Be careful with CCPC dividends for Canadian corporation shareholders.

Bruce_C49

The Canadian Controlled Private Corporation (CCPC) has a very attractive corporation tax rate, a lifetime taxable capital gains exemption of close to $825,000 but there is a severe penalty imposed by the CRA (Called Part III tax) on excess dividends. Those excess dividends are essentially the amount of the GRIP (graduated rate investment pool) - comprising profits earned by a CCPC. You need to carefully plan a dividend for a small business. If not there is a 20% tax on excess dividends.