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Let’s consider an example – John and Jane are a married couple. John earns $135,000 a year while Jane earns $30,000. Jane saves $20,000 and invests that total amount which later increases by 50% (a value of $10,000). Her total taxable income is now $40,000 for the year. Since she has a much total lower income, her marginal tax rate is only 24.1% and her after-tax income is $34,108.

Now let’s reverse the scenario and John is the one who is investing the $20,000 with the $10,000 in profit. His total taxable income for the year is now $145,000, since he has a much higher income he is subject to a marginal tax rate of 46.4% and his after-tax income is $98,567. So in this situation, Jane should be the one investing since her investment profits will be taxed at the much lower marginal rate due to her initial low total taxable income. This will save John approximately $5,361 in taxes. (Please note that this example is based on the Federal and Ontario Provincial tax rates for the 2013 taxation year).


  • There are thousands of programs with varying eligibility criteria, deadlines and application processes.
  • The program landscape changes over time as new programs are introduced, existing programs are stopped as funding is exhausted or eliminated altogether.
  • Unlike most tax credits, direct funding programs must be preapproved and therefore require appropriate planning and alignment with overall business strategy and critical project timing.
  • Program funds are often limited and competitive, making application timing and strategy critical.
  • Receiving direct funds can have an impact on a company’s SR&ED claim.