If the Canada Revenue Agency (CRA) comes knocking to ask questions about salary or wages paid to your spouse or kids, you can be sure you’ll be asked to provide a job description, along with a log of specific dates and times the work was performed. This will save them more tax when they contribute to an RRSP and will help them save for the future. In addition to getting a tax deduction for salaries or wages paid, your spouse or kids who receive the compensation will have earned income, which provides RRSP contribution room. Now, here are some things to keep in mind. When you add other tax credits into the picture, such as tuition tax credits, many young people could earn up to about $20,000 in 2021 before paying any taxes. Your family members can earn as much as $13,808 in 2021 (this is the basic personal amount for those in the lowest tax bracket) before having to pay any federal tax. 31 will provide a deduction against your business income in 2021, which will save your family tax as long as that person is in a lower tax bracket than you. Let me start by saying, if you’re a business owner, paying salary or wages to your spouse or kids (or any family member, for that matter) before Dec. Today, I want to talk about the nuances of paying family members salary to save tax – because there’s more to it than meets the eye.
Finally, my kids became old enough that I could start to involve them in my tax planning by paying them salaries from my business, along with salary to my wife, Carolyn. “Dad, since I lack any type of important life experience, I have decided to follow your advice” – said no teenager to me ever. Log In Create Free AccountĪn important lesson I learned earlier in life is that having one child made me a parent.
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