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Originally Posted by Leondros
I will let Locke validate this one as its been a decade since I wrote the UFE but my understanding is that when the holding company sells shares of a related active operating company at a capital gain, the taxable portion (50% of the capital gain) is treated as passive investment income. The taxable portion of the capital gain (50%) is taxed at the investment income rate of 46.67%, not the general corporate tax rate of 23%. However, part of this tax is refundable when dividends are paid out of the company.
One last consideration would be if the holding company has over 10% of the operating company, it might qualify for the Capital Dividend Account, which would allow the non-taxable portion (50%) of the capital gain to be shielded and distributed tax-free in the future.
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This is a pretty good explanation, the general rule is 'it depends' on how much is in there relative to operating income, Capital Dividends, etc.
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Originally Posted by calgarygeologist
A question regarding T4 slips. My company issued me two T4s for 2024 because my employment status changed throughout the year. I can see both in our payroll system. In my CRA account only one T4 shows up? Should I be considered about this at all? Should I indicate this to payroll at work?
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This is very common actually. You see it a lot especially in Government work, specifically AHS, when an employee either changes positions or goes from Part-Time to Full-Time or vice versa, ond/or in Corporate circles if theres been a merger or acquisition or even just a change in payroll companies.
You do have to add them both together on your taxes though.