How Your Year-End Date Impacts Dividends and Shareholder Distributions

One question we get asked often is how does my year end date affect my dividend or my shareholder distributions? And there's a multitude of different ways that it gets impacted. So I want to talk about some of the planning opportunities maybe related to a year end date that doesn't necessarily tie into a calendar year. So one thing that we, we have that happens when we do a corporate year end, essentially all of the distributions that have been taken out during the year, we have to issue a dividend to clear those out. Now that dividend is issued in the period of time of when the corporate year end is filed. I'll talk about that in one second. But that dividend amount that comes out, it's on a T5 slip. That amount essentially needs to be claimed in the year it's issued. So let's go back to the corporate year end and how it relates to this. So for example, if we have a calendar year, we clear out the dividend distribution on December 31st. We issue the dividend. That dividend needs to be claimed in December in that same year of that period. So let's say it's December 31, 2024. If the dividend is issued December 31, 2024, the individual needs to claim it on their personal taxes in 2024. Let's change the year end date. Let's say instead of December 31, 2024, it's January 31, 2025. If we issue the dividend at the year end completion date, it's January 31, 2025. Even though those distributions came out, we cleared out the dividend. The dividend was issued in 2025. That leaves a whole extra year for us to not have to claim it on our personal taxes and not to pay tax on those dividends. So those off calendar years after December 31st can be really advantageous to deferring tax for a whole year. So when we think about it again, we have to clear out those dividends during the period of which the year end is. At the end of that year end period, we issue a dividend and that dividend distribution needs to be claimed in the period it was issued.