The next way to get Money out of the Corporation is through the use of an RRSP: There is a two-fold benefit in doing this.
If you have RRSP room this is one of the quickest and easiest ways to decrease some of that passive you may have. Income would be paid out as T4 income to the shareholder and then deposit into your RRSP. The first benefit is that this is a tax saving to the corporation and is a tax neutral transaction to yourself.
The second benefit is that you are no longer paying tax on passive income within the corporation which is at a 50.2% tax rate in Ontario in 2019 but it will grow tax-deferred in your RRSP.
The biggest drawback with this strategy is that most people do not have significant RRSP Room to move the needle for someone that is experiencing the clawback.
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