My RRSP and TFSA are maxed. What should an incorporated business owner do next?

Short answer: Give the next dollar a job before you pick a product. The conventional answer is to keep investing and chase returns. I start with what you want the money to do, and in which year you want cash flow from it. Then I look for the structure that is built to deliver it. For an incorporated owner the usual candidates are paying down debt, investing inside the corporation, an individual pension plan, real estate, a corporate-owned permanent insurance contract, and reinvesting in the business itself. Each has a cost and a time horizon, and each does a different job: some play defence, some play offence, and a few do both.

First, what is the money for?

Most people ask what to buy. A better first question is when you want income from this money and how much of it you want to keep.

I think about wealth as cash flow, meaning money you can use on your terms in the years you want it. A number on a statement does not pay for anything until it becomes cash. So the question becomes which structure turns this surplus into usable cash flow with the least friction and the fewest ways to go wrong.

The conventional path is to earn, spend, invest and chase returns. Starting with the outcome flips it, and it starts with cash flow: what do you want coming in, and when? Decide what you want first. Defence: growth that only goes up, protection from tax, creditors and people who would take it, something to leave behind. Offence: growth, access while it grows, and room to take advantage of opportunities. Then ask which structure is built to deliver it.

What are the realistic options?

How does debt fit into this?

Debt belongs in the conversation because most large owner decisions already involve it. A mortgage on a building, a line of credit, equipment financing.

The principle is simple. Debt can let an asset keep working while you use the cash. It also adds a payment you owe whether the asset performs or not. Here is the arithmetic that matters: borrow $100,000 at 6% and you owe $6,000 of interest a year. If the asset behind the loan earns less than that after tax and costs, you are paying to hold the position. If it earns more, the gap is your gain, but only if you can carry the payments through a bad stretch.

So the question for any option above is not whether to use debt. It is whether the asset and your cash flow will comfortably outrun the cost of the loan.

Do real estate and rental income count as passive income?

Generally yes. Rental income earned inside a corporation counts as passive investment income toward the $50,000 threshold unless the corporation has more than five full-time employees in the rental business. That surprises many owners who assumed property was a different category.

A note on the RRSP

For an incorporated owner the RRSP is not automatic. RRSP room comes from salary, withdrawals are fully taxable, and at death the full balance is added to your final return and taxed as income all at once, unless it rolls to a spouse or certain dependants. Against that, the deduction is real, and for some owners it is still the right call. I have written a separate page on whether an incorporated owner should contribute to an RRSP.

Where does insurance fit?

A participating whole life contract owned by the corporation is one of the tools some owners use for surplus they will not need for a long time. I set these up, and the page below says plainly when it does not fit. The detail is on the page about corporate-owned life insurance.

Related questions people ask

Should I pay down my mortgage or invest in the corporation?

Paying down a mortgage earns a certain return equal to your interest rate, but the money is then tied up in the house. Investing inside the corporation keeps the money liquid but exposes it to market risk and annual passive income tax. Compare your mortgage rate to a realistic after-tax return, and keep an emergency reserve either way.

What is an individual pension plan, and who is it for?

An IPP is a registered pension plan for one or a few people, usually the owner-manager, funded by the corporation. It tends to make sense for people drawing T4 salary who are around 40 or older, because contribution room rises with age. It requires periodic actuarial valuations and the money is locked in until retirement.

How much cash should I keep liquid before committing to anything long-term?

Enough to run the business and cover what you already owe, and no more than that. See how much cash to keep in your corporation for a worked example.

Is this the same advice for every owner?

No. Age, income, debt, how much the business depends on you, and what you want from the money all change the answer. This page lists the options and their costs. It is general information, not advice for your situation.