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Opening a GIC

Expert: John R. Mott

Glen asked:

Should GIC's be opened in my name or my company's name. Does it make a difference? If in my name, it's my objective to repay these "owner's loans/withdrawals" before the company's year end. Would this be considered as income to me &/or dividends and taxed

regardless even though I intend to collapse these GIC's and replaced this money before my company's year end. The company will owe me dividends by then. I don't want to leave excess money in my company's account when I could put this into GIC's for a year and its secured and earning interest. What would be the best way of dealing with this and the consequences of either way? Do T accounts factor in this method at all if I just take the money out now and replace later.

John R. Mott answered:

By company, I am assuming that you are referring to a legally constituted corporation. If you use corporate funds to purchase GICs in your name, this could be regarded as a transfer of funds to you personally. Assuming that you do not account for this transfer as salary or dividends, the Income Tax Act will deem the transfer to be personal income if it is not repaid by the end of the following corporate fiscal year.

Even if the transfer is repaid within this timeframe, you will be considered to have enjoyed an interest-free loan and be deemed to have received a taxable shareholder benefit. To avoid these issues, the GICs should be purchased in the name of the corporation.

About the author

John Mott is a chartered accountant and tax specialist with a private practice in mid-town Toronto. He provides tax, accounting and advisory services to individuals and small businesses. He may be visited online at:

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