I’m an IT contract worker (Canadian Federal Inc Corporation) and have a considerable amount of surplus money left in the corporation after all taxes have been paid. My son recently got into medical school and has opened a Scotia Student line of credit at Prime – 0.5% to pay for his education (OSAP covers only a minuscule bit).
Can my corporation loan the after-tax surplus money out to him for say a 5-6 year period at very low interest so he can save on the higher interest costs from Scotia? It’s stagnant after-tax money, is not invested and I do not need to use it in expanding the business. What are the steps I should take to work within the laws and not to be flagged by CRA? I do understand the interest charged will be “income” for the corporation and will need to be declared and taxed.
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