General rate income pool (GRIP)
The general rate income pool, or GRIP, is a balance that generally reflects a corporation’s taxable income that has not benefited from the small business deduction or any other special tax rate. A Canadian-controlled private corporation can pay eligible dividends up to it without Part III.1 tax.
GRIP is a running balance a Canadian-controlled private corporation (CCPC) keeps for tax. It sets how much the company can pay as eligible dividends without Part III.1 tax, and it appears in the company’s T2 filings.
How it works
- The CRA says GRIP is calculated at the end of the tax year, on Schedule 53 filed with the T2 return.
- A CCPC can pay eligible dividends to the extent of its GRIP without incurring Part III.1 tax, and can pay them during the year if, at the end of the year, those paid do not exceed it.
- The Income Tax Act defines the pool for a CCPC as a positive or negative amount worked out by formula.
What to ask
Ask for the latest Schedule 53 and for the dividends the company has designated as eligible. See what a large pre-sale dividend does and the entry on eligible dividends.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentGeneral rate income pool (GRIP)
- 02Government of CanadaGovernmentIncome Tax Act, R.S.C. 1985, c. 1 (5th Supp.)
- 03Canada Revenue AgencyGovernmentEligible dividends
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