If, over the years, you claim cumulative investment expenses greater than your investment income, your access to the capital gains exemption will be reduced by the excess. Using dividend income to reverse this excess gives you full access to the capital gains exemption.
In this situation, it may better for Shareholders of small business corporations to receive dividends, rather than a salary, as compensation. You should discuss this with your tax advisor.
Click here for a complete list of Tax Tips.
Copyright © 2002 Intuit Canada Limited