# Shareholder loans to corporations



## blondellie (Mar 11, 2018)

I almost feel silly for even asking this. I am a shareholder in an immediate family member's professional corporation which I receive dividends from. 

The accountant who does the taxes for the PC has informed the principal who is a high income earner (that's why she pays dividends to me to help reduce her tax bracket) that she can report the following on the T5: 

At this point a T5 has been issued to me for $90,000 (actual amount of dividend). Using round numbers $60,000 has been paid to me. The remaining $30,000 would be recorded on the corporation’s books as a shareholder’s loan. (A loan that the professional corporation owes to me however I am not required to actually physically loan this money to the corporation it will only be recorded in the books as if I did). 

Also, the accountant has rounded the numbers on the T5 rather than using exact numbers from the books.

I have some basic knowledge of corporations, shareholder loans, dividends, etc. and from my basic knowledge neither of these are not allowed! Does anyone have any experience or references for the situation? Any shared experiences and resources will be greatly appreciated! Thank you.


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## domelight (Oct 12, 2012)

blondellie said:


> I almost feel silly for even asking this. I am a shareholder in an immediate family member's professional corporation which I receive dividends from.
> 
> The accountant who does the taxes for the PC has informed the principal who is a high income earner (that's why she pays dividends to me to help reduce her tax bracket) that she can report the following on the T5:
> 
> ...


Basically you we're paid a deemed dividend. This is standard practice everybody does it. You will have no issues with CRA. Actually it sounds like your accountant is doing a good job. He/She is having you pay tax at an optimal amount over the long term depending on your province, long term wants, and averaging your spouses income between the two of you over your lifetime. This is good tax planning. But there is nothing wrong with the transaction itself.


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## blondellie (Mar 11, 2018)

Thank you domelight ?


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