GRIP from Capital Gain

Tax Topics
1

Hi everyone.
I have a question about GRIP, hoping someone can help.
I thought GRIP will be automatically calculated if there is investment income, including capital gain, but I am just doing one return for a corporation with capital gain, did the S3, disposition and looked at S53, it showed up there, but somehow, it’s deducting the capital gain, so the GRIP is 0.

On the T2, looks like the refundable dividend tax is calculated there correctly, so not sure if I am missing something Or is there no GRIP for capital gain?

Thanks

2

For a CCPC there is no GRIP generated on your first $500,000 of ABI as well as any Schedule 7 Investment income (including capital gains).

You can, however, generate GRIP if you receive eligible dividends.

Sure, you are going to generate RDTOH but you aren’t going to be paying out Eligible Dividends on interest income and capital gains if you are a CCPC. You will be paying out non-eligible dividends.

3

Thanks for your response.

Looking at it, it seems crazy. Getting used to say the top marginal rate is just above 50%, so when I see the 20% corporation tax after the refundable dividend tax, I was thinking the eligible dividend will be the reason for the different, otherwise, we are looking at a combined tax of 65% with non eligible dividend?