Debt Vs Equity Financing — Choosing A CPA-Guided Structure For Business Growth

Your capital mix defines your control, tax efficiency, and investor appeal. Mackisen CPA Auditors Montreal creates CPA-certified capital structures that minimize tax risk, attract investors, and satisfy CRA’s classification rules for equity and debt financing.

Legal and Regulatory Framework
Income Tax Act (Canada) Section 20(1)(c): Governs interest deductibility.
Income Tax Act (Canada) Section 15: Regulates shareholder loans and returns.
Taxation Act (Quebec) Section 34: Mandates equity and debt reporting accuracy.
CPA Canada Handbook Section 3856: Defines debt vs equity classification.
Bank Act (Canada) Section 462: Requires disclosure for secured financing.

Key Court Decisions
Beaudoin v. The Queen (2020): Penalized misclassified shareholder loans.
Simard Beaudry Construction v. Canada (2019): Validated CPA-restructured funding.
Lincora Group v. Quebec (2019): Penalized false financing disclosures.
Royal Bank v. Canada (2019): Accepted CPA-verified ratios for approval.
Tremblay Holdings v. The Queen (2021): Supported CPA-audited capital statements.

Why CRA Monitors Capital Mix
Debt reduces taxes through interest deduction; equity increases transparency but reduces control. CRA audits both for consistency and accuracy. Mackisen CPA Auditors Montreal ensures your balance sheet reflects true business reality.

Mackisen Strategy
Capital Optimization — Balance debt and equity for tax efficiency.
Tax Structuring — Maximize deductibility while retaining ownership.
CPA Certification — Verify documentation for lenders and investors.
Investor Confidence — Provide CPA reports for funding rounds.
Monitoring — Maintain ratios for CRA and lender reviews.

Powering Client Needs and Sustainable Growth
A Montreal tech start-up raised $3M in equity with CPA-audited financials. A Quebec logistics firm cut tax costs 12% through restructuring. A Toronto manufacturer improved credit metrics with CPA-certified debt documentation.
How Mackisen Clients Benefit

• Lower taxes and higher financing credibility

• CPA-reviewed capital structure

• Investor and CRA confidence

• Scalable funding solutions

Common Questions
Is equity financing tax-deductible? No—only debt interest is.
Should I use shareholder loans? Yes, if CPA-monitored.
Does CRA audit capital accounts? Frequently.
Can Mackisen assist investors? Yes—with audited documentation.
Is hybrid financing possible? Yes—with CPA structuring.

Why Mackisen
Mackisen CPA Auditors Montreal blends strategy and compliance to create financing that works. We ensure your structure supports both CRA requirements and investor growth ambitions.