borrowing money from a professional coroporation in Canada

QUESTION: If I borrow money from my professional corporation, do I have to report this amount as part of my income and pay personal income tax on that amount, or do I only pay corporate tax after I return the amount to the corporation. Thank you.

david ingram replies:

If you borrow money from your corporation it is not taxable if you pay it back within 6 months of your year end. If you do not pay it back, it becomes taxable income to you and changes on the corporation's books from a loan receivable to an expense.

In the meantime, since a loan is not an expense, the corporation owes tax on that amount if it is in a profitable position.

And, in my opinion, less than 5% of people who have professional corporations should have them.