Getting Started: Corp. General Info

In the Corporate General Info Section, we want to set up the core information for your corporations. We want to understand:

  1. Ownership
  2. Share Value
  3. Liquidation Strategy
  4. Deduction Limits and Notional Accounts

A lot of this information can be found on your T2 Corporate Tax Return. If you are unsure of where to find this information, check with your accountant.

Ownership and Share Value:

Ownership can be solely with one spouse, shared between spouses or with an off platform 'other'. How it is shared will determine how assets are taxed when sold, and how corporate value is reflected in your personal net worth.

Value and adjusted cost base of corporate shares is important to how tax is calculated in the event of a share sale. Adviice does not assume your CCPC qualifies for the life time capital gains exemption. If you find that shares do qualify, you can enter this into the Projection Section as a custom deduction.

Liquidation/Dissolution Method is not yet an automatic process in version 1 of the corporate module. When we launch version 2, you will be able to select either share sale or winding up as a liquidation method.

  • Share Sale: Sells the entire corporate structure and uses the corporate share value to determine taxation.
  • Winding Down: Assumes that all assets within the corporation are sold and distributed through salary and dividend to the owners.

You will be able to choose the timing of this event to either happen in your estate or on a specific date.

Small Business Deduction Limit:

The small business deduction is a reduction in corporate taxes for Canadian controlled private corporations, or CCPCs. The reduced rate of tax is available on active business income up to the corporation's business limit for the year.

The deduction limit is set both federally and provincially but may vary depending on the number of associated corporations you own.

If you are unsure of your federal/provincial SBD, ask your accountant.

Notional Account Balances:

“Notional accounts” are record-keeping accounts that only exist on paper. They are used to track money that your corporation can get as a tax refund, or how much your corporation can pay you with special tax-advantaged dividends.

This information can be found on your T2 corporate tax return or by asking your accountant.

The four notional account balances tracked on Adviice are:

  • General Rate Income Pool (GRIP) Balance: GRIP tracks how much your corporation can pay out in eligible dividends.
  • Capital Dividend Account (CDA) Balance: When a corporation sells an investment and realizes a capital gain, a portion is taxed at the corporate passive income rate. The other portion adds to the corporation’s CDA balance. Dividends taken from the CDA account are tax-free.
  • Non-Eligible Refundable Dividend Tax on Hand (neRDTOH) Balance: Investment income (such as interest, dividends, or passive rental income) is taxed at a high rate upfront. Part of that tax is refundable and tracked via neRDTOH. This refund is released when your corporation pays out non-eligible dividends.
  • Eligible Refundable Dividend Tax on Hand (eRDTOH) Balance: For eligible dividend income that your corporation receives, the refund is the same as the tax collected. That refundable tax is held as eligible eRDTOH. The refund gets released from that notional corporate account if your corporation has paid out eligible dividends equivalent to what your corporation received.

The balance of these accounts will can be tracked in the Projections section table by scrolling all the way to the left and clicking on the > beside Notional Accounts.