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Hi,
I am a IT consultant with a numbered corporation in Ontario. My accountant mentioned that private corporations (CCPC) cannot declare Eligible dividends. Is that true? I've been reading about this online and it seems that private corporations can declare Eligible dividends.
Hi Peter, yes, a CCPC can pay eligible dividends to its shareholders, to the extent that it has a positive GRIP balance. The term GRIP means taxable profits in excess of $500,000 in the year, plus eligible dividends received, less eligible dividends paid.
Most CCPCs do not have a GRIP balance and are unable to pay eligible dividends.