I want to learn more about how the shareholder's loan works.

If you paid back the shareholder's loan within the same fiscal year in which it was made, you would not typically need to pay interest on the loan.

However, it's always a good idea to check the terms of your loan agreement to confirm whether interest was required.

In general, the interest on a shareholder's loan is paid from the shareholder to the corporation. This means that if you borrowed money from your corporation, you would pay interest on the loan to the corporation.

As a Canadian business owner, you would need to comply with the regulations of the Canada Revenue Agency (CRA) regarding shareholder loans.

The CRA has specific rules and guidelines for shareholder loans, and it's important to follow these rules to avoid any potential tax consequences.

In Canada, if you have an outstanding shareholder's loan at the end of the fiscal year, the amount of the loan will be included in the income of the corporation, which could result in additional taxes.

To avoid this, you would need to either repay the loan or ensure that it meets certain criteria, such as being secured by collateral.

If you did not have a loan agreement in place when you took out the shareholder's loan, it would be a good idea to create one now to help ensure that you are in compliance with the CRA regulations.

In terms of the interest rate, the CRA requires that the interest rate on a shareholder's loan be reasonable and in line with what an arm's length lender would charge in similar circumstances.

An arm's length lender is one who is not related to the borrower or the borrower's company.

Currently, as you mentioned, the interest rates for small business loans from banks are around 8-10%. If you charged yourself an interest rate of 8-10% on the outstanding balance of the shareholder's loan, this would likely be considered reasonable by the CRA.

If you pay back $3,000 to your corporation this year and follow the repayment schedule outlined in the loan agreement, this would likely be considered a reasonable effort to repay the loan.

However, it's important to keep in mind that the specific requirements for repaying a shareholder's loan can vary depending on the circumstances of the loan and the company.

If you borrowed $30,000 from your business and haven't paid it back, or if you meet certain circumstances, including backing the loan with collateral, the remaining loan amount may be deemed taxable and included in your personal income for tax purposes.

You would then be required to pay tax on the loan amount and record it as income on your personal tax return.

The balance of the outstanding loan at the conclusion of the corporation's fiscal year, less any interest you paid to the corporation on the loan, would be the amount of the presumed taxable advantage.

Any follow up questions for me?