The objective of this course is to familiarize the reader with not only the "basics" relative to the income tax provisions affecting Canadian-controlled private corporations (CCPCs), but also to present those provisions that affect practical implementation (planning or compliance) with respect to the core matters. The material is not intended to be exhaustive, but rather illustrative of the areas typically confronted by a CGA in practice.

In a corporate tax discussion or review, the characteristic unique to CCPCs is the concept of integration, where total corporate and personal tax on a given amount of income will approximate the total tax payable had that income been earned personally. That most often the CCPC is simply an extension of the individual is undeniable. Wherever practical, this course takes this integrative approach.

The main concern of the course is the issue of how CCPCs and their owner/managers are taxed on the income first earned by the corporation and subsequently distributed to the shareholders. There are a number of tax incentives by way of tax deferral, tax savings, and income splitting opportunities available to business people who decide to incorporate their active business activities into a CCPC. To fully understand these incentives, it is necessary to become familiar with the various anti-avoidance measures that have been put in place to limit the circumstances to which these incentives apply. This course will review these incentives and limitations, and provide a framework for business people and their advisors to plan the most tax-efficient approach to minimizing the overall tax burden.

This course is based on the Income Tax Act as it stood at July 5, 2011. Any pending legislative amendments, pronouncements, and proposals announced up to then have been incorporated into these materials. Some of the Income Tax Act references included in these materials have, by necessity, been paraphrased. While every effort has been made to retain the integrity and flavour of the Act, you may wish to refer to the specific Act provision to build your comprehension.

The course is divided into 12 modules. Each module ends with a Topic point summary which highlights the main points of that module. There are four online quizzes to test your understanding of the concepts.

Links are provided to some of the more important Interpretation Bulletins (ITs), Information Circulars (ICs), and forms referred to in the modules.

You are expected to have a current Income Tax Act or have access to an up-to-date tax service.

Module 1 CCPCs — The basics
Module 2 The principle and practice of integration
Module 3 Active business income

Quiz 1

Module 4 The business limit and association
Module 5 Passive income — Dividends
Module 6 Passive income — Refundable Part I tax and capital dividends

Quiz 2

Module 7 Eligible dividend rules
Module 8 Compliance
Module 9 Change of control

Quiz 3

Module 10 Owner/manager remuneration — Salary and dividends
Module 11 Owner/manager remuneration — Other salary and bonus issues
Module 12 Owner/manager remuneration — Loans and benefits

Quiz 4

Summary

List of Abbreviations

Victor Waese, MBA, CGA, the update author, is an instructor of Financial Management at British Columbia Institute of Technology, and since departing from public practice as a CGA, has been involved in the tax education field with BCIT, CMA, and CGA.

David G. Nolke, CMA, FCGA, the original author, is a partner with Nolke & Co. Certified General Accountants and president of Integrated Business Advisory Services Inc. based in Calgary, Alberta. His areas of practice include assurance, tax, and management services primarily directed toward Canadian-controlled private corporations and their shareholders. He has lectured in CMA and CGA courses and has presented many tax seminars. His extensive involvement with the Certified General Accountants Association of Canada includes serving as chair and CEO. He has also represented the accounting profession of Canada as a technical advisor to the Council of the International Federation of Accountants (IFAC), served on the membership committee of IFAC, and chaired CGA-Canada’s International Committee.