Dissolution of Canadian Corporation

Tax Topics
1

Hi everyone,

I am new in the field of Canadian taxation and I need some guidance about dissolving a corporation.

  1. The corporation has positive retained earnings and if I have to dissolve it, should I pay out the entire retained earnings as final dividends? The corporation’s year end is Dec, so should I need to payout the dividends in Feb 2025 ?
  2. The corporation also has NCL balance from previous and current year, can I transfer this to the shareholder’s personal income tax ? If yes how can I do it.

Thanks in advance for the guidance.

2

I think you need to do the accounting work before you start looking at the taxes. Before dissolving a corporation, you need to liquidate all assets and settle all liabilities. In the process of doing that, the retained earnings should end up at zero (provided you are using standard double-entry accounting).

The answer to your second question is no.