Definitions - Corporate Component

We refer to the following terms within the Corporation component in Snap Projections:

Corporate Settings Page

  • Canadian Controlled Private Corporation (CCPC) - A private corporation that is controlled by Canadian residents.   If a corporation is controlled directly or indirectly by a public corporation or by non-residents of Canada, it will not qualify as a CCPC.
  • Small Business Deduction - The small business deduction is a reduction in corporate taxes for CCPCs.  The reduced rate of tax is available on active business income up to the corporation's business limit for the year. 
    • Federal and Provincial limits: The reduction of the CCPC's business limit is equal to the greater of 
      • the reduction based on taxable capital
      • the reduction based on aggregate investment income
        • Snap Projections reduces the Small Business Deduction (SBD) automatically if the aggregate adjusted investment income exceeds the $50,000 threshold. The SBD is automatically reduced by $5 for each $1 of investment income over $50k until the full SBD is removed at $150k. (This applies to the federal SBD and all provinces except Ontario and New Brunswick.)
  • Existing Balances - Check with the client's accountant for these balances. Snap will calculate them going forward.
    • Eligible Refundable Dividend Tax on Hand (RDTOH)  - This includes the Part IV tax payable on eligible portfolio dividends that the CCPC receives, plus the Part IV tax payable on other dividends it receives to the extent the corporation paying the dividends receives a refund of tax out of its eligible RDTOH.
    • Non-Eligible RDTOH - Generally includes the refundable portion of the Part 1 income tax paid on investment income in the year and the Part IV tax payable on any other dividends that the CCPC receives.
    • CDA - Capital Dividend account - The capital dividend account is part of a tax provision with the goal to enable tax-free money received by a company to be given to its shareholders, tax-free. When a company generates a capital gain, 50% of the gain is subject to capital gains tax. The non-taxable portion of the total gain realized by the company is added to the CDA.
    • GRIP - General Rate Income Pool - The GRIP Balance allows for Eligible Dividends to be paid from the corporation to the shareholder. Eligible Dividends are more tax-efficient and are limited to the available GRIP Balance in a given year of the plan. The GRIP Balance is increased by 72% of active business income taxed at the full corporate rate (income above the Small Business Deduction) and any eligible dividends received from Capital Assets.

Corporate Planning Page Columns

  • Age - This shows how old your client is by the end of the year.
  • Business Income - An income on active business carried on by a corporation where active business is defined (Subsection 125(7), Income Tax Act) as “any business carried on by the corporation other than a specified investment business or a personal services business and includes an adventure or concern in the nature of trade”.
    • Preferential federal and provincial tax rates apply up to the limit (Business Limit) of income earned by a CCPC from an active business carried on in Canada.
    • Starting at $50k, Snap reduces the small business deduction if the aggregate adjusted investment income exceeds that $50k threshold.
  • Salary of Client / Spouse - A salary of the client or spouse declared by a corporation.
  • All Expenses - Total amount of corporate expenses (deductible and non-deductible expenses).
  • Non-Deductible Expenses - Total amount of corporate expenses that are not deductible for tax purposes, such as amortization (net of capital cost allowance), 50% meals and entertainment costs, club dues, certain conference and convention fees, interest and penalties, etc.
  • Net Business Income - Business Income after all expenses for accounting purposes before income tax, calculated as the Business Income minus Salary of Client, Salary of Spouse, and All Expenses.
  • Taxable Business Income - The taxable portion of Business Income for tax purposes.
  • Investment Return - Investment returns generated on investments (capital and real assets) held by the corporation.
  • Taxable Investment Income - The taxable portion of Investment income that includes interest income, dividends, and the taxable portion of capital gains.
  • Other Income - Any other income that is non-taxable to be added to the corporate capital assets (for example inter-corporate dividend received from a connected corporation tax-free, after-tax proceeds from real estate disposition, or after-tax proceeds from any other corporate asset disposition).
  • Income Tax - Tax to be paid by the corporation on Business Income and Taxable Investment income, calculated as Part I and Part IV Federal Tax plus Provincial Tax minus potential dividend refund from dividends paid out the prior year.

  • Capital Asset Value - The year-end balance of the Corporate Asset.
  • Capital Asset Contribution - New deposit (positive number) or withdrawal (negative number) to or from the Corporate Asset in the calendar year.
  • Capital Asset Rate - The annual rate of return earned on the starting balance of the account less any withdrawals for the year.
  • Real Assets - Value at the end of the year.
  • Non-Eligible Dividend Client (or Spouse) - Non-Eligible Dividend amount paid to a client (who is a shareholder) or a spouse (who is a shareholder).
  • Eligible Dividend Client (or Spouse) - Eligible Dividend amount paid to a client (who is a shareholder) or a spouse (who is a shareholder). The Eligible Dividend paid in a given year of the plan can't exceed the GRIP Balance available.
  • Capital Dividend Client (or Spouse) - Capital Dividend amount paid to a client (who is a shareholder) or a spouse (who is a shareholder).
  • Non-Eligible Dividend Other - Non-Eligible Dividend amount paid to other shareholders (not a client or spouse, e.g. children or other shareholders). This dividend will affect the Capital Balance in the corporation but it will not show up anywhere in the projections for the Client/Spouse.
  • Eligible Dividend Other - Eligible Dividend amount paid to other shareholders (not a client or spouse, e.g. children or other shareholders). This dividend will affect the Capital Balance in the corporation but it will not show up anywhere in the projections for the Client/Spouse. The Eligible Dividend paid in a given year of the plan can't exceed the GRIP Balance available.
  • Capital Dividend Other - Capital Dividend amount paid to other shareholders (not a client or spouse, e.g. children or other shareholders). This dividend will affect the Capital Balance in the corporation but it will not show up anywhere in the projections for the Client/Spouse.
  • Net Cash Flow - A positive amount (cash flow surplus) indicates the cash remaining after contributing surplus cash to the Capital Assets. A negative amount (cash flow shortfall) indicates the amount by which the expenses, contributions, or taxes owing were unable to be met. 
  • Cash Balance - The balance of the accumulated Net Cash Flow for all previous years.  
  • Net Worth - The year-end total of all corporate Capital and Real assets and the Cash Balance.

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