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An “assessable dividend ” is an amount received by a corporation as, on account of, in lieu of payment of or in satisfaction of, a taxable dividend to the extent that amount is deductible from taxable income under section 112. It is relevant to the tax integration mechanism and refundable dividends.

Specified Investment Business or SIB is defined in Canadian Income Tax Act subsection 125(7) and ties into and provides an exclusion from the definition of Active Business Income. In other words specified investment business income earned by a corporation is not considered to be active business income and is not eligible for the small business deduction (SBD) tax credit. Specified Investment Business is income from property such as interest, rent ( including leasing income from land or buildings), dividends or royalties. There is an exclusion from the definition of SIB if the corporation employs more than 5 full time employees so property income earned by a corporation with more than 5 full time employees will meet the active business income.

Disclaimer:

“This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer.”

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Pro Tip

CRA Tax Audits

There are over 350,000 tax audit and review actions conducted by the Canada Revenue Agency on a yearly basis. Around 15,000 of these tax audits deal with “cash only” businesses (i.e. the underground economy). Additionally, an estimated 35,000 are tax shelter audits.

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