% in PE. The Ontario rate, basically works out to about 12.2% for small business and about 26.5% for any amount over 500,000. 

  • 02:09 Host: For passive business income or investment income. You pay a higher rate, and this is a big misnomer. People seem to think that when you invest within a corporation you can save tax. It's not true for two reasons. First, the investment income tax that's charged by the federal government is 38.7%. And on top of it, provincial rates are somewhere between 8 to 16% and you get some pretty big numbers.

  • 03:40: $500,000 is a business limit or exemption. So, for the first $500,000 you get to pay the lower rate, but if you have more than $50,000 investment income. They start taking back the amount they start, reducing the 500,000 at a rate of $5 for every $1 earned in passive income.

  • 04:01: For example, $100,000 in passive income, the first 50,000 is eliminated. The next 50,000 would result in a reduction of your business limit of by 250,000. Instead of getting $500,000 taxed, at the lower rate you get 250,000 taxed.

  • 04:39: The tax you pay on that at 50% or whatever it is in your province plus the clawback of the exemption of the 500,000 results in you paying a marginal rate of tax corporately of somewhere between depending on the province 70 to 120%.

  • 06:05: The investment income is known as aggregate investment income. It consists of a total of taxable capital gains minus investment losses plus income from properties such as interest, rents, and royalties. Basically, they calculate that total amount and anything beyond 50,000 is what is without reduction applies to. 

  • 06:41: When you pay out the equivalent amount of dollars to yourself personally as a shareholder, then what happens is that basically there is some credits that happen to the court getting back to the corporation potentially and you pay a dividend interest rate of tax, dividend rate of tax. The dividend tax plus the net dollars paid by the corporation is the same thing as if you had earned that investment income personally.

  • 08:14: The first national account is the general rate income pool. You may realize that there are actually 2 different tax rates payable on dividends in Canada.

  • 08:33: There are three depending on where they came from. The third one is that foreign dividends that are not considered eligible for dividend tax credits. So, they are basically taxed as income.

  • 09:58: The general rate income pool is a calculation of the money that you pay tax on or the income that you pay tax on at the general rate. So, anything that wasn't the small business rate is the pool of money that you can distribute as an eligible dividend. 

  • 10:57: The clawback earlier on aggregate investment income is very high tax rate on investment income because the corporation wasn't that bad because what happens is that if your exemption is lowered from 500,000 or small business amount is lowered from 500,000 to something smaller that means you are paying tax at the grip rate. Which means that you qualify for more grip and by the time you pay that all out, it equals the same thing. You are paying a higher amount temporarily, so the deferral you are getting is smaller.

  • 11:27: The next one is the capital dividend account, capital dividend account is the notional account where our monies that were considered nontaxable that flow into a business. 50% of capital gains are taxable. The other 50% is not. That creates a CDA credit and the big one is insurance.

  • 11:53: Any insurance proceeds from the death of an individual above and beyond the adjusted cost basis are considered a game. They flow into the CDA. Why does the CDA matter? Because the CDA is an amount that the individual can draw tax-free from the corporation. 

  • 14:44: Why are we paying refunds to corporations? Because if we don't pay this refund to the corporation, then by the time you add the tax paid corporately to the tax paid personally, it's going to exceed. The tax would have paid if you would have just started personally, so you're not going to no longer be integrated.

  • 16:27: The first type is the eligible RDTOH is an amount equal to the total, it's not equal to the total of the eligible dividends you receive. This is accounting for dividends you received that paid the lower tax rate.

  • 16:44: Non-eligible RDTOH is made up of a couple of things. Non-eligible RDTOH is made up of a percentage of the income you received that was taxable, that was received due to investment purposes, so taxable portion capital gains, non-eligible dividends and the tax and interest. 

  • 19:05: RDTOH allows you to take money out at a tax preference because you've already paid some of the tax and get some tax refund.

  • 20:43: Safe income is the cumulative after-tax profits of your corporation from a tax standpoint, not from an accounting standpoint. The tax law and accounting law and accounting rules don't always match up. There are generally accepted practices that are basically using accounting to record the way your business works.

  • 21:03: There is a difference between what the government considers profit and what your accounting considers profit. So what happens is, there is sometimes a differential to see if the income is the cumulative lifetime gains or lifetime after tax income that you received in your corporation from a tax standpoint minus any dividends paid.

