a) The Case for Incorporation
.. Tax Rates
• The top tax rate in Manitoba for 2006 is 46.4%.
• The small business tax rate is 18.1% on the first $400,000 of qualifying income
• 28.3% savings or $113,200 each year can be realized.
.. The corporation can pay for items such as club memberships, life insurance, critical
illness insurance, and other non-deductible expenses with cheaper corporate taxed dollars.
.. Incorporation may provide for some additional income splitting opportunities and
additional health or disability benefits.
b) Factors to Consider
.. Is there a surplus income, not being spent, that can be left in the corporation to attract the lower tax rate?
.. The costs if incorporating, maintaining the records, and filing required legal and tax returns.
.. Additional complexity to lifestyle.
For most, the savings make it worth incorporating.
