T2 Schedule 50: Reporting Your Corporation’s Shareholders

When it’s time to prepare your corporation’s tax return, your accountant asks for an up-to-date copy of your shareholder register. That register is what feeds T2 Schedule 50, the part of the return that tells the Canada Revenue Agency (CRA) who owns your corporation. It lists every shareholder holding 10% or more of the common or preferred shares, along with their identification number and ownership percentages.

The schedule only has a few columns, but it leaves little room for guesswork. A forgotten holding company or a trust listed under the wrong name is enough to make it inaccurate. Everything depends on an accurate register.

What is T2 Schedule 50 and who must complete it?

T2 Schedule 50 is where a corporation reports its main shareholders to the CRA. Every private corporation must complete it when at least one shareholder holds 10% or more of its common shares or of its preferred shares. It lists up to the 10 largest shareholders.

Under the Income Tax Act, a private corporation has to be resident in Canada. It can’t be a public corporation, and it can’t be controlled by one. Most incorporated small businesses are Canadian-controlled private corporations (CCPCs), so they fit this definition.

In these corporations, at least one shareholder almost always crosses the 10% line. So Schedule 50 ends up in nearly every return, along with several other schedules covered in our guide to the T2 corporation income tax return. The real work is getting the list right.

If you searched for “schedule 50” without adding “T2,” you may have landed on Schedule 50 of the T5013, the partnership information return. It covers each partner’s interest in a partnership and has nothing to do with the corporate income tax return your corporation files.

The 10% threshold applies to each class of shares

Take a shareholder who holds 5% of the common shares and 12% of the preferred shares. That shareholder must be reported, because the threshold is met in the preferred class. That’s why the form has a separate column for each class.

This comes up often after an estate freeze. The founder usually receives preferred shares and keeps few or no common shares. Look only at the common shares and the founder disappears from Schedule 50, even though those preferred shares held most of the corporation’s value at the time of the freeze.

What information goes on Schedule 50?

For every shareholder holding 10% or more of a class of shares, Schedule 50 asks for their name, their type and an identification number, followed by their percentages of common and preferred shares. On the CRA website, the form is titled “Schedule 50, Shareholder Information” and carries the code T2SCH50.

Shareholder names and percentages come from the shareholder register, one of the corporate tax documents you need for your T2 return.

The shareholder’s type goes in brackets after the name. The CRA allows four types (corporation, partnership, individual or trust).

Only one identification number is entered per shareholder, and it depends on that type. An individual is identified by their social insurance number, a corporation by its business number and a partnership by its partnership account number. A trust uses its trust number, which is the letter T followed by eight digits.

Lines 400 and 500 hold the two percentages. Despite what some online summaries suggest, the form doesn’t ask for the shareholder’s address or number of shares.

Schedule 50 is one of the T2’s information schedules, and no dollar amounts appear on it. Your financial statements go through the General Index of Financial Information (GIFI) instead, mainly on Schedules 100 and 125, which cover your balance sheet and income statement.

How do you report a holding company or a family trust?

A holding company or a family trust that holds 10% or more of a class of shares is listed on Schedule 50 under its own name, with its own number. The people behind it don’t appear on the schedule.

The holding company is entered under its legal name, followed by “(corporation)” and its business number.

It works the other way, too. A subsidiary wholly owned by your holding company must report its parent corporation on its own Schedule 50. That one is easy to miss when several returns for the same group are prepared at the same time.

A family trust follows the same logic. It’s listed under its name, with “(trust)” and its trust number, without adding the trustees or the beneficiaries. Those details belong in the trust’s own return.

Schedule 50 example for a small business

Here’s how it plays out at Lakeshore Cabinetry Inc., a small Ontario business. A few years ago, its founder, Sarah Mitchell, completed an estate freeze in favour of a family trust. This is the corporation’s shareholder register at year-end.

Lakeshore’s Schedule 50 has three lines. Sarah Mitchell is on it even though she holds no common shares, because her 100% of the preferred shares is well above the threshold.

Daniel Wong, an employee who holds 5% of the common shares, isn’t on it. He stays below the threshold in both classes.

Do you also need to complete Schedule 19?

Yes, if a non-resident shareholder held a voting share of your corporation at any time in the year. Their percentage doesn’t matter, and Schedule 19 is completed in addition to Schedule 50. Chapter 2 of the CRA’s guide specifies that non-voting shares aren’t included.

Picture a shareholder with 30% of the voting shares who moves to the United States during the year. If they become a non-resident, they appear on Schedule 50 for their ownership and on Schedule 19 for their status.

What mistakes should you avoid on Schedule 50?

• Looking only at common shares. A shareholder who holds only preferred shares may still have to be reported.
• Forgetting the holding company. A holding company is a shareholder like any other, identified by its business number.
• Listing the trust under the trustees’ names. The trust is reported with its own trust number.
• Reusing last year’s percentages. A share issuance, transfer or redemption changes the split.
• Leaving the parent corporation off a subsidiary’s return. With 100% of the shares, it has to be on the schedule.

Most of these mistakes trace back to an outdated shareholder register. Checking it before every return is the simplest way to avoid them.

A short schedule that depends on an accurate register

Short as it is, T2 Schedule 50 reflects the whole history of your share ownership. Every reorganization and every share transfer can change what goes on it from one year to the next. Miss one in the register, and the schedule may no longer be accurate.

When you rely on our corporate tax filing services, Schedule 50 is prepared from your documents and reviewed by an experienced tax accountant, along with the rest of your file. Simply include your up-to-date shareholder register with the documents you send us.

This information is provided for educational purposes and doesn’t constitute personalized tax advice. Every situation is different. Consult a CPA about your specific case.

Frequently asked questions about Schedule 50