Читать книгу Kickstart Your Corporation - Andrew Feindel - Страница 25

This example assumes the following:

 John is a physician earning $400,000 per year who wants to buy a condo in Toronto for $1,000,000.

 We'll assume the growth rate on the condo is 4% per year, but for the moment we'll ignore all real estate transaction costs (i.e., land transfer taxes, legal and real estate commissions, and so on).

 At a $400,000 income, John's average tax rate will be 44%, though his marginal rate will be 53.53%.

 Let's assume John needs $100,000 of after-tax (“take-home”) pay to meet his day-to-day living expenses.

 John wants to save $250,000 as a 25% down payment on the condo.

With no corporation, based on these assumptions John could save $124,000 in the first year, and it would take him a total of two years and almost three months to make up the 25% down payment on a property that may well appreciate during John's “waiting period” (meaning his $250,000 no longer represents a 25% down payment).

If John incorporates, his average corporate tax rate would be 12.2%, and he could pay out $129,000 in dividends to fund his $100,000 lifestyle spending needs (at an average tax rate of 22%), allowing him to save $223,000 in the first year.

In this scenario, he will have a $250,000 down payment within a time frame of about 15 months—cutting an entire year off the time frame for saving the required down payment.

And not only does John save up the down payment more quickly, he also saves about $40,000 on the condo purchase price, given our projection about real estate appreciation over the waiting period. How is John able to realize his down payment savings strategy so quickly and effectively? The key is his use of a shareholder loan from his corporation, which we discuss next.