Personal Finance

For how long a person can leave money in Corporation w/o any withdrawls?

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  • Dec 30th, 2019 9:27 am
[OP]
Banned
Nov 1, 2013
304 posts
42 upvotes

For how long a person can leave money in Corporation w/o any withdrawls?

If you are a contractor and sole share holder of a registered inc., for how long can you let the money sit in the company account without withdrawing anything as salary or dividend?
one year or three?
I believe three years is the max after which the money must be withdrawn but not sure.
7 replies
Sr. Member
Nov 17, 2014
807 posts
277 upvotes
You can leave the money without salary or dividend withdrawals in your corp forever or as long as u want. There is no tax or corp law implications as I understand. On the other hand, during a tax audit, the CRA might question u how do u pay your personal and family bills.
Deal Addict
May 16, 2017
1554 posts
1959 upvotes
Just be cautious about having the incorporated company build up a lot of capital value that will at some point have to be distributed when the company is wound down or transferred at death. So consider the wind-down implications and at consider what you do with privately held share corp's like this in your will to minimize tax consequences for whomever may inherit.
Deal Fanatic
Sep 23, 2007
5061 posts
1155 upvotes
There's no such rule about how long you can leave money in a corporation. Though most people have many reasons to make withdrawals. For example, if you have no other income, you should at least make use of your basic personal amount (now 12k or something?). You can basically pay yourself around 12k and pay zero tax. The point of a business is to make money. There's rarely a reason a person would not seek to get the money out one way or another.

Realistically, if you have no more business activities, you also don't want to leave money in there. Banks charge you fees right? You probably got bills to pay. Read your bank account details. Probably a clause about inactivity fee?
Deal Guru
Feb 9, 2009
10654 posts
8986 upvotes
It’s your Corp you can do anything you want.

You can leave the money there, you can pay yourself. I know some business owners save their money in their Corp cause of lower tax rate on small business income and then when they need the money they take it out (to minimize taxes).

Some use Corp money then to expand, buy another business or real estate or something.

So to answer your question — you can leave the money as long as you want.

Only thing... be sure of your passive income in the Corp not to exceed $50k.
Deal Fanatic
Oct 7, 2007
8059 posts
4036 upvotes
You may just want to watch that your bank doesn't charge inactivity/dormant fees in case that's important.
Deal Fanatic
Feb 1, 2006
9618 posts
849 upvotes
Muskoka
BananaHunter wrote: There's no such rule about how long you can leave money in a corporation. Though most people have many reasons to make withdrawals. For example, if you have no other income, you should at least make use of your basic personal amount (now 12k or something?). You can basically pay yourself around 12k and pay zero tax. The point of a business is to make money. There's rarely a reason a person would not seek to get the money out one way or another.
There are definitely reasons. Maybe a couple lives on one partners pay, and keeps all profit in corp as a defacto RRSP (works similar, but with less restrictions). Taking the $12k makes sense, unless you are a couple with kids who receive CCB, and then that $12k could have a huge clawback.

Both of these are reasons I leave all profits in my corp, actually.
Deal Fanatic
Feb 1, 2006
9618 posts
849 upvotes
Muskoka
I am 43, probably won't touch my corp money until 50 when I retire. Maybe later if my dividends rise enough to not need the money.

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