There are many factors to consider when examining the merits of holding shares of a Canadian Controlled Private Corporation in an RRSP:

• You must own less than 10% of the company
• Auditors must sign qualification letter

• Can be used as a contribution in kind - contribute existing shares to RRSP and get tax receipt - a tax refund with no out of pocket cost
• Can be used for an asset swap, removing cash or securities from the RRSP in exchange for the current CCPC share value
• Can use existing RRSP assets to buy CCPC shares and increase ownership
• Dividends increase RRSP value without affecting contribution room - cash dividends can be used to buy other investments
• Growth is tax deferred - even after shares are sold

• Lack of diversification - company career progress and investment eggs all in one basket
• Requires self-directed RRSP - additional fees ($25 charge per transaction)
• Often spouse restricted from being beneficiary (can't have non-employee own shares)
• Tax on growth paid fully as income when RRSP collapsed
• If shares no longer qualify as a CCPC, may have to come up with a large amount of cash quickly

• Simplification
• Interest from borrowing to invest in shares is tax deductible
• Growth counts as capital gains, only taxed at 50% and paid when shares are sold but,
• Should qualify for $400,000 farm/CCPC capital gains exemption

It is strongly recommended that you carefully consider these factors and consult a tax advisor or accountant before investing in CCPC shares in your RRSP.

CCPC Share Administration - Special Benefits for Group Plan Members

The information contained on this website is for use by persons resident in Canada only.