Yes, you can add your spouse to your corporation, either as a preferred shareholder or common shareholder. Both types of shares, if structured properly, will allow you and your spouse to split the profits of the corporation through payment of dividends to each of you.
A key difference between a common shareholder and preferred shareholder is that a common shareholder is entitled to participate in the growth of the business. Also, common shareholders usually have voting rights attached to their shares, giving them a degree of control over the corporation’s affairs.
On the other hand, the value of preferred shares is fixed at the time of issuance, and does not increase in value, even if the company grows. Additionally, preferred shareholders usually do not have the right to vote.
Tip: If you are adding your spouse as a shareholder, then he/she must pay the market price for the shares purchased. Special provisions exist in the Canadian Income Tax Act, that if properly implemented, can allow your spouse to become a shareholder for a nominal amount (e.g. $100).
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.