Dividends Don't Divide
If you are among the fortunate who hold a basket of well-diversified dividend-yielding shares, you will check out the dividend yield, the ex-dividend date and the dividend payment date. A bank stock will vie with other banks in order to raise dividends as permissible. A health stock like Moderna is re-investing its earnings, focusing on R&D and would like the investor to tag along and ride out the pandemic.
If you are a shareholder-business owner, you could take a salary if you are not investing your hard-earned savings and time into your business. Or else, you do have the option of giving yourself a T5 and issuing dividends at some point during the year. The difference between a pay cheque and dividends being you are deferring tax. For what you don’t pay upfront, you do pay when you file your tax return.
Therefore, while on the one hand you garner dividend tax credits or pay dividend withholding tax, on the other, you defer-defer-defer. And hopefully you have socked away some of those dividends in a savings account so you can pay off that tax bill. So, don’t head to the airport … yet.
We are available to file your personal taxes and do ongoing bookkeeping consults. #TrushaDesai.com