text: Basket,  I disagree with your interpretation of the deferral. I think the deferral results from the difference in the corporate tax paid annually by the corporation and what is paid when the capital is removed from the corporation.  Once the capital is removed from the corporation, it is taxed at the nominal rate. The benefit is that money left in the corporation can be invested and earn additional returns (thus paying additional taxes - capital gains).  Taxes are paid in full, there is just a delay between when the revenue is earned by the corporation  and when the individual pays the income tax on them, similar to an individual RRSP.