GIFI Equity Accounts
GIFI codes 3000 to 3999 capture the residual interest in a corporation: share capital, contributed surplus, retained earnings, and dividends.
Definition
The 3000 to 3999 GIFI range reports equity: the residual claim of shareholders after all liabilities are settled. For a typical CCPC this range is short, with most activity flowing through common share capital (3500), retained earnings (3600), and dividends declared (3701). More complex corporations use additional codes for preferred shares, contributed surplus, accumulated other comprehensive income, and non-controlling interests.
Key rules
- Share capital codes (3500 to 3540): par value and stated capital of issued shares, split by class. The amounts reflect legal stated capital under the governing statute, not fair market value.
- Contributed surplus (3541): capital contributions received that are not share capital, such as forgiven shareholder loans that were documented as capital contributions.
- Retained earnings (3600, 3620, 3640, 3660, 3680, 3849): opening balance, net income, dividends declared, and adjustments reconcile to the closing balance on Schedule 100.
- Dividends declared (3701 for taxable, 3702 for capital) reduce retained earnings when they are declared, not when they are paid. The split between eligible and non-eligible also has reporting implications on Schedule 3.
- Contributed capital changes (new shares issued, shares redeemed, or surplus contributions) must reconcile to movements on Schedule 50 Shareholder Information and the corporate registry records.
Example
Equity section of a single-shareholder BC CCPC at its second fiscal year end:
The Capital Dividend Account is a tax attribute, not a ledger balance. It does not appear in GIFI equity codes; it is tracked separately on Schedule 89. See .
Common mistakes
- Booking the issuance of shares at fair market value when only $100 was actually paid in. Stated capital is what was received, not what the shares are worth today.
- Treating declared but unpaid dividends as a liability without also reducing retained earnings. The debit to retained earnings and the credit to dividends payable must both be recorded at declaration.
- Mixing eligible and non-eligible dividends in one account. Keep them separate so that Schedule 3 and the GRIP and LRIP tracking tie out.
- Posting shareholder capital contributions to revenue. A contribution increases equity under 3541, not net income.
- Leaving 3849 (closing retained earnings) out of reconciliation. The movement from opening to closing retained earnings must equal net income minus dividends minus any prior-period adjustments.
Related concepts
The equity section closes out Schedule 100. Learn the full coding system at , and the matching halves of the balance sheet at and . The movement through retained earnings is presented on the . For structuring the share capital itself see .
Authority
- Canada Revenue Agency Guide RC4088, General Index of Financial Information (GIFI)
- Canada Business Corporations Act Part V
- Canada Revenue Agency Guide T4012, T2 Corporation Income Tax Guide
See also
Related entries
GIFI Overview
The General Index of Financial Information (GIFI) is CRA's standardized four-digit coding system that maps every balance sheet and income statement account to a T2 return line.
GIFI Asset Accounts
GIFI codes 1000 to 1999 cover every asset a corporation reports on Schedule 100, from cash and receivables through capital assets and intangibles.
GIFI Liability Accounts
GIFI codes 2000 to 2999 cover every current and long-term liability reported on Schedule 100, including payables, tax payable, and shareholder loans.
Schedule 100. Balance Sheet Information
Schedule 100 (T2SCH100) reports balance sheet items using CRA's General Index of Financial Information (GIFI) codes, mapping the corporation's trial balance accounts to standardized CRA categories.
Share Classes
Share classes define who votes, who gets dividends, and who receives what on a wind-up. A clean share structure at incorporation avoids expensive reorganizations later.
Statement of Retained Earnings
The Statement of Retained Earnings reconciles opening and closing retained earnings, showing net income and dividends declared during the period.
Capital Dividend Account (CDA)
The Capital Dividend Account is a notional tax pool of a private corporation that allows certain amounts, primarily the non-taxable half of capital gains and life insurance proceeds, to be paid to shareholders as tax-free capital dividends.
This entry is for general reference. It does not constitute professional tax advice. Consult a qualified Canadian accountant for your specific situation.