Cases
St-Pierre v. Canada, 2018 FCA 144
The taxpayer was the sole shareholder and director of a Quebec corporation (the “Corporation``) that realized an eligible capital amount on a...
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Tax Topics - General Concepts - Effective Date | retroactive judgment of a Superior Court effectively treated as only having prospective effect for ITA purposes | 425 |
Canada v. Gillette Canada Inc., 2003 DTC 5078, 2003 FCA 22
Some of the shares held by the taxpayer in its French subsidiary were purchased for cancellation by the subsidiary in consideration for the...
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Tax Topics - General Concepts - Payment & Receipt | replacement with different currency note | 60 |
Tax Topics - Income Tax Act - Section 212 - Subsection 212(13.1) - Paragraph 212(13.1)(b) | 117 |
Magicuts Inc. v. Canada, 2001 DTC 5665, 2001 FCA 332
Whether there was an amount owing by the taxpayer to its non-resident parent turned on whether accounts between them were netted. The Court found...
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Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss | trade receivable contributed on capital account to sub | 68 |
Wallace v. Canada, 98 DTC 6326 (FCA)
The taxpayer became indebted to a company of which he was a sole shareholder as a result of a bank calling in a guarantee by the company of a loan...
Dunlop v. The Queen, 95 DTC 5351, [1995] 2 CTC 149 (FCTD)
The taxpayer failed to establish that a loan had been made to him directly by a brokerage firm ("Walwyn") rather than from a corporation ("Canam")...
The Queen v. Silden, 93 DTC 5362, [1993] 2 CTC 123 (FCA)
The taxpayer, who was an employee of a Norwegian multinational corporation ("Musnor") was transferred to Canada and issued 1/3 of the shares of a...
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Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. | 84 |
Nellis v. The Queen, 86 DTC 6377, [1986] 2 CTC 216 (FCTD)
"The purpose of Section 15 of the Income Tax Act is to prevent a corporation from distributing its profits to its shareholders under the guise of...
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Tax Topics - Income Tax Act - Section 76 | 47 |
Schlamp v. The Queen, 82 DTC 6274, [1982] CTC 304 (FCTD)
The amount of a loan, made by a company to its shareholder for the purchase by him of a home for occupation by his family, was added to his income.
See Also
St-Pierre v. The Queen, 2017 TCC 69, rev'd 2018 FCA 144
The taxpayer was the sole shareholder and director of a Quebec corporation (``2869``) that realized an eligible capital amount on a disposition on...
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Tax Topics - General Concepts - Estoppel | limited estoppel remedies in Quebec/no abusive conduct by CRA | 459 |
Tax Topics - General Concepts - Unjust Enrichment | taxpayer was unjustly enriched when he received capital dividends that subsequently were declared to not have been validly paid as dividends | 85 |
Erb v. The Queen, 2000 DTC 1401 (TCC)
The taxpayers, along with related persons owned shares of a corporation ("Enterprises") and received draws from a partnership, of which they and...
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Tax Topics - Statutory Interpretation - Specific v. General Provisions | 68 |
Lemoine v. The Queen, 96 DTC 1655 (TCC)
The taxpayer was unsuccessful in his attempt to establish that a loan received by him from a controlled corporation (Lemoine Inc.) was in fact a...
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Tax Topics - General Concepts - Illegality | prohibited loan recognized | 33 |
Haynes v. The Queen, 94 DTC 1906, [1995] 1 CTC 2515 (TCC)
Before finding that the taxpayer had received $210,000 from his corporation as an appropriation rather than a loan, Margeson TCJ. stated (p. 1910)...
285614 Alberta Ltd. and Maplesden v. Burnet, Duckworth & Palmer, [1993] WWR 374, 8 BLR (2d) 280 (Alta. Q.B.)
Te defendant was found to be negligent in not advising of the risk that the signing by the individual plaintiff of a demand promissory note as...
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Tax Topics - General Concepts - Negligence, Fiduciary Duty and Fault | failure to advise that opinion might be incorrect | 160 |
Laflamme v. MNR, 93 DTC 50, [1992] 2 CTC 2596 (TCC)
In finding that the inclusion of the amount of a loan made to the taxpayer by a corporation owned by his father in the taxpayer's income was not...
Tonolli Canada Ltd. v. Minister of National Revenue, 91 DTC 520, [1991] 1 CTC 2607 (TCC)
After a venture carried on through a U.S. subsidiary which was owned by the taxpayer and its Netherlands parent proved to be unsuccessful, the...
Wolinsky v. MNR, 90 DTC 1854, [1990] 2 CTC 2417 (TCC)
The non-payment of interest did not constitute the "making of a loan" for purposes of the pre-1982 version of the provision, although it resulted...