  • 21:19: Why does this number matter? This number matters if you have a corporate structure in place. If you have two corporations, one corporation owning another, and you want to transfer money between these corporations, you can transfer by way of intercorporate dividends.

  • 22:08: If you have $100,000 in corporate dividend, but you only have $80,000 of safe income, there is a $20,000 gap that triggers a capital gain. Because you just distributed more capital out of the business than your businesses made technically from a tax standpoint.

  • 22:32: Safe income is a very important number in knowing how you can move money around your corporate structure. 

3 Key Points:

  1. In 2018, there is a tax change that happened that basically will change your tax rates corporately for passive income. Total passive income or what's known as aggregate investment income exceeds $50,000 and it will increase. You will pay an increase straight up until about $150,000, which will go back to normal.

  2. Why would the government allow you to take money tax for you to be a corporation? Let's look at investment capital gains. Half of it is tax free, there is no real difference there. It's going to result in you paying the same tax that you would otherwise. So, if you take a capital gain and pay 100% of the proceeds out and you end up paying at most 26%, Insurance is different.

  3. The purpose of RDTOH is to extract the corporation of the companies, the government, extracting more income from you corporately now than they would if you paid to yourself personally. If you pay it to yourself personally then they refund you the difference.

Tweetable Quotes:

  • "I hate the idea of one extra dollar resulting in more than a dollar disappearing from your tax return. But this is because of the principle of integration, which is a cornerstone of taxation in Canada. When it comes to corporations, the principle says that whether you're earning a dollar corporately or personally, the total combined tax bill should be the same." - Jason 

  • "The same thing applies when people say, I can pay less tax, I pay myself dividends instead of income, that's not true. Because dividends are after tax, corporate income, so taxes paid means that money gets paid out to the individual and the individual pays less tax on that versus income, where income is paid double to the corporation and fully taxable." – Jason

  • "When it comes to Canadian sourced evidence, there are eligible dividends in non-eligible dividends. Eligible dividends pay a lower tax rate than non-eligible dividends. And the key difference is that non eligible dividends are dividends paid out from a private corporation who paid the small business tax rate." – Jason 

  • "The eligible dividend is basically the dividend paid after tax income that paid the general rate that paid the higher the two. So, if I pay a higher rate corporately, I pay a lower rate personally, if I pay a lower rate corporately, I pay a higher rate personally." – Jason

  • "Insurance is different because the CDA is a mechanism for flowing out the gains tax-free to the shareholders." – Jason

  • "Next we come onto the refundable dividend tax on hand. There are eligible and non-eligible RDTOH so. First, we'll start off with a refundable dividend tax on hand. The way it works is, if I pay out a dividend as a corporate as a business owner and there's money available in this part where there's an amount available, insert RDTOH account, I will receive a refund on some of my corporate taxes." – Jason

  • "I pay out a dividend then I would receive back between 30.67 or 38.33 cents on the dollar in order to basically equalize. This is the non-eligible RDTOH. So if I paid $1000 in dividends, the company received back $306.70. Why? Because when you do the math on what the corporation paid initially in taxes on that income, subtract the refund and then add the personal tax paid. It equals the same thing as if that person had earned that form of income personally." - Jason

  • "If I want to move $100,000 from company A to Company B. Two things happen here. If I have safe income, it transfers over, and the first company gets the RDTOH. The second company pays the equivalent of the RDTOH back. So we are following the credit through, but when you netted out effectively, the total transaction was not zero in terms of tax." - Jason

Resources Mentioned:

Full Transcript:

Producer: Welcome to the The Financial Planning For Canadian Business Owners Podcast. You will hear about  industry insights with award-winning financial planner and entrepreneur, Jason Pereira. Through the  interviews with different experts, with their stories and advice, you will learn how you can navigate the  challenges of being an entrepreneur, plan for success, and make the most of your business and life. And  now your host, Jason Pereira. 

Jason Pereira: Hello and welcome. Welcome to the final episode in the series on understanding your financial  statements. This one's a little bit different in that this is about notional accounts and these are accounts  that don't actually exist on your financial statements. So it's a little bit different than the last few. So  what are notional accounts? Again, these are accounts that don't exist in your financial statements. They  have to be tracked by your accounts separately and reported to CRA some of them, not all of them yet,  but they're all being reported now. And reason for not all of them yet is because some of them are a  little bit new, but we'll get to that later. 

