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Hi Allan,
Thanks so much for your helpful videos. I have regularly relied on this video to fill out my T2 for my small consulting corp: https://www.youtube.com/watch?v=jU4Td7652hs
My question is about line 710 on the T2 which refers to a schedule 55.
If I paid myself a dividend instead of a salary this fiscal year, do I need to fill out schedule 55?
thanks for all your helpful information.
Hi, thanks for watching the videos and for your question.
Short answer: Usually no.
Schedule 55 (Eligible Dividend Designation) is only required if the corporation is designating a dividend as an eligible dividend under the gross-up and dividend tax credit rules.
If you paid yourself a regular (non-eligible) dividend, which is the case for most small consulting corporations that do not have sufficient GRIP (General Rate Income Pool), then:
You would complete Schedule 55 only if:
Most CCPCs earning income taxed at the small business rate do not have GRIP, so Schedule 55 is commonly not required.
That said, the eligibility of dividends depends on the corporation’s tax profile, so it’s important to confirm whether GRIP exists before designating dividends.
Hope that helps, and glad the video has been useful.
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