A new client came to me (corp client) which is owns 35% of the the CCPC and other 65% is owned by others.
The work he does for the the corporation and payments made to him has always been claimed as an expense in S125 and the prev accontant would issue him a T4a for him to file his T1 and file T2125.
Can this be done? I was under the impression that he can only be paid via T4 or T5?
I’m not understanding this, as your question is a bit unclear on the facts.
Is the 35% owner of the CCPC a corporation an individual?
I’m not understanding the relationship of the payor and payee.
The 35% is an individual and he owns 35% of the CCPC. The CCPC (corporation) is paying him sub contractor fees and issuing a T4A for the fees that are being paid to him.
Technically likely offside, but I’ve had CRA overlook this in the past where the amount has been reported in full (and subject to CPP) on the T1. Whether they would still do that is an open question.
Why “likely”? No actual control of the CCPC (an assumption on my part) but questionable as it depends on the type of work performed and the potential level of control the CCPC exerts over the shareholder. (Back to the old “employee vs contractor” question…but with a slight deference to the fact that the individual IS a shareholder.)
I had a client (sole shareholder) who receive $36,000 from a CPCC, but the same accounting firm only included $30,000 in the T2125 three years in row. By the time we were submitting voluntary disclosure,I had him on payroll. Because he on payroll, the rep waived the GST, as it would be a wash between the"proprietor" and the corp. The client paid the taxes and interest with no other consequences.
Right - same here…neglected to mention that they scrubbed the GST as well. Technically, again, they could assess and they’d “earn” penalty money…but no base amount. Kind of a waste of time.
I know that (long ago), CRA would not allow significant shareholders to be compensated other than by payroll, but I seem to recall that it has since changed…
Nah - the law hasn’t changed: you can’t be a “contractor” to a company of which you are a significant (or controlling) shareholder. But, as an administrative practice, because it’s more or less “no harm, no foul” they ignore it…mostly.