5 Ways To Use Your Corporation To Invest And Save Taxes
March 22, 2021 
Dave Loncaric

We all want to save money wherever we can, right? The good news is there are lots of strategies business owners may not know about to save taxes and improve their financial outlook, today and in the future.

Too many business owners and incorporated professionals don’t properly utilize their corporations when it comes to current, future, and end-of-life investment and tax-saving opportunities.


Do you own a corporation and want to maximize your investments and save taxes today, during retirement, and at the end of your life? Then here are five ways you can use your corporation to invest and save taxes:

Watch the video on this strategy

1. Pay yourself a dividend

Let’s start with what you can do today: Make sure you pay yourself a dividend and not a salary.

Paying yourself a dividend will save you from having to pay into Canada Pension Plan. It will allow you to keep approximately $6,000 inside your corporation to invest however you want. With that, you can save $240,000 over 40 years, and have more control over your savings.

2. Keep as much money as you can inside your corporation

Do not pull money out of your corporation to put into Retirement Savings Plans (RSPs).

If you decide to take money out of your corporation to put in an RSP, you will have to give half of that back to the CRA. Although you took the money out of your corporation tax-free, when it comes time to withdraw money out of the RSP, you will be paying up to a 50% tax rate.

If you keep the money in your corporation, you pay less income taxes by taking it out as dividends.

Interested in learning more about why business owners should not use RSPs? We have an entire post (including a video) on the subject here: Why Successful Business Owners Should Not Use RSPs.

3. Invest in capital gains-producing investments

Make sure to invest in capital gains-producing investments such as stocks, real estate, and corporate class mutual funds. Capital gains are taxed at a much more favorable rate than dividend or interest income.

Capital gains lower your tax payable and create Capital Dividend Account (CDA) credits for you to take tax-free money out of your corporation.

4. Pay life insurance with corporate dollars

Make sure that your corporation owns and pays for all your life insurance.

Having your corporation as the owner and payer of your life insurance policies means you will pay the life premiums with dollars that are taxed at 11% (in BC), as opposed to your personal tax rate, which could be as high as 50%.

This is a frequently overlooked method to save taxes, but it’s one that can pay off in a big way.

5. Consider investing in corporately owned whole life insurance

This final tip helps you and your family with taxes upon death: Look into corporately owned whole life insurance.

This is a great strategy to ensure that the money left inside your corporation will go to your family or the charity of your choice, as opposed to CRA. Corporately-owned life insurance can also be used to help create a tax-efficient retirement.

While we’re on the subject of life insurance, is it time to revisit your policy? If it’s been a while since you got your life insurance policy, the answer is probably yes. Life insurance isn’t meant to be “set it and forget it.” We talk about why it’s time to reevaluate your coverage and much more in this post: Life Insurance for Business Owners: Why It’s Time to Revisit Your Policy.


If you own a corporation and you’re not implementing most of these strategies right now, you’re missing out on saving money today, tomorrow, and at death. Ultimately, it will impact the quality of life and your ability to achieve your goals.

If you want to learn how to maximize your investments and save on taxes, book a call we’d love to run you through our financial planning process.

Did you learn a lot from this post about investments and how to save taxes by including your corporation in your strategy?

Then here are three posts to read next:

This post was first published in 2020, but it was updated in 2021 just for you.