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How long can I keep the money in the company?

3K views 12 replies 6 participants last post by  RussT 
#1 ·
I am an IT consultant and incorporated. If I stop consulting business, my company will have no income. I wonder whether I can leave all the money there until I retire as long as I file tax return every year. If yes, there is clear tax benefits since I only need to pay for the corp tax. Can I keep on claiming some business expenses? I was told only for three years after no income. Is this true?
 
#4 ·
Correct and sort of not ? AFAIK, there is no legal definition or distinction between a "holding company" and any other sort of company. There are distinctions between a CCPC and a regular company. Those are the types under the Income Tax act.

What matters is the type of income earned by the company (and it's subsequent taxation). Whether the income is active business income or investment income (and of what type) will determine how it is taxed in a CCPC.
 
#3 ·
It should be self-evident that if the business is inactive, it's income can't be treated as business income for tax purposes.

From CRA Definition: Business and business income

A business is an activity that you intend to carry on for profit and there is evidence to support that intention.


To qualify as a business there has to be an expectation of profit from the business activities.
 
#7 ·
Not as long as you continue to send in the Provincial Corporate form and send them a cheque. In AB after two years of not filing you become inactive and need to reapply if you want to be registered again. With the fed's you need to continue to file the T2's.
 
#10 ·
Whether you have revenue or not, a non-capital loss can be carried back three years or forward for 20 years - your choice. I'm not sure about how this applies in a situation where no business activity was undertaken in the loss years. It sounds pretty aggressive to me but I'm not an expert by far. I expect CRA would challenge a carry-back if a company had simply stopped operating.
 
#13 ·
As I read it, the OP doesn't want any more consulting contracts but would like to claim that he is trying to get contracts, but unsuccessfully (wink, wink, nudge, nudge). I suppose if you are legitimately looking for business your expenses are also legitimate even if you are unsuccessful. In the OP's case I don't think the expenses are truly for the purpose of earning revenue.
 
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