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Hello Madan.. Love your videos been following you for a long time.
Appreciate your knowledgeable videos.
Regarding if shareholder took a loan from company to pay for a downpayment on a home dwelling. How is that accounted for and how to account for it over time ? Also can you take a loan from company as a shareholder employee for a dwelling outside the country for example in Lebanon ? And how many shareholder loans are you allowed at a time?
Thank you for your kind feedback. An employee can receive a loan from his employer (corporation) and not have to pay tax on the loan proceeds, if:
- the amount of the loan is reasonable
- the interest charged on the loan is at market rates
- the amortization period is fair (e.g. 25 years)
- biweekly / monthly principal + interest payments are made to repay the loan
- the employer corporation puts a mortgage on the home to secure the loan made
An employee can also be a shareholder, but the employee must have received the loan in his capacity as an employee. The house must be located in Canada and the employee must live in the house after its purchased. Only one loan at a time.