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Email this11:05 am
January 29, 2018
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Here's the situation, someone got spare money in his company and doesn't need the fund business wise.
Since interest rate are very low in corporate account and much better for individual.
What do you think of making a fund advance to yourself from the company at the beginning of the fiscal year to invest personally in HISA or less than a year GIC and than refund your fund advance before the corporate year end. Of course you get taxed personally on the interest earned but it's a lot better than leaving the money in the business account yielding almost nothing.
Do you think this strategy could bother the government if done regularly?
11:50 am
September 11, 2013
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Not sure what you mean by "fund advance", sounds like CRA might view it as a loan, and there can be tax implications for both the corporation and the individual if a corporation loans money to a non-arm's length person (e.g. shareholder) at interest rates lower than would apply to unrelated parties. Might want to talk to an accountant.
12:27 pm
January 29, 2018
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My accountant told me that if it's refunded during the same year it could be as an advance (not sure of the term in English) and not a loan so the corporation doesn't have to charge interest. I didn't have time to talk to him much. I only ask if it was possible and did not mention the intention of doing it regularly.
12:36 pm
September 11, 2013
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An advance is usually an amount of money for something that will occur later, e.g. the provision of subsequent services, the incurring of an expense by the person who receives the advance, etc. CRA tends to look at the substance of what's going on if it conflicts with the terminology used, especially if it's done repeatedly and with related persons. On the other hand, and depending on the amounts too, they may never look at or find it.
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