Jason Pereira: So a couple foundational things to tackle first. First is corporate tax rates and the second is the concept  of integration. Corporate tax rates, on the first $500,000 of income, federally you will pay 9% as a small  business on active business income. That is income earned when basically operating your business and  earning income from business activities, not from investing. Different provinces have different amounts that they add on top of that, anywhere from 0 to 4%, depending on what province and some provinces  like Saskatchewan and the Yukon, one province, Saskatchewan will actually apply that 0% rate up to  $600,000. 

Jason Pereira: But for all intents and purposes, the half a million dollar mark represents where a small business' income  is. Anything beyond that, any income earned beyond that gets taxed to what is known as the general  rate. And the general rate is 15% federal plus a percentage added provincially, and no, there's no zeroes  here, as low as 8% in Alberta and as high as 16% in PEI. I'm going to use the Ontario rate, which basically  works out to about 12.2% for small business and about 26.5% for any amount over $500,000, that's just  for illustrative purposes going forward. 

Jason Pereira: Now that's for active business income. For passive business income or investment income you basically  pay a higher rate. And this is a big misnomer. People seem to think that when you invest within a  corporation, you can save tax. Well, that's not true. So it's not true for two reasons. First, the investment  income tax that's charged by the federal government is 38.7%. Add on top of the provincial rates,  somewhere between 8 to 16%, and you get some pretty big numbers. Ontario, again, going back to my  home province as an example, it's about 50.05% roughly. So bottom line is you earn a dollar of interest,  you pay 50 cents on the dollar on that, in tax on that. You earn capital gains, about 26%, and dividends  are somewhere in between. 

Jason Pereira: Now going back to 2018, there is a tax change that happened that basically will change your tax rates  corporately for passive income, should your total passive income, or what's known as aggregate  investment income, exceed $50,000. And it will increase, you'll pay an increase rate up until about  $150,000, in which case you go back to normal. So what is this? What am I talking about? So basically  the way they look at it is the $500,000 is a business limit or exemption. So that first $500,000 you get to  pay the lower rate. But if you earn more than $50,000 in investment income, they start taking back.  They start reducing the 500,000 at a rate of $5 for every $1 earned in passive income. So what does that  mean? If you earn, for example, a $100,000 in passive income, the first $50,000 is basically eliminated  and uncounted. The next 50,000 would result in a reduction of your business limit of by $250,000. So  instead of getting $500,000 taxed at the lower rate, you get $250,000 taxed at the lower rate. 

Jason Pereira: So this is interesting because depending on the province you're in, some provinces decide to follow suit  with this law, others did not. But reality is that if you earn a fully taxable aggregate investment dollar  over 50%, over $50,000, the tax you pay on that at 50% or whatever it is in your province, plus the claw  back of the exemption of the $500,000 results in you paying a marginal rate of tax corporately, of  somewhere between depending on the province, 70 to 120%, it's enormous. Yes. Now why is this? It's  because that extra dollar took back $5 that were being taxed at the lower rate, which are now being  taxed at the higher rate. So that $1 resulted in the 50 cent tax, gone. 

Jason Pereira: And then let's just say it's at a hundred percent. Let's just say it's 20, I'm going to use the 26% example  versus a 12.5 or 12.2. That is a 14%. No, it's a 13% difference, my apologies, times five. So 13 times five,  13 times five is 65 plus 50. You can see how you get over a hundred. So is this fair? Well, frankly it is a  big tax rate, but really it's temporary and I'll get to how it's temporary. But before we get to how it's  temporary, which is the principle of integration, let's talk first and foremost about the income that's  being measured here. So the investment income. It's known as aggregate investment income. So this  consists of taxable capital gains, minus investment losses, plus income from property such as interest  rents and royalties. So basically they calculate that total amount and anything beyond $50,000 is what  that reduction applies to. 

Jason Pereira: So now why did I say this is not as bad as it seems? Well, don't get me wrong, I hate the idea of one  extra dollar resulting in more than a dollar disappearing from your tax return. But this is because of the  principle of integration. This is a cornerstone of taxation in Canada when it comes to corporation. So  how does it work? Basically, the principle says that whether you earn a dollar corporately or personally,  the total combined tax bill should be the same. Now, how does that work? Well, it works because  essentially while you're taxed corporately, when you pay out the equivalent amount of dollars to  yourself personally as a shareholder, then what happens is that it basically, there's some credits that  happen, given back to the corporation potentially, and you pay a dividend interest rate of tax, a dividend  rate of tax. So that dividend tax plus the net dollars paid by the corporation is the same thing as if you  had earned that investment income personally. 

