Principales Questions: 1) Does the fact that a corporation has paid salary to the deceased sole shareholders for many tax years, but only dividends for the past two tax years affect the characterization of a payment as a death benefit? 2) Would the response in 1) be different if the deceased only received dividends and never received any remuneration/salary from the corporation? 3) Whether the minutes of a meeting of the directors of the corporation providing for the payment of a death benefit to the sole shareholder need to be done prior to his/her death? 4) Whether there is a time limit within which a payment to a taxpayer must be made?
Position Adoptée: 1) It is a question of fact but the fact that the corporation only paid dividends for the past two tax years prior to the individual's death does not, in and of itself, preclude the amount from qualifying as a death benefit. 2) Question of fact, but it does not seem reasonable to conclude that an amount paid would be in recognition of the deceased service in an office or employment. 3) We accept that a payment to the taxpayer may be a death benefit where all requirements in the definition of death benefit are satisfied. There is no obligation to have the minutes providing the payment of a death benefit before or after the death of the employee.
4) There is no time limit to pay a death benefit.
Raisons: 1) and 2) Definitions of death benefit, office and employee at paragraph 248(1). 3) Definition of death benefit. 4) Definition of death benefit at paragraph 248(1). Paragraph 14 of Interpretation Bulletin IT-508R.
