PASSIVE INCOME RULE

A Canadian-controlled Private Corporation (CCPC) that earns active income through their operations can claim the small business deduction and net their rate rate to 9%.

So, it's natural for a business owner to think they get to enjoy the same 9% tax rate on real estate investments, but hold on there, the government closed that loophole a long time ago.

Passive income earned by a CCPC is taxed at 50%.

When a CCPC earns passive income, most business owners declare a dividend as the most tax efficient way to receive the money.

Every $2.61 of taxable dividends payable produces $1.00 corporate tax refund, referred to as Refundable Dividends Tax On Hand (RDTOH).