Minimize Taxes After Borrowing $200k from My Corporation

Taxes

I make $150k a year from my full time job and have a corporation for consulting services which which makes around $200k a year from a few clients in the US. I usually don't draw salary or dividends from this corp since the income from my full time job is sufficient. I have around $40k in TFSA with about $20k in available contribution room and $0 in RRSP with $85k in contribution room available. My spouse started working for the corp as an employee making $102k last year, $0 TFSA with $20k contribution room available and $0 RRSP with $0 available in contribution room (My spouse became Canadian resident in 2023 with $0 income for that year). My spouse and I currently have $80k each in our checking accounts.

In Jan 2024 I started searching for a townhouse to buy and found the one we liked in a matter of weeks. Since I didn't have any contributions in RRSP, I couldn't borrow from it under the Home Buyers Plan. So I borrowed $200k from my corp and used most of it for the down payment thinking I could pay it back by the end of 2025 but now I'm not sure. I can probably pay $100k back to the corp but since the rest would get added to my current year income, I'm looking to optimize how much taxes I end up paying.

What are my options? Can I split income with my Spouse to minimize taxes? Would contributing some amount to RRSP for me or Spouse help in this situation?

Posted Jan 14, 2025, 4:22 PM UTC

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