S50 and S100 after a section 85 rollover

S/E taxpayer incorporated and transferred Goodwill to Corp for $50,000 in exchange for 50 class D non-voting shares.

Taxpayer owns all class A voting shares (for $10)
Taxpayer owns the 50 class D non voting shares (worth $50,000 per S85 agreement but with aggregate adjusted cost base and aggregate elected amount of $5)
Spouse owns all class B non voting shares (for $10)
Holdco owns all class C non voting shares (for $10)

What’s the percentage breakdown on the S50 form? I’m not sure how the cost and FMV come into play. Is it just:
Taxpayer 100% common shares
Taxpayer 20% of preferred shares
Spouse 40% of preferred shares
HoldCo 40% of preferred shares

And the same for the S100 contributed capital section. Is it just $10 common shares and $25 preferred shares?

S100 and s125 are copies of your financial statements. No further thinking or manipulation should be necessary, unless you have combined two gifi amounts into one line on your financial statement. If so, either you break them out or you apply the appropriate lines elsewhere on the various schedules. (And even if you broke them out, you may still need to break them out.)

S50 asks for percentages. Again, just answer the question.

I think @NumberJack is asking whether the “percentage” refers to NUMBER of shares or DOLLAR VALUE (which could further be a question of BV or FMV). I have always used NUMBER of shares. Has anyone done differently?

Always based on % of VOTING shares.

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Really?? That’s not what I was taught. Now, I have discovered several things over the years that my CGA courses were wrong about, but I can’t find anything online to support or refute this one. Nothing decisive on the CRA website, and searching for “Schedule 50” in the income tax act comes up empty.

Can you provide some context or support for this @jhd.hemeon ?

Says right on S50 “All private corporations must complete this schedule for any shareholder who holds 10% or more of the corporation’s common and/or preferred shares.”

Strange. I’ve never seen non-voting shareholders listed. Only voting. When a client has a reorganization, a tax accountant always handles it. The closing letter received once the work is done includes instructions on completing the post-reorg returns - T1, 2, & 3. Schedule 50 includes only voting shares, which can include some, but not necessarily all, classes of common or preferred shares. A few years ago, CRA had a project on schedule 50, which was a letter-writing campaign to get more corps to complete the schedule. I don’t know what effect it had.


I have yet to find a definitive and detailed reply to the T2 Sch50 shares questions. I invested a lot of energy into this in my early years of T2 tax preparation especially with multiple voting and non-voting classes. One CRA resource officer on a call back finally told to use the following:

1 - List voting shares only.
2 - Use dollar value only.
3 - Total the number of all the classes of voting shares only. Did not specify common vs preferred. Did not know what to do about common vs preferred.
4 - Have the percentages add up to 100%. Please note that this differs from the T2 Schedule 50 instructions.
5 - Match these to the balance sheet and corporate records.
6 - This schedule is notional and rarely reviewed or audited for small, owner operated, private corporations.
7 - Create and maintain a shareholder continuity record in both the corporate record book and in the client documents based on book value unless advised otherwise by a corporate lawyer, CPA, or other subject matter expert.

In Alberta, this matches our Alberta Annual Return declaration. IE the form we complete when paying the Alberta Corporate Registry fee.

I feel your pain in not finding a definitive source and in receiving conflicting information. This seems to be yet one more area that needs updating and documenting by CRA and others.

These are the only two original source references that I found when searching the internet. Neither addressed this topic.

Income Tax Act.

Corporations Return Act.

Wolters Kluwer
In the 2019 edition of the Wolters Kluwer guide, Preparing Your Corporate Returns, section 8702, pages 613 to 614, infers that 10% or more shareholder of private corporations is based on the number of shares, both common and preferred, but poses the question about who are the top 10 shareholders:

“…For example, if there are 100 common shares and 100 preferred shares, and 10 shareholders each hold 10 of the commons, and 10 different shareholders each hold 10 of the preferreds, who are the top 10 shareholders? Do the common shareholders have more clout and are therefore the ones who should be listed?..”

This reference goes on to list some assumptions, pose some solutions, and refers to an earlier version of shares listing, pre 1997 which it discusses in section 2362.

They comment :
“It is difficult to determine precisely what information Schedule 50 is trying to pin down…”

And cover more situations including:
What if a shareholder owns both common and preferred shares.
Canadian tax residents vs non-residents.
Individuals vs corporations

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I think this is getting far more attention than is warranted. My practice has always been to include voting shares only. We don’t need to differentiate between common and preferred. I have clients with different classes of common shares - some voting and some non-voting. Same for preferred. One class of pfd shares can have a par & redemption value of $0.01 with voting rights. These are used in a reorg to maintain control in the hands of one family member. To me, it makes more sense to list only the shareholders who can affect the actions of the corp - those who can vote. Preferred shares have more characteristics of debt than equity.

Lol. Perhaps.
On the other hand, I’m glad someone posted the question - it highlights the fact that CRA has not published clear instructions for what they want on this form, or why. There are probably many other practitioners like myself who have never known, and never asked CRA, and have been doing it “wrong” for many years.
Further, it shows that there seem to be no consequences for doing it wrong.