Miconi v. MNR, 85 DTC 696, [1985] 2 CTC 2457 (TCC)
A real estate property was found to be beneficially owned by the taxpayer rather than by a corporation controlled by him, with the result that...
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Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(2) | 95 |
Heal v. MNR, 80 DTC 1169, [1980] CTC 2199 (TCC)
Before finding that an advance by the company of which the taxpayer was the principal shareholder to aid in his construction of a home was...
Administrative Policy
25 February 2022 External T.I. 2020-0873761E5 F - Shareholder loan
On January 1, 2019, the Corporation (which had a calendar year) made the loan of $1,000, bearing interest at 5% per annum, to a shareholder (Mr....
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Tax Topics - Income Tax Act - Section 80.4 - Subsection 80.4(3) - Paragraph 80.4(3)(b) | s. 80.4(2) does not apply to accrued and unpaid interest on a loan | 196 |
Tax Topics - Income Tax Act - Section 15 - Subsection 15(2.6) | s. 15(2) applies separately to accrued and unpaid interest on a shareholder loan, but s. 80.4(2) does not apply to such interest | 142 |
2 October 2014 External T.I. 2013-0506551E5 - Transitioning from 15(2) to a PLOI
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Tax Topics - Income Tax Act - Section 15 - Subsection 15(2.11) | PLOI election unavailable for pre-2012 loan that is repaid and relent/ s. 15(2) applies only to 1st loan | 210 |
27 February 2014 External T.I. 2013-0506401E5 - Loan from a partnership to an individual
A partnership between Holdco1 as the 99.9% LP and Holdco2 as the 0.1% GP makes a $2 million non-interest-bearing demand loan to the taxpayer, the...
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Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | bona fide loan not a transfer | 165 |
2010 Ruling 2010-0353141R3 - Related Foreign Entity Financing
a loan from a controlled foreign affiliate to a related non-resident entity will not trigger the application of s. 15(2) and Part XIII.
7 September 2006 External T.I. 2006-0172841E5 F - 15(2) - employé non-actionnaire au moment du prêt
CRA indicated that s. 15(2) can apply to a non-shareholder, non-connected employee who receives a loan from the employer to enable the employee to...
8 October 2004 APFF Roundtable Q. 4, 2004-0088411C6 F - Prêt à une société de personnes par une société
Two individuals equally own a corporation and have equal interests in a professional partnership. The corporation on-lends the proceeds of a loan...
30 April 2004 External T.I. 2003-0045851E5 F - L'affaire Gillette Canada inc.
Does CRA agree with the TCC and FCA Gillette Canada decisions regarding the application of ss. 15(2) and (2.1)? CRA responded:
We disagree with...
23 March 2004 External T.I. 2003-0049031E5 F - Paragraphe 15(2) de la Loi et "montant remis"
In 2003, Opco made a loan to the adult child of its sole shareholder in order to pay the tuition fees of the child, who was not an employee. The...
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Tax Topics - Income Tax Act - Section 12 - Subsection 12(11) - Investment Contract | loan that was anticipated to be forgiven was not in fact a loan | 122 |
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1.21) | inclusion under s. 56(2) avoided second inclusion under s. 15(1.21) | 296 |
Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Excluded Obligation | loan included in income under s. 15(2) was excluded obligation re its subsequent forgiveness | 209 |
17 February 1997 External T.I. 9640655 - LOAN TO A FUTURE SHAREHOLDER
S.15(2) does not apply to a loan made by a corporation to an individual who only becomes a shareholder of the corporation after the loan is made.
25 November 1993 Income Tax Severed Letter 9323577 - Interest Costs on Bridge Financing upon Relocation
RC's policy is that an employee will not be subject to a taxable benefit for the interest costs associated with bridge financing arrangements...
5 January 1993 T.I. 923226 (November 1993 Access Letter, p. 491, ¶C9-290; (Tax Window, No. 28, p. 16, ¶2375)
A loan may still qualify after its transfer at fair market value to a related corporation by which the employee is also employed, because the...
92 C.R. - Q.43
Where an open or running account of a shareholder with a corporation is cleared at every year-end by the payment of salaries or dividends, s....
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Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(j) | 34 |
19 November 1990 T.I. (Tax Window, Prelim. No. 2, p. 19, ¶1050)
Because the application of s. 15(2) is determined only at the time the debt is incurred, it will not apply by virtue only of the debtor having...
October 1989 Revenue Canada Round Table - Q3 (Jan. 90 Access Letter, ¶1075)
A partnership is a person for purposes of s. 15(2).
84 C.R. - Q.16
"Taxpayer" in s. 20(1)(j) is considered to include a partnership where a loan subject to s. 15(2) previously has been included in the...
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Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxpayer | 21 |
80 C.R. - Q.39
If a person who holds shares as a nominee or trustee is not in his personal capacity a shareholder of the corporation or a related corporation and...
80 C.R. - Q.7
The holding of the shares