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Yes, you're taxed on any personal salary you draw from the corporation, which is why you try and take advantage of as many legal (and often lesser-known) tax write-offs as humanly possible.
For example, under Canadian tax laws, every corporation is permitted one annual "corporate retreat" as a write-off as well. Meaning you can take a 'vacation trip' and chalk it up to corporate expense. If you spend a few $k on the trip, it helps offset personal income tax.
There's also shareholder loans which can serve as a good tax shelter.
Having a father-in-law who's also a very knowledgeable chartered accountant is handy, too (hehe).
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