Safe Income Calculator
Determine the safe income on hand attributable to a corporation’s shares and test a proposed intercorporate dividend against it under section 55(2). An internal working paper first, with an optional client-ready summary.
A full working paper for the file, and a client-ready summary only when you choose to share it.
Safe Income, and the Dividend It Supports
This is one of the built-in calculations in CodaraFlow. Enter the corporation’s income and distributions year by year, and it builds the safe income on hand, allocates it to the shareholdings, and tests a proposed dividend against it.
- Safe Income on HandIncome earned or realized that may contribute to safe income on hand supporting a dividend, computed year by year to the determination date.
- Allocated to Each HoldingSafe income allocated among the shareholdings, with any pre-acquisition amount left unallocated.
- The Exposed-Dividend TestWhether a proposed dividend exceeds a holding’s safe income, flagging the excess exposed under section 55(2).
- The CRA Position ForkYears before and after November 28, 2023 handled under their respective positions.
- Estate-Freeze ExchangesSafe income allocated to preferred shares received on an estate freeze, capped by the accrued gain at the time of the exchange.
An Internal Determination, With an Optional Client Summary
Safe income is an internal determination, not a client letter. In CodaraFlow it produces a full working paper for the file, and only a summarized conclusion is ever client-facing, and only when you turn it on.
Year by year and holding by holding, ready for the file and a CRA review.
The CRA-position method fork and the practice conventions handled consistently.
The letter and email output is off by default; only the summarized conclusion is ever shared.
When you do include the summary, it exports like every other section.
Grounded in the Provisions You Cite
The determination follows the section 55 anti-avoidance rules and the related safe-income principles. The wording is firm-editable; the sections are fixed by the Act.
An intercorporate dividend may be recharacterized as a capital gain to the extent it exceeds the share’s safe income, subject to the exceptions.
A dividend is protected to the extent of the income earned or realized that reasonably contributes to the accrued gain on the share.
Rules relevant to computing income earned or realized for safe-income purposes, including the adjustments for taxes and non-deductible amounts.
The figures are planning estimates prepared from the corporation’s tax returns and records. They reflect the Canada Revenue Agency’s published positions, together with accepted jurisprudence and administrative practice where relevant, including the change in position for years beginning after November 28, 2023, and do not replace a review of the specific facts.
Calculations Firms Reach For Alongside It
Get a working demo account, run this calculation on a real file, and export the letter it produces.
Everything is computed from the figures you enter and assembled from your firm’s approved wording. The app never connects to AI.
Editable Word documents on your firm’s letterhead. Monthly pricing, no long-term contracts.
Questions About This Calculation
Is this a standalone calculator?
No. It’s one of the built-in calculations inside CodaraFlow, and an internal one: a working paper for the file. Only a summarized conclusion is ever client-facing, and only when you turn it on.
Does it go in the client letter?
By default, no. Safe income is an internal determination; the letter and email output is off unless you enable it, and then only the summarized conclusion is shared.
Can we change the wording and which notes appear?
Yes. Every sentence and every note is firm-editable, and can be overridden on an individual letter.
Does any client data go to an AI?
No. The app never connects to AI. Deliverables are assembled from structured facts and your firm’s approved wording.