When it comes to creating an optimal compensation strategy plan, there’s a lot to navigate. And while there may be a plethora of general rules floating around on the internet, each individual’s optimal strategy is ultimately going to be dependent on their unique situation. That is why we’re using today’s conversation to break down the findings of our mental model algorithm. Tuning in you’ll hear a detailed explanation of the five steps for creating an optimal compensation strategy plan, and how to apply them. Find out how to plan your consumption, account for mandatory income, clear out notional accounts, use salary to make up the difference, and utilize salary dollars that aren’t for spending. We also cover key areas, like Canada Child Benefit (CCB) clawbacks, incorporating income splitting when using your salary, and how to pay yourself a salary bonus to bring the corporate active income down. Join us today to learn how you can implement a dynamic salary and dividend strategy for optimal compensation, and much more. There’s a lot to unpack here, so get your note-taking devices ready, and let’s get started!
Key Points From This Episode:
(0:05:19) Optimizing integration: general rules and exceptions in different contexts.
(0:07:48) The first three steps in our mental model algorithm: planning consumption, accounting for mandatory income, and clearing out notional accounts.
(0:15:25) A quick warning on thinking about money in terms of inflation-adjustments, and why it’s important.
(0:16:11) How to use capital dividend accounts (CDAs) in different situations and why it’s generally the most useful notional account.
(0:28:03) An overview of Eligible Refundable Dividend Tax on Hand (ERDTOH), how to use it, its status as the second most useful notional account, and why it’s considered more useful than CDAs in certain cases.
(0:30:58) Important details on Non-eligible Refundable Dividend Tax on Hand (NRDTOH).
(0:32:42) Everything you need to know about the General Rate Income Pool (GRIP) in various contexts.
(0:41:01) Situations where it may make sense to pay extra dividends and key factors that impact personal tax rates.
(0:56:31) A breakdown of the Canada Child Benefit (CCB) clawback versus Notional Account Release, and key factors to consider.
(01:03:22) Factoring in RRSP contributions when paying yourself a salary and how to take advantage of them.
(01:08:39) How to incorporate income splitting using your salary depending on the situation.
(01:13:48) What to do with salary dollars that you won’t take for spending.
(01:18:46) Key insights, analysis, and caveats on bonusing down the SBD rate; how to pay yourself a salary bonus to bring the corporate active income down.
(01:30:19) Implementing a dynamic strategy of salary and dividends, how it might unfold over time, and examples of analysis that we’ve done.
(01:37:19) Our post-op debrief: a review of our mental model algorithm and creating an optimal compensation strategy plan to pay yourself from your corporation.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/
Dr. Mark on X — https://twitter.com/LoonieDoctor
Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/
Benjamin on X — https://twitter.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Corporate to Personal Salary Dividend Optimizer — https://www.looniedoctor.ca/ccpc-income-disperser/
