Tax Alert
Professional Corporations - Family Members and Shareholders
Currently in the Province of Alberta only a member of a profession may hold shares in a professional corporation. This restricts the ability of the professional to split income amongst family members by paying dividends from the professional corporation.
Bill 53, which has passed first reading in the Alberta Legislature, stands to correct this and will allow for families of professionals, including Doctors, Dentists, Lawyers and Accountants, to hold non-voting shares in professional corporations. When the Bill becomes law professionals may want to consider reorganizing their professional corporations and issuing share capital to spouses and children. This could result in new income splitting opportunities and an overall income tax savings for the family on the payment of dividends and/or if the shares of the professional corporation are sold for a capital gain. It should however be noted that there is no tax savings benefit from income splitting where dividends are paid to minor children because of the so called “kiddie tax.”
We will continue to monitor the progress of Bill 53 and will update our clients on the opportunities that may be available when the legislation is passed.
Kenway Mack Slusarchuk
Stewart LLP
CHARTERED
ACCOUNTANTS
220, 333 – 11 Avenue
SW
Calgary, AB T2R 1L9
(403) 233-7750
(403) 266-5267
(fax)
Kenway Mack Slusarchuk Stewart Bow
Valley LLP
CHARTERED
ACCOUNTANTS
201 Bear Street
Box 930
Banff,
AB T1L 1A9
(403) 762-2271
(403) 762-8817
(fax)
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