Free Tax Advice

From: Joe S
Province: Ontario

I would like to loan personal funds to my private corporation at market interest rates, so that it can make investments and eventually repay the loan. I would want to structure the loan so the interest is paid to me annually. Are there any considerations from a tax planning view? For example is it ok to have the interest paid on an annual basis or does it have to be on a shorter period?

It’s my understanding that in the case of borrowing from my company, after a certain time the loan is considered taxable income in my hands. Does the reverse hold true also? i.e. in the case of a private corporation must the loan be repaid to myself within some time period?

Joe

Read answer to: What option for interest repayment do I have if I loan money to my company?