Jason Pereira: The same thing applies when people say, "oh, I can pay less tax by paying myself dividends instead of  income."Well, no, that's not true because dividends are after tax corporate income. So tax was paid, then money gets paid out to the individual and the individual pays less tax on that versus income where  income is paid it's deductible to corporation, fully taxable to individual. So the reality is that there is no  real advantage here. There might be some small differences, low rounding error differences, because it's  hard to line up all the provinces. But in general you are indifferent to earning money in a corporation  than you are person. Once it hits your personal line, that is. So how do they accomplish this? Right?  Because there's a lot of different, I just mentioned two to three different tax rates. So this is where the  notional accounts come in. At least three of the notional accounts, the fourth one is a bit different. 

Jason Pereira: So the first notional account we're going to talk about is the general rate income pool or GRIP. So what  does this do? So you may know, you may realize that there's actually two different tax rates payable on  dividends in Canada, well three really, depending on where they came from. Why I say three really is  that foreign dividends are not considered eligible for dividend tax credits. So essentially they are  basically taxed as income. But when it comes to Canadian source dividends, there's eligible dividends  and noneligible dividend. Eligible dividends pay a lower tax rate than noneligible dividends. And the key  difference is that noneligible dividends are dividends paid out from a private corporation who paid the  small business tax rate, the lower tax rate corporately. So follow the bouncing ball on this, this makes  sense. So if I pay a lower tax rate corporately and then receive that remaining amount as a dividend,  well I'd have to pay more in order for it to equal the same thing as me earning it personally. 

Jason Pereira: The other one, the eligible dividend are dividends that are paid from after tax income that paid the  general rate, that paid the higher of the two. So you fall, right? So if I pay a higher rate corporately, I pay  a lower rate personally. If I pay a lower rate corporately, I pay a higher rate, personally. It all nets out to  the same thing, roughly. So the general rate income pool is basically a calculation of the money that you  pay tax on or the income that you pay tax on at the general rate, so anything that wasn't the small  business rate. And that is the pool of money that you can distribute as an eligible dividend. Eligible  dividends are also earned from Canadian control [inaudible 00:08:32] or from Canadian public  corporations. But the point is GRIP is, hey, I paid the higher rate, I get that this money qualifies for that,  and when I pay that money personally, I will now basically pay the lower eligible dividend rate. 

Jason Pereira: Now, remember when I said that very, very high tax rate on investment income in the corporation  wasn't that bad? Well, the reason why I say it wasn't that bad is because what happens is that if your  exemption is lowered from $500,000 or a small business amount is lowered from $500,000 to  something smaller, well that means you're paying tax at the GRIP rate or the general rate, which means  that you qualify for more GRIP. And by the time you pay that all out, it equals the same thing. So all  that's happening really with that aggregate investment income issue is that you're paying a higher  amount temporarily. So the deferral you're getting is smaller. So that's GRIP. 

Jason Pereira: The next one is probably the easiest to understand, is the capital dividend account. The capital dividend  account is basically the notional account where all monies that were considered non-taxable that flow  into a business, flows into. So what goes in here? Well, 50% of capital gains are taxable, the other 50% is  not. That creates a CDA credit. And the big one is insurance. Any insurance proceeds from the death of  an individual above and beyond the adjusted cost basis are considered a gain. So they flow into the CDA. Now why does the CDA matter? Because the CDA is an amount that the individual can draw tax free  from the corporation. You heard me right. If you have $100,000, $200,000 sitting in a CDA account,  capital dividend account, you can pay a capital dividend out tax free. Now, when I say you can pay  capital dividend account tax free, keep in mind an accountant has to file an election form for this within  a certain amount of time. 

Jason Pereira: They'll charge you anywhere from a couple hundred bucks to a couple thousand dollars. Frankly, this is a  simple form and should not cost more than a couple hundred dollars your accountant can call me to  argue with me all he wants, or she wants. Your accountant call to argue with me all they want, but it's a  simple, simple form. So why would the government allow you to take money tax-free out of a  corporation? Well, I'll leave insurance aside for a second. Let's look at investments, capital gains. Well,  half of it's tax free. So half of it basically is tax free corporately and tax free personally. So there's no real  difference there. The other half, basically, we're going to get to that in a second, but it's going to result  in you paying in the same tax that you would otherwise. So if you take a capital gain and pay 100% of  the proceeds out, then you wind up paying at most 26%, just like you would corporately. 

