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[Music] [Applause] hello David rock glacier and the Canadian tax and business lawyer and today Id like to discuss the taxation of shareholder loans a shareholder loan or a draw is money withdrawn by a shareholder usually the owner manager from a corporation now if that amount was not included in income you could see that this is an easy way to take money out of the corporation without ever having to pay tax so the Canadian income tax act in Subsection 15 sub 2 says that any shareholder loan that is not repaid within 2 corporate year ends is included in tax and is fully taxable at top marginal tax rates what does this mean for you as a shareholder well you can certainly take out shareholder draws but its very important that they be repaid within 2 years or if not repaid they have to be allocated to either dividends or salary in that way it will be taxable to you and the corporation will either receive a deduction for the salary paid or a reduction of retained earnings when a dividend