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RN Mabira Professional Corporation
Accounting Services
112 Violet St.
Barrie, ON L4N 9M8
Phone: (905) 252-6796
We are pleased to provide a variety of resources on accounting, taxation, and other related subjects that we think you will find helpful to both individuals and businesses.
Browse through the Quick Tools resource menu then, if you have a question that isn’t answered, we can help to clarify your situation.
Simply contact us by email or give us a call at 905-252-6796. We would be happy to meet with you for a free, no-obligation consultation to discuss your unique situation.
Shareholder loans refer to loans made by shareholders of a corporation to the corporation. The tax implications of such loans will vary depending on the jurisdiction, but usually, they are not considered taxable income to the shareholder.
One must be careful, for if the loan is not repaid or forgiven, it may be considered a taxable distribution to the shareholder.
To simplify things, make sure loans to shareholders are not outstanding past the corporation’s year-end.
Prescribed interest rates for calculating taxable benefits from low-interest and interest-free loans to employees and shareholders are set quarterly and can be found in the CRA’s table of prescribed interest rates.
A loan by a corporation to one of its shareholders may result in a deemed taxable benefit to the shareholder.
Another benefit will be deemed to have been received by the shareholder unless interest has been paid on the loan in an amount equal to or greater than interest calculated at the prescribed rate for the period in the year during which the loan was outstanding.
Advances or loans that are made to shareholders should be recorded in a general ledger account specifically set up for this purpose. If the interest is tax deductible for the shareholder, it is important to track this loan separately from other advances or loans.
Other considerations that you should be aware of:
As the rules and regulations regarding shareholder loans can be complicated, it is extremely important to consult a tax professional for specific advice. You can reach out to our office at any time for assistance on this, and any other matter.
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RN Mabira Professional Corporation
Accounting Services
112 Violet St.
Barrie, ON L4N 9M8
Phone: (905) 252-6796
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