Entrepreneurship & Small Business

Ask me any Tax Qs? FREE TAX CLINIC for small business owners

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  • Apr 28th, 2015 4:04 pm
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Member
Aug 17, 2011
448 posts
150 upvotes
CALGARY
It depends on whether or not you have a GRIP Pool (General rate income pool) to draw down from. Eligible dividends are paid out of that pool (high-rate tax); Ineligible dividends are paid out on any retained earnings that were taxed at the small business rate (low-rate tax.)

A very generalized answer is that if your business has had net income of OVER $500,000 in any one year, you likely have a small GRIP pool, and can declare a small amount of eligible dividends. If you have never had a net income over $500,000 in any year, then you'll be drafting Box 10 ineligible dividends.
birdfamily wrote: I have a small business that is incorporated. I have withdrawn dividend from the company’s retain earnings. Should I complete T5 box 10, 11, 12 or box 24, 25, 26? I have done some reading but still can’t figure out the difference between eligible and non-eligible dividends. Any help is greatly appreciated, thanks.
Deal Addict
User avatar
Mar 23, 2008
4059 posts
452 upvotes
Toronto
Is the deadline to file employer t4 pushed to Monday March 2 because February 28 Falls on a Saturday?
Deal Addict
Nov 17, 2007
2350 posts
806 upvotes
Kitchener
Thanks for the thread TaxExpert.

I incorporated two years ago. I'm working on our taxes and have a few questions. This is a vending business.

Assets were 0 at the beginning of the year. I acquired $10 000 worth of assets in the year. The 50% rule only gives me the ability to depreciate 1/2 the value. Am I understanding this correctly?

The two of us started the company by depositing $6000 each. I've identified this as a long term liability.

We each have 100 shares at a value of $.01 each. How and where do I reflect this in the financial statements?

If I buy units throughout the year, do I depreciate the class as a total amount or do I have to prorate them?

What is a reasonable rate to pay myself mileage for the delivery and maintenance of the assets. Do I include this amount in my personal tax as income?

In the first year we made no $, in fact lost some because of the cost of purchasing the machines and little revenue. I didn't submit a tax return, and am doing two years now. Still no profit. Should I file both at the same time or one at a time, waiting for the first to come back to see if I did everything correctly.

Thanks in advance for your help.
Deal Addict
Aug 11, 2008
1291 posts
423 upvotes
Calgary
I read somewhere online that share holder can only get dividend after one year of incorporation. Is that correct?
Deal Addict
Aug 28, 2007
2167 posts
539 upvotes
Calgary
No, the board of directors can declare any dividend amounts on multiple dates per year on any or all classes of common shares at any time (unless you restricted yourself in your articles of incorporation). CCPC shares are just like public shares; i.e. the Board announces a dividend payout and anyone can buy the shares up to the day of record and still qualify for the dividend payment.

That is why you should create a separate class on non-voting common shares for every member of your household when you submit your articles of incorporation. You may want to pay one member of the household a specific amount that is different from another member of your household. (Always keeping in mind that dividends paid to minors will be attributed back to the parent)
Newbie
Mar 27, 2015
14 posts
9 upvotes
Toronto, ON
2014 was my first year of incorporation... noob questions ahead!

My year end was Dec 31. When is my payment due? March 31?

What should I do if my return isn't completed by my payment due date? Just make a payment of 11% + 4.5% (ON) of my net income? Should I overpay a little to avoid any unforeseen problems/exceptions that may come up in my return? I'm incorporated federally, operating in Ontario. I haven't made any instalments.

Do I pay both the federal and provincial portions to the CRA? Do I need to separate it or make the payment to a different payee, or just one lump-sum to CRA Corporate Tax Payments 2014?


Thanks for the thread. Lots of very helpful information!
Deal Addict
User avatar
Oct 27, 2004
1352 posts
689 upvotes
I love RFD! Always great Canadians willing to help others!

My question: I have a side business as well as a 40-hour-per-week minimum wage job. I am preparing my taxes using UFILE, and I'm a bit flummoxed by the GST/HST rebate section. My business grossed $17,000 last year, netting $11,000 after expenses. When filing, can I claim the "GST or HST rebate on employment or partnership expenses paid in 2014"? It seems like this section is for employment, rather than business related expenses. Is that correct? Is there a separate section for HST rebate I should be looking for?

Filling out this section makes a big difference: if I claim the HST expenses here, I will get an additional $1700 in refund!
Newbie
Apr 29, 2012
32 posts
4 upvotes
TORONTO
If I incorporated my company in Hong Kong and run my operations here in Canada. Do I need to pay Canadian Corp profit tax?

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