Entrepreneurship & Small Business

Taxation - answering any questions here

  • Last Updated:
  • Nov 14th, 2018 11:58 am
Newbie
Nov 2, 2018
1 posts
Hi. I have a question paying dividends during the first year of incorporation for my CCPC. I incorporated in Feb 2018 and would like to pay a dividend to recognize in my 2018 personal taxes. Do I have to wait for the end/after of the business fiscal year to declare the dividend, or can I declare and pay the dividend now (Nov 2018). I was planning on having a Jan 1 to Dec 31 fiscal year for the corporation as well.

Thanks very much.
[OP]
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Oct 30, 2017
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Ottawa, Ontario
AntLor wrote:
Nov 3rd, 2018 8:23 am
Hi. I have a question paying dividends during the first year of incorporation for my CCPC. I incorporated in Feb 2018 and would like to pay a dividend to recognize in my 2018 personal taxes. Do I have to wait for the end/after of the business fiscal year to declare the dividend, or can I declare and pay the dividend now (Nov 2018). I was planning on having a Jan 1 to Dec 31 fiscal year for the corporation as well.

Thanks very much.
Hi,
you can pay out dividends anytime you like.
for business rule, normally when a dividend paid, by a cheque to the shareholder , you should have a resolution signed by the directors. but since you are a small corp, it is ok.
then when it is the time for preparing T5s for 2018, you need to file them to CRA to show how much and to whom these dividends were paid in 2018. as well, when you prepare the corporate tax return, you need to have these information in schedule 3 of the T2. if you need help for preparing the T5 or schedule 3, you can message me and I can help.

so, you can pay yourself anytime you like, just keep track and report it properly when filing the T2 and have the T5 properly filed.

thank you
thank you very much
Philip Kwok, CPA, CGA
[OP]
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Oct 30, 2017
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Ottawa, Ontario
Hi, when anyone has any questions, please let me know and I will try my best to help.
thank you very much
Philip Kwok, CPA, CGA
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Mar 27, 2010
325 posts
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York Region
PhilipK796978 wrote:
Nov 7th, 2018 10:24 am
Hi, when anyone has any questions, please let me know and I will try my best to help.
How do you calculate what you have to pay for CCP when self-employed?
///
Member
Nov 12, 2014
446 posts
248 upvotes
Kingston, ON
Stn wrote:
Nov 7th, 2018 5:24 pm
How do you calculate what you have to pay for CCP when self-employed?
On your personal tax return.
[OP]
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Oct 30, 2017
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Stn wrote:
Nov 7th, 2018 5:24 pm
How do you calculate what you have to pay for CCP when self-employed?
the equation is " (salary - $3500) x .0495 . this will give you the CPP contribution amount. if you are self employed, you need to multiple by 2, because you are paying both employer and employee contribution.

thank you
thank you very much
Philip Kwok, CPA, CGA
Member
Nov 12, 2014
446 posts
248 upvotes
Kingston, ON
PhilipK796978 wrote:
Nov 8th, 2018 8:45 am
the equation is " (salary - $3500) x .0495 . this will give you the CPP contribution amount. if you are self employed, you need to multiple by 2, because you are paying both employer and employee contribution.

thank you
There is also a maximum amount...
Deal Fanatic
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May 12, 2004
9758 posts
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Ottawa
Philip,

I was recently made partner for the company I operate (Company A) and received 33% of the issued shares. Basically company was owned 50/50 by 2 seed investors and they are both giving me enough shares to make me 1/3 partner. Now I need to tell them what I want to do with these shares. What are the advantages of opening a personal holding corporation to register these shares versus just putting them in my own personal name?

Current situation;
- Wife is homemaker/housewife so I'm thinking she could pull a salary from the corporation? What are the ramifications if any of making her a shareholder in the holding company?
- I don't need the dividends to live on. Are there any tax benefits of the holding company owning US real estate?

Things get a little personal and convulated from there...so depending on your answers I might want to meet you in person.
Censorship is telling a man he can't have a steak just because a baby can't chew it.
- Mark Twain
[OP]
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Oct 30, 2017
45 posts
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Ottawa, Ontario
Cas77 wrote:
Nov 12th, 2018 10:33 am
Philip,

I was recently made partner for the company I operate (Company A) and received 33% of the issued shares. Basically company was owned 50/50 by 2 seed investors and they are both giving me enough shares to make me 1/3 partner. Now I need to tell them what I want to do with these shares. What are the advantages of opening a personal holding corporation to register these shares versus just putting them in my own personal name?

Current situation;
- Wife is homemaker/housewife so I'm thinking she could pull a salary from the corporation? What are the ramifications if any of making her a shareholder in the holding company?
- I don't need the dividends to live on. Are there any tax benefits of the holding company owning US real estate?

Things get a little personal and convulated from there...so depending on your answers I might want to meet you in person.
Hi Mark, in order to give you a detail answer, I will need some more personal detail, therefore you might need to private message me some additional detail.
but in general, rather to hold the operating company shares in personal or having a holding company depend on . 1. what kind of income will the operating corporation generates. 2. having a holding corporation is like building a shelter to your assets for legal proposes, will the business have any risk? do you have any assets that you like to protect? 3. your personal income level. how much funds you like to pay to yourself? can you keep the funds in the corporation?
Once I got more detail, I can explain to you in full detail of which one will be more benefit.

If you want your wife to earn income from the business, you will need to assign her some duties to justify this income. if she will be a shareholder of the holding corporation, she will still need to get involved in the business. when we discuss, I can give you some advise of what kind of duties you can assigned her to justify these income

if the corporation owns foreign property, US real estate, if only earning rental income, it is tax at high rate, close to 50%, but some portion is refundable, net will be about 28%, depending on your personal tax level, it might or might not be a benefit. But if you are operating a business and having an office there, that will be different. I need more detail.

Thank you very much. you can PM me and we can discuss more in private.
thank you very much
Philip Kwok, CPA, CGA
[OP]
Newbie
User avatar
Oct 30, 2017
45 posts
12 upvotes
Ottawa, Ontario
QN5252 wrote:
Nov 8th, 2018 9:57 am
There is also a maximum amount...
thanks for helping
thank you very much
Philip Kwok, CPA, CGA

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