Can my Ontario corporation pay me a dividend using property instead of cash?

Yes, a dividend in kind involves the corporation distributing property — real estate, a vehicle, equipment, or investments — to a shareholder rather than cash. However, the tax consequences are more complex than a cash dividend.

When a corporation transfers property as a dividend in kind, it is deemed to have sold the property at fair market value for corporate tax purposes, triggering any accrued capital gain or recapture on the asset at the corporate level. The shareholder is deemed to have received a dividend equal to the fair market value of the property, and reports it on their personal return with the appropriate gross-up and dividend tax credit treatment for non-eligible dividends.

Dividends in kind also attract a deemed transfer for GST/HST purposes in some circumstances. Property transferred from a corporation to a shareholder that is not a supply in the ordinary course of business may still trigger a self-supply or deemed supply analysis. Because both corporate and personal tax consequences arise simultaneously, and because valuation disputes with the CRA are expensive, dividends in kind are generally used only where cash is genuinely unavailable and a professional has modelled the full tax cost.