As suggested in the title, how do you treat the remaining of Shareholder Contribution when the Corporation is closed entirely? For example, after all assets are withdrawn and paid toward debts + deduct against initial Shareholder Contribution, the client still have some $10,000 Shareholder Contribution. basically, I will submit S100 with $10,000 left in Shareholder Contribution and ($10,000) of Remained earnings. Does this mean this Share Holder Contribution amount is lost forever as the Corp cease to exist? Thank you for your insight as always!!!
I would claim it as an Allowable Business Investment Loss for the shareholder when you file the next T1 return. I believe you enter the actual details on Sch 3, similar to a capital loss on sale of shares. (note; It’s been a while since I claimed an ABIL, so I’m not 100% sure if using Schedule 3 is still valid but it should provide the needed direction). Make sure you keep details of the uncollectable Shareholder loan. I hope this helps.
I agree that it could be an ABIL. However, CRA reviews these claims so make sure your client has documents to prove the unrecovered shareholder loan balance. Also look at the shareholder’s personal situation and whether they can make use of the ABIL. They may be restricted by their CNIL balance or if they’ve ever claimed a capital gains deduction. If the shareholder can’t claim the ABIL due to one of the above, you could just claim it as a normal capital loss.