When the government of Canada offered retirees the opportunity to reduce their minimum RRIF withdrawal because of investment markets’ reaction to the pandemic, you might recall that I suggested keeping the withdrawal at its usual level. My reasoning was that taking out the same dollar amount requires deregistering more units of a depreciated mutual fund or ETFs which could allow you to reinvest the proceeds in a TFSA or non-registered account. In this strategy, you are essentially pre-paying the tax at a lower rate because of the prevailing market softness.

This article expands on that strategy for small business owners who probably have seen revenues decline or drop off as a result of the pandemic. If your business revenue has suffered in 2020, you may wish to draw out income from other sources (additional dividends from a private corporation or RRSP withdrawals, for example) at a time when your salary is artificially low.


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