The most common reason a scheduled dividend or income distribution does not occur is that the corporation, holding company, or trust does not have sufficient cash available to make the payment.
In Voyant, these entities are modelled as separate cash flow entities. Before they can distribute income to shareholders or beneficiaries, they must first receive funding through income, business profits, asset sales, or contributions.
1. Check that the entity has been funded
Corporations, holding companies, and many trusts do not generate cash automatically. Before they can pay dividends or make income distributions, they must have sufficient cash or assets available.
If you've scheduled a dividend or income distribution but haven't modelled any funding for the entity, there will be no funds available to distribute.
For a corporation or holding company, funding may come from:
- Business income or profits
- Contributions from the owners
- Proceeds from the sale of business assets
- Other planned cash inflows
For a trust, funding can be modelled in one of two ways:
- Create the assets with the trust as the owner, if the trust already owns those assets at the start of the plan.
- Model a transfer of existing assets from an individual or another owner into the trust during the plan.
If the trust has not been funded using one of these methods, it will not have assets available to generate income or make distributions to beneficiaries.
2. Review the entity's cash flow
If the entity has been funded, review its cash flow to determine whether sufficient cash is available in the year the distribution is scheduled.
Previous expenses, distributions, or other withdrawals may have reduced the available balance before the scheduled payment occurs.
To review this, open the Holding Company or Trust chart and select Year View > Investments.
3. Confirm the distribution is scheduled correctly
Review the scheduled dividend or income distribution to ensure:
- The start year is correct.
- The payment has not ended.
- The payment amount is appropriate and does not exceed the cash available in the entity.
- The payment is associated with the correct corporation, holding company, or trust.
Additional resources
For more information about modelling holding company cash flow, refer to the Canadian Holding Company training resources. Holding Company Webinar
If you're modelling a trust, refer to the Canadian trust documentation for guidance on funding trusts and scheduling distributions. Inter-Vivos Trust
Key takeaway
A scheduled dividend or income distribution can only be paid if the corporation, holding company, or trust has sufficient cash available at the time the payment is due. If a planned distribution is missing, the first thing to check is whether the entity has been properly funded and has enough available cash to make the payment.