What’s a shareholder loan and can I owe money to my own corporation?
Yes, you can owe your corporation money, but only briefly. Income Tax Act s. 15(2) deems any loan or debt owing by a shareholder (or non-arm’s-length person) to be included in the shareholder’s income unless the loan is repaid within one year after the end of the corporation’s fiscal year in which the loan was made.
Example: an Ontario CCPC with a December 31 fiscal year-end lends its 100% shareholder $40,000 on March 1, 2026. To avoid s. 15(2) inclusion, the shareholder must repay the $40,000 by December 31, 2027 (one year after the fiscal year-end in which the loan was made, being fiscal 2026). Miss that deadline and the full $40,000 is included in the shareholder’s 2026 T1 as income; a subsequent repayment yields a deduction under s. 20(1)(j) but only in the year of repayment.
Interest on the loan. If the shareholder does not pay reasonable interest, s. 80.4 imputes a taxable benefit at the CRA prescribed rate (5% for Q3 2026; check the current-quarter rate). The imputed interest is added to the shareholder’s income annually until the loan is repaid.
Loan-repayment strategies. Declare a bonus. Declare a dividend. Repay in cash. Do not use series-of-loans-and-repayments; s. 15(2.6) blocks the workaround where the same loan is effectively re-advanced.
Note: The reverse case (you loaning money to your corporation) is common and clean. Owner-manager loans TO the Opco are recorded as due-to-shareholder liabilities, repayable tax-free, and can carry reasonable interest (deductible to corp, taxable to owner).
Source: canada.ca â Shareholder loans
— Bader A. Chowdry, CPA, CA, LPA — Insight Accounting CPA
Disclaimer: Bader A. Chowdry, CPA, CA, LPA is a Licensed Public Accountant regulated by CPA Ontario. Insight Accounting CPA Professional Corporation is a Chartered Professional Accountant firm. This content is general information only and does not constitute professional advice for your specific facts. Confirm current rules and figures with your own advisor before acting.