Jason Pereira: Insurance is different. Insurance is different because, well, the CDA is a mechanism for flowing out the  gains tax free to the shareholders. And this is a gain, right? I mean, if I put more money into an  insurance policy than I needed to basically cover off the basic cost of insurance then it is a gain. And  frankly, this flow through allows for any amount of estate planning that allows for businesses to pass  through generations or farms to pass through generations. So frankly, this is something that is a huge,  valuable planning tool in the insurance space. 

Jason Pereira: So next we come on to the more complicated one, and that's the refundable dividend tax on hand  amount. And here's the thing, there used to be one of these and now there are two. So it's what's  known as eligible and non-eligible RDTOH. So basically what is this? So RDTOH, or first of we'll start off  with refundable dividend tax on hand. So in principle, very simple, the way it works is if I pay out a  dividend as a business owner and there's money available in this, or there's an amount available in this  RDTOH account, I will receive a refund on some of my corporate taxes. 

Jason Pereira: So why are we paying refunds to corporations? Well, simple, because if we don't pay this refund to the  corporation, then by the time you add the tax paid corporately to the tax paid personally, it's going to  exceed the tax you would've paid if you had just earned it personally. So you're no longer going to be  integrated. You're no longer going to be equal. So the purpose of RDTOH, the government's extracting  more income from you corporately now than they would if you paid it to yourself, personally. If you pay  it to yourself personally, then they refund you the difference. So how does this work, or what does this  look like? So let's look at the different types. 

Jason Pereira: So the first type is the eligible RDTOH. How does this work? Basically it is an amount equal to the total of  the eligible dividends you received. So this is accounting for dividends you received that paid the lower  tax rate and noneligible, which is made up of the percentage of the income you received that was taxable that was received due to investment purposes. So taxable portion capital gains, non-eligible  dividends, and interest, of course, and any rents for example. Add those all together and you get your  RDTOH. Now here's how this works. So if I pay out a dividend, then I would receive back between 30.67  or 38.33 cents on the dollar in order to basically equalize. 

Jason Pereira: So what does that look like? I'll use the 38, and this is specifically... I'll use the 30.7, this is specifically on  just general, this is the non-eligible RDTOH. So if I paid a thousand dollars in dividends, the company  received back $306.70. Again, why? Because when you do the math on what the corporation paid  initially in taxes on that income, subtract the refund and then add the personal tax paid, it equals the  same thing as if that person had earned that form of income, personally. Therefore, there is no  advantage. 

Jason Pereira: Again, this integration's all about creating no advantage to having something corporately versus person.  So those are the big notionals. GRIP, CDA, and RDTOH. Gets complicated. But here's the key. You should  understand what these balances look like. Why? Because for stuff, CDA especially, allows you to take  money out of corporation tax free. By all means, go right ahead. GRIP and RDTOH allows you to take  money out at a tax preference because you've already paid some of the tax and get some tax refund, at  least on the RDTOH side. So why would you, or when do you use those? General rule is it depends on  your income, right? If you're going to pay less tax total by taking out a dividend, than you would by  leaving it in the corporation, then you're better off doing that. 

Jason Pereira: Now, when would this happen? Why would this happen? Right? I just said, you should be the same.  Well, you should be the same, but keep in mind, I'll use interest as an example. So let's say you earn  $10,000 in interest. Half of it's gone off the bat, 50%. Now let's say your marginal tax rate's only 33% personally. Well, now you're technically worse off by the difference. So you're better off taking $10,000  out of the company, paying it as a dividend, getting the refund back, and then paying the personal tax.  Because what'll happen is that you'll end up paying less net tax than the 50%. So that's when it makes  sense. It totally makes sense when your income is at a level that the net tax paid in that given year is  basically less than what you would pay for leaving the money in. 

