Canadian Controlled Private Corporation (CCPC in RRSP)

 

​Small Business Investments - CRA

 

A CCPC is a private corporation controlled only by Canadian residents and operating an active business mainly in Canada. If a public corporation or non-residents indirectly control it, it does not qualify as a CCPC.

Many startups issue private shares to raise funds. These shares can be purchased inside a Registered Retirement Savings Plan (RRSP), but there are important restrictions based on CRA tax rules.

What You Need to Know Before Investing in a CCPC through RRSP

• Consult your tax adviser about the small business capital gains exemption and the 10% ownership rule
• Get written confirmation from the CCPC’s Chartered Accountant confirming the corporation’s eligibility
• Obtain verification citing the specific subsections of the CRA Tax Act that apply

Key Rule of Thumb

If you or related persons directly or indirectly own more than 10% of the CCPC:

• You cannot hold the CCPC’s private shares or debt inside your RRSP
• Exception: If it’s an arm’s length relationship and the total investment cost is under $25,000

Important Consideration

An investment that qualifies at the time of purchase may become prohibited if the corporation no longer meets small business requirements.