Identify who owes whom
An owner may contribute money to cover startup costs or pay a company expense personally. A corporation may also pay an owner's personal cost or advance money to them. Those transactions should not be mixed into one unexplained balance without supporting records.
Review the dates, amounts, purpose and direction of each transaction. A balance that moves from an amount owed to the owner to an amount owed by the owner can create a materially different question.
A bookkeeping entry is not a tax strategy
Recording a personal withdrawal as a shareholder loan does not establish that it is tax-free. The shareholder-loan rules contain income-inclusion provisions, specific exceptions and related considerations that depend on the facts.
Do not rely on a simple year-end repayment slogan or assume repeated repayments and withdrawals resolve the issue. Bring the complete transaction history to a qualified adviser before deciding how to treat a balance.
What to bring to the review
Gather relevant bank entries, receipts for expenses paid personally, loan documentation, repayment evidence and any decisions about salary or dividends. Identify personal costs paid through corporate accounts openly rather than classifying them as business expenses.
Agree on how future transfers will be documented and reviewed during the year. Early attention gives the accountant a clearer fact pattern than an unexplained balance discovered after year-end.
Sources & editorial notes
Sources checked October 23, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Income Tax Folio S3-F1-C1: Shareholder loans and debtsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.