Taking Invested Funds From A Private Corporation

by Tax Guy - Burlington Accountant on April 10, 2009 Print This Post Print This Post

Question: If we put our own personal funds into the business in the past tax year and want to recover the amount put in, would this be seen as a taxable income on his personal income tax submission?

Normally a shareholder loan refers to a situation where a corporation has lent funds to its shareholders.  In this case, you have invested money into a corporation and are seeking a return of your capital.  The income tax act has a number of provisions limiting the ability of a shareholder to take fund out of a corporation as a return of capital.  Thus the withdrawal of funds will probably result in the withdrawal being a deemed dividends and taxes as a dividend in the shareholders hands.

The rules around these sorts of transactions are complex and I would recommend you discuss this with a CGA or CA.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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