Weekly Tax Tips
Can my RRSP invest in my own business?
21 May 2010
It is possible to use your RRSP to invest in a Canadian-controlled private corporation (CCPC). However, if you, together with persons related to you, own 10% or more of the shares of the CCPC, the investment may not be a qualifying RRSP asset. If you deal at arm's length with the CCPC and the cost of the shares you hold in the CCPC or a related corporation is less than $25,000, you can invest your RRSP in shares of the company. If you own less than 10% of the shares, there are generally no restrictions on the amount you can invest.
In determining the amount and cost of the shares that you own, you have to consider shares owned by persons related to you, both inside and outside their RRSPs. Also, all or substantially all of the company's assets must be business assets at the time the shares are purchased by your RRSP.
This tax tip is a publication of BDO Canada LLP on developments in the area of taxation. This material is general in nature and should not be relied upon to replace the requirement for specific professional advice. The information in this tax tip is current as of 21 May 2010.
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