“Which reverse mortgage is right for me?” + MORE Sep 8th

When Vancouver condo owners Maggie and Rob found out they were on the hook for $400,000 in improvement costs to their building and unit as required by an assessment from their Strata Council, they weren’t sure what to do. (We’ve changed their names and some details to protect their privacy.)

The couple, who are in their early 80s and mortgage-free, have lived in the large upscale Kitsilano condo for the past 20 years and were not anticipating a financial obligation of this magnitude during retirement. So the results of an assessment from their Strata Council, which requires them and other unit owners to find six-figure sums in short order, came as a shock. While they have about a half-million dollars in investments they could use to cover the improvement costs, liquidating those assets would come with a serious tax hit. And their income isn’t high enough to qualify for a home equity line of credit (HELOC) or mortgage refinance.

Making matters worse, Rob’s health has been failing, which puts moving out of the question…

Bill Gates firm buys Saudi Prince Alwaleed Four Seasons stake  Aljazeera.comBill Gates buys controlling interest in Four Seasons Hotels and Resorts – Business News  Castanet.netBill Gates’s private investment company buys controlling interest in Four Seasons Hotels and Resorts  The Globe and MailBill Gates inks deal to buy controlling interest in Four Seasons  Global NewsSaudi Billionaire Prince Alwaleed to Sell Four Seasons Stake for $2.2 Billion  BloombergView Full coverage on Google News

When it comes to their own compensation, a business owner with a corporation has three primary choices: To pay themselves a salary; to pay themselves dividends; or to leave business income in the corporation. Let’s take a high-level look at what’s involved in each case.

When a business owner pays a salary, the corporation receives a tax deduction that reduces its taxable income. If it pays out all of its business income as salary, there is no profit left in the company and therefore no corporate tax to pay (assuming no investments or other income sources for the corporation). 

Business income left in a corporation as profit is taxable. Corporate income that is eligible for the small business rate (generally for income under $500,000) is taxable at between 9% and 14%. A business owner can then pay these after-tax corporate profits out as dividends in the current or any future year that is taxable personally; because 9% to 14% tax was already paid, the personal tax payable on a corporate dividend is lower…