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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.
The amount of the loan will be taxable to your son. This is because your son does not deal at arm's length with you, unless your son repays the entire loan within one tax year from the year during which the loan was made.