Hey guys,
so client’s corp’s YE is 30 May. She took out bonus in November 2023. Is it mandatory to include this in her 2023 T5 or I can take this as dividend withdrawal for next year in according with her corp’s Year End?
I would report it in 2024 T5 based on Corp year end.
If it is a bonus that was declared and expensed in the May 2023 financial statement it must be paid within 180 days (thus November). This would be a T4 for 2023 and employee deductions should have been withheld and remitted to CRA.
If it is a dividend that is declared and paid a T5 should be reported in the year it is paid. However, if you are allocating the amount to the Due to Shareholder account you might declare a dividend in 2024 and allocate it against the amount already taken. Thus deferring tax until the 2024 personal tax year.
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Thank you so much!!!
@wem is correct.
To further elaborate on this, an accrued wage bonus should only entail CPP. Be careful not remit EI where it is not applicable.
As for a dividend, make sure you are declaring them as paid within the 1 year threshold for a shareholder who’s loan is offside. Don’t declare the dividend subsequent to the YE that is outside of this window, as CRA could come along and deem an interest accrual on the duration of which the shareholder was offside (should they ever review). Just food for thought.