An owner-manager of a construction company would like to have a swimming pool installed at his personal residence. It doesn't really matter whether he has his corporation build it for him or, alternatively pay him sufficient salary to build the pool on his own.

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From a tax perspective, having the corporation build the pool could result in the value of the pool being considered a taxable benefit to the owner-manager, potentially leading to higher personal taxes. Additionally, corporate expenses must be for the purpose of earning business income, and personal expenses like a swimming pool do not qualify, potentially leading to disallowed deductions for the corporation and additional taxes. Paying a higher salary to cover the cost of the pool would be more straightforward, with the salary being a deductible expense for the corporation and taxed as income to the owner-manager.

An Owner-Manager of a Construction Company Would Like to Have