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Capital Dividend Account

The capital dividend account (“CDA”) is calculated at a particular point of time, other than additions as a result of dispositions of good-will. The account is calculated for the period commencing with the first taxation year after the corporation last became a private corporation and that ended after 1971.

A change in the status of a corporation as a Canadian Controlled Private Corporation (CCPC) will have negative consequences on the CDA account balance.

Basic Components of the CDA are:

  • Untaxed portion of capital gains minus capital losses;
  • Capital dividend received;
  • Portion of proceeds on sale of eligible capital property;
  • Portion of life insurance proceeds; and
  • Capital dividends paid.

Pro Tip


The Small Business Deduction gives businesses a tax deduction on the first $500,000 of income. This saves an eligible corporation around up to $50,000 in income taxes. There are a number of conditions that have to be met to be eligible for this deduction.


Sam Faris reduced the significant unreported income based on net worth audit to be nil. Sam’s approach in fighting these types of complex audits is unique and sophisticated. He found countless mistakes made by the auditor which were rectified when Sam appealed the audit decision. Instead of owing significant amount of taxes, Sam reduced it to zero. I highly recommend to hire Sam for this type of audits and any CRA problem.”

E.M., Ottawa