Jason Pereira: So bottom line is there's no deferral benefit if your income's too low. If your income's high enough and  there is a deferral benefit, then you leave it alone and you take it out when your income's lower. So  those are the big ones. The other one, which is newer, which most people are less aware of, is  something called safe income. So safe income is basically the cumulative, after tax profits of your  corporation from a tax standpoint, not from an accounting standpoint. What I mean by that is that tax  law and accounting law and accounting rules don't always match up. There's the generally accepted  practices that basically are used in accounting to record the operations of your business. But sometimes  there's a difference between what the government considers profit and what your accountant considers  profit. So what happens is that there's sometimes a differential. Safe income is the cumulative lifetime  gains or lifetime after tax income that you received in your corporation from a tax standpoint, minus any  dividends paid.

Jason Pereira: Why does this number matter? This number matters if you have a corporate structure in place. If you  have one corporation owning another, and you want to transfer money between these corporations,  well, if you transfer them, you can transfer by way of an inter-corporate dividend. So if I want to move  $100,000 from company A to company B for credit proofing or whatever reason, I can do that so long as  I have safe income of at least $100,000. So two things happen here. A, if I have safe income, it transfers  over and the first company gets the RDTOH the second company pays the equivalent of the RDTOH  back. So what we're doing is we're flowing the credit through. So essentially, but when you net it out  effectively, the total transaction was net zero in terms of tax. 

Jason Pereira: However, if you have, if in this example where you did $100,000 as that inter-corporate dividend, but  you only have $80,000 of safe income, a $20,000 gap, that triggers a capital gain. Why? Because you just  distributed more capital out of the business than your business has made technically, from a tax  standpoint. So that's a gain. So safe income's a very important number in knowing how you can move  money around your corporate structure. Now here's the downside. Safe income's only been something  they've been making us use for probably about 10 years, if that, so there's plenty of companies out  there who've never had this calculated. Companies that have been around for 20, 30, 40 years. So  honestly, I have more than one case right now where the accounts are taking quite a while, rightly so, to  go back over every tax filing they possibly can to calculate the safe income because they do not want to  adversely trigger a capital gain. 

Jason Pereira: So that's the summary. It got a little bit deep. It got a little bit complicated. I know. But those are the  notional accounts that you as a business owner should be aware of or at least have some understanding  of so that you can speak to your accountant knowingly. The general rate income pool, which is the  amount of money that you paid, the after tax amount left over after you paid the general rate, which is  the not small business rate, but the rate above $500,000 first. That is eligible to be paid as eligible  dividends, which will pay a lower tax rate. Combined though, it's the same thing as if you earn that  money personally. The CDA, capital dividend account, whatever is in there can be paid out tax free.  Again, filing has to happen first. Refundable dividend tax on hand and the two different types. This tells  you how much money the company can get back from a dividend paid out. 

Jason Pereira: Again, why are they doing this? In order to make sure that integration holds. That you are not better off  or worse off earning corporately than personally. And safe income, the amount that you can transfer  between corporations. And we did cover the concept of aggregate investment income. So this was a  deep one. You probably want to listen to it more than once. You're probably going to want to look up  some of this stuff, there's some good resources online. Be cautious of any resource that predates, I  believe it was 2018, because these rules all changed a little bit in 2018. 

Jason Pereira: So summing it up in cool's notes one last time, CDA is your best friend, tax free money of Corp. RDTOH,  if you're going to save money or pay less tax by taking the dividend that year versus leaving it in the  Corp, makes sense. GRIP, basically well that's what dictates your ability to take one of those two types of  dividends. Safe income, dictates the ability to transfer money between corporations. Aggregate investment income, basically the total investment income you make in a corporation that can take back  and reduce your eligibility for the small business tax rate. Doesn't mean you shouldn't invest in the  corporation just means you got to be wise about it. And frankly, again, it's just a reduction in the defer. 

Jason Pereira: So like I said, it was deep. You're going to need some help. Understand the basic concepts. Don't be  intimidated. This all becomes second nature over time. If you enjoyed this podcast as always, please  leave review on Apple Podcast, SoundCloud, Stitcher, or Spotify, wherever it is you podcast. And until  next time, take care. 

Producer: This podcast was brought to you by Woodgate Financial, an award-winning financial planning firm,  catering to high net worth individuals, business owners, and their families. To learn more, go to  woodgate.com. You could subscribe to this podcast on Apple Podcast, Stitcher, Google play, and Spotify,  or find more episodes at jasonpereira.ca. You can even ask Siri, Alexa or Google Home to subscribe for  you.