Key facts ▾
- After-tax IRR is calculated via XIRR — a date-aware formula that handles irregular cash flows and compounds returns continuously, not annually.
- Taxes on corporate investment income are paid from the operating account, not the investment account — so they don't reduce the portfolio balance but they do reduce the true return.
- For periods under 10 years, IRR may not represent long-term expected performance; 10-year windows smooth out market cycles.
- Use taxes actually paid (from T2 line 710 and provincial equivalent), not net-of-RDTOH amounts — the cash that left the corporation is what compounds elsewhere.
- Liquidation tax on unrealized gains must be subtracted to calculate the net after-tax return if the portfolio were sold today.
Key facts ▾
- After-tax IRR is calculated via XIRR — a date-aware formula that handles irregular cash flows and compounds returns continuously, not annually.
- Taxes on corporate investment income are paid from the operating account, not the investment account — so they don't reduce the portfolio balance but they do reduce the true return.
- For periods under 10 years, IRR may not represent long-term expected performance; 10-year windows smooth out market cycles.
- Use taxes actually paid (from T2 line 710 and provincial equivalent), not net-of-RDTOH amounts — the cash that left the corporation is what compounds elsewhere.
- Liquidation tax on unrealized gains must be subtracted to calculate the net after-tax return if the portfolio were sold today.
Corporate Investment Account IRR
Work out the true after-tax internal rate of return on a corporate investment account, including the tax paid along the way and the tax still owing if it were liquidated today. Quebec and Ontario, illustrative only.
Account Information
About your calculation period: For meaningful long-term analysis, periods of 10 years or more are most representative. Shorter periods (2-5 years) may not reflect your long-term expected returns, especially given recent market performance.
Cash Flows
Recurring Monthly Transactions
Add regular monthly deposits or withdrawals that occurred over a period
One-Time Transactions
Add individual deposits or withdrawals at specific dates
Taxes Paid on Investment Income
Where to Find This Information
Find the total taxes paid on investment income (capital gains tax, dividend tax, interest tax) on your Federal (T2) and Provincial corporate tax returns for each tax year in your evaluation period. This is the tax paid on investment income, not from the investment account itself, but from your operating account at tax time.
Note: If you don't have this information, you can skip this step and see your pre-tax IRR. However, the after-tax IRR will be more accurate for understanding your true performance.
About RDTOH: Use actual tax paid (not net after RDTOH), as this reflects the cash that left your account and isn't compounding. RDTOH refunds are future cash inflows when dividends are paid. Learn where to find these amounts on your T2 return.
Calculate Liquidation Tax
Input your current positions to calculate capital gains tax if you were to liquidate today. This helps show your net after-tax return if you sold all holdings.
| Security | Shares/Units | Avg Cost ($) | Current Price ($) | Unrealized Gain | Actions |
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This calculator is illustrative only and not a substitute for professional advice.
Assumptions: Uses your inputs (balances, dates, cash flows, taxes paid). IRR calculated via standard XIRR methodology. Tax rates and rules vary by province and year. Consult your CPA before making decisions.
Tax Optimization Strategies
Portfolio Optimization Strategies
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Review My Tax StructureCommon questions
Why is my after-tax IRR lower than my account statement's reported return? ▾
Should I use gross tax paid or net-of-RDTOH? ▾
What period length is most meaningful for IRR? ▾
How does IRR differ from the yield or interest rate on a fund? ▾
Does this calculator account for the SBD grind-down? ▾
Sources & official references
- GOVERNMENT T2 Corporation Income Tax Return Guide
- GOVERNMENT Refundable Dividend Tax on Hand — CRA
- GOVERNMENT Small Business Deduction — Passive Income Rules
Full regulatory disclosure ▾
This content is for information and education only. It explains general concepts that may apply to incorporated business owners, but it is not personalized tax, legal, or investment advice.
Tax Considerations:
- Tax rules are complex and subject to change
- Strategies and benefits depend on your specific circumstances, province, and business structure
- Always consult with a qualified CPA before implementing any tax strategy
- Provincial variations in rates and rules may apply (Québec vs. Ontario differences exist)
- Past tax treatment does not guarantee future treatment
Investment Risk Disclosure:
- Investing involves risk, including the possible loss of principal
- There is no guarantee that any investment strategy will achieve its objectives
- Investment values fluctuate with market conditions, and you may receive less than you originally invested
- Tax efficiency is one factor; risk, fees, and total returns all matter
- Past performance does not guarantee future results
Insurance Illustrations:
- Insurance illustrations show projected values based on assumptions that may not be guaranteed
- Actual results will vary based on factors including interest rates, mortality experience, and expenses
- Non-guaranteed elements (such as dividends or credited interest rates) are not promises of future performance
- Review both guaranteed and non-guaranteed projections with your advisor before making decisions
Content Accuracy:
- We strive to ensure information is accurate and current, but laws and regulations change frequently
- Information reflects our understanding at the time of publication and may not reflect subsequent changes
- If you believe any content contains an error, please contact us
Regulatory:
- Mutual funds are offered through WhiteHaven Securities Inc.
- Insurance products and certain other services are provided through iAssure Inc., an independent firm in the insurance of persons and in the group insurance of persons
- These activities are neither the business nor the responsibility of WhiteHaven Securities Inc.
Professional Advice:
- This article is not a substitute for professional advice from your CPA, lawyer, or financial advisor
- Work with your professional team to understand how these concepts apply to your specific situation
- For personalized advice, a formal engagement and suitability review are required
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About the author
Financial Security Advisor · Mutual Fund Dealing Representative · Group Insurance & Annuity Plans Advisor
Independent advisor since 2008, focused on corporate investing, tax-efficient wealth strategies, and dynasty planning for incorporated business owners in Québec and Ontario. Mutual funds distributed through WhiteHaven Securities Inc.; insurance through iAssure Inc.