I understand that for a Canadian citizen living in Canada who works on a contract basis there can be significant advantages to incorporating and running the contracts through the corporation. As I understand it, the income is then taxed at the lower corporate rate going in, and the contracter/owner can then draw a reasonable-but-smaller salary as well as take dividends, and can smooth and stretch lumpy income out over several years. Perhaps I'm wrong here, please correct me if so.
1) Is my understanding of the stated advantages correct?
2) Are there other advantages that I'm missing?
3) Are all of these advantages completely eliminated or negated for US/Canada dual citizens living and working in Canada?
This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.
Moderator: Mark T Serbinski CA CPA
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