Entrepreneurship & Small Business

related corporation and T2 tax filling

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  • Aug 5th, 2020 9:34 am
[OP]
Newbie
Jul 30, 2020
1 posts

related corporation and T2 tax filling

My spouse has a corporate (non-professional corporate) and I have an MPC (medical professional corporation). our accountant when setting up both corporation he added me as shareholder owns 100 class B shares in my spouse corporation and added my spouse as a shareholder owns 100 class B Shares in my MPC. I just know now after reading through the CRA website that both corporations in this way are related to each other. our accountant did not mention that to us when he set up both corporations. When he filed our taxes last year, he did not mention in the tax return that our corporations are related (there is a question in the T2 Tax return form: Is the corporation related to any other corporations? If you answer yes, we need to add schedule 9) but in the schedule 50 (shareholder information he put me and my spouse shares information). My MPC and my spouse corporate earn less than 500k. in addition, I did not withdraw money (no dividends no salary) from my spouse corporation and my spouse did not withdraw any from my MPC. The main reason to put us as shareholders is if anyone passes away the surviving one can have the money in the corporation (I do not know if this wrong or right). Now I left my accountant because he did a lot of mistakes in filing taxes last year personal and business. my questions are 1- we need to file our taxes for both corporations do we need to mention that both corporations are related (our accountant did not mention that as I said last time he filled taxes ) or we do not need to mention that as long as our income collectively less than 500k . in addition, if we mention it will be complicated in filling the T2 TAXES 2-can I remove myself and my spouse as a shareholder (how to do that) and if we do that both corporations will no longer be related? 3- are there any bad consequences with CRA for non mentioning that the 2 corporations are related (please note that both corporations did not pass the 500K small business deduction threshold and we do not have passive income). Thank you
1 reply
Jr. Member
Jan 18, 2017
190 posts
141 upvotes
Both corps are Related and Associated corps. You'll need to file a Sch 23.
gordon2020 wrote: My spouse has a corporate (non-professional corporate) and I have an MPC (medical professional corporation). our accountant when setting up both corporation he added me as shareholder owns 100 class B shares in my spouse corporation and added my spouse as a shareholder owns 100 class B Shares in my MPC. I just know now after reading through the CRA website that both corporations in this way are related to each other. our accountant did not mention that to us when he set up both corporations. When he filed our taxes last year, he did not mention in the tax return that our corporations are related (there is a question in the T2 Tax return form: Is the corporation related to any other corporations? If you answer yes, we need to add schedule 9) but in the schedule 50 (shareholder information he put me and my spouse shares information). My MPC and my spouse corporate earn less than 500k. in addition, I did not withdraw money (no dividends no salary) from my spouse corporation and my spouse did not withdraw any from my MPC. The main reason to put us as shareholders is if anyone passes away the surviving one can have the money in the corporation (I do not know if this wrong or right). Now I left my accountant because he did a lot of mistakes in filing taxes last year personal and business. my questions are 1- we need to file our taxes for both corporations do we need to mention that both corporations are related (our accountant did not mention that as I said last time he filled taxes ) or we do not need to mention that as long as our income collectively less than 500k . in addition, if we mention it will be complicated in filling the T2 TAXES 2-can I remove myself and my spouse as a shareholder (how to do that) and if we do that both corporations will no longer be related? 3- are there any bad consequences with CRA for non mentioning that the 2 corporations are related (please note that both corporations did not pass the 500K small business deduction threshold and we do not have passive income). Thank you
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Canadian & US tax guy

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