Canadian Money Forum banner
1 - 8 of 8 Posts

·
Registered
Joined
·
4 Posts
Discussion Starter · #1 ·
Hi guys
I have a dormant small business (inc) that has been dormant for the last year (no direct income)
Since we had some money in its accounts we decided to invest that money in stocks
We created a Questrade margin account that is owned by the company
We are now receiving dividends which are reinvested so the company's account is not seeing any transactions
Do we have to report these dividends as income if we reinvest everything and the company's bank account does not record any transaction?

What CRA forms should we use for this ? What tax slips or forms do we need to request from Questrade?
 

·
Registered
Retirement projections and decumulation strategies
Joined
·
12 Posts
Do you use an accountant to file your corporate return? If so, you'll need to provide them with a T5 from your discount brokerage, in addition to tracking your trades. If your year-end does not coincide with your T5 (Dec 31), then you'll need to provide statements to show the dividend income until your year-end.

Hope this helps!
 
  • Like
Reactions: TomB16

·
Registered
Joined
·
4 Posts
Discussion Starter · #3 ·
Thanks CAP, no I do not use an accountant, it does not make much sense in this situation since the corp is dormant
My wife has a background in Economics and she used the quick method for taxes last year
Now since we invested the money we need to know how to report that and yes our corp's fiscal year is not Dec 31
Questrade does does provide some reports where you can see the YTD amount of dividends received
What I am looking for here is the T2 section where we need to report these
 

·
Registered
Joined
·
413 Posts
My accountant takes care of this sort of thing but but your business will have to claim this trading income.

If you are employed, you might want to consider pulling this money from the business, use it to top up your RRSP or TFSA (depending on your blended tax rate and your anticipated retirement blended tax rate), and then spread that income across multiple years by portioning it between owner loan and dividends. This would be straight forward and could be quite advantageous, depending on your tax situation.
 

·
Registered
Joined
·
667 Posts
Depending on the amount of retained earnings, I agree that it may be preferable to liquidate the company - perhaps over a number of years. However, the tax treatment of the distributions can be complex since the retained earnings have to compartmentalized into the various income components (small business income, capital gains, interest income, dividend income, etc), it’s best to get professional advice.
 

·
Registered
Joined
·
4 Posts
Discussion Starter · #7 ·
Hi guys
Sorry for not replying earlier, I have been busy with the job.
Yes I think it probably is a good idea to start paying my wife dividends as I am in much higher tax bracket rate than she is.
I have to practically maximize my rrsp contribution each year for two reasons: get the matching contribution part from my employer and they to lower my taxes so getting more money dividends for myself would not work
 

·
Registered
Joined
·
667 Posts
Hi guys
Sorry for not replying earlier, I have been busy with the job.
Yes I think it probably is a good idea to start paying my wife dividends as I am in much higher tax bracket rate than she is.
I have to practically maximize my rrsp contribution each year for two reasons: get the matching contribution part from my employer and they to lower my taxes so getting more money dividends for myself would not work
I‘m not sure that it’s not wise to just pay the dividends to your wife unless she’s the sole shareholder. You could end up with a heap of trouble with the taxman - not sure but I surmise this strategy is not allowed. Best to consult a professional.
 
1 - 8 of 8 Posts
Top