Planning for excess funds in CCPC

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Planning for excess funds in CCPC

Post by dualcitizencanuk22 » Tue Jan 01, 2019 2:42 pm


I am a dual citizen (US/Can) living in Canada.

I own 100% of the shares of a CCPC. This year the CCPC has substantial excess funds and I am trying to figure out the best thing to do with them. The typical strategy for a Canadian who is not a US citizen would be to leave the funds in the CCPC and invest them as part of your retirement plan.

For a dual-citizen, what is the general consensus of the approach that leads to lowest tax:

1. Leave funds in CCPC.
2. Pay funds out to myself as dividend.
3. Pay funds out to myself as salary

Funds would be invested in a CCPC-held investment account for option 1, or a non-registered investment account for options 2 and 3.

Thanks for your thoughts.


Phil Hogan, CA
Posts: 28
Joined: Fri Jan 08, 2010 12:11 pm
Location: Victoria BC

Re: Planning for excess funds in CCPC

Post by Phil Hogan, CA » Sun Jan 20, 2019 7:35 pm

Hi Richard

This can get tricky. The answer will depend on several factors:

- Assuming the company is a CFC and had retained earnings in 2017, did you 1040 for 2017 include 965 calculations?
- As a CFC you'll also be subject to GILTI for 2018. Have you access these requirements yet? see here

There's often nothing wrong with continuing to defer income from tax within the corp until you reach a point where subpart F income becomes a problems (investment income in the corp for US purposes).

If you can answer the questions above in more detail I can provide some more answers.


Phil Hogan, CA, CPA (Colorado)
Canadian and US Income Tax
Victoria BC

Mark T Serbinski CA CPA
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Re: Planning for excess funds in CCPC

Post by Mark T Serbinski CA CPA » Tue Jan 29, 2019 10:48 am

New IRS rules related to the Transition Tax in IRC 965 make it unattractive for any US person to accumulate retained earnings with a foreign corporation, and the transition tax retroactively taxes retained earnings back to 1986.

Here are some references: ... rporations

For future years, the accumulation of earnings and profits in a foreign corporation will also be taxed, annually: ... come-gilti

US rules generally favor the inclusion of any earnings in personal income in the year they are earned, and the deferral of income Canadian style can be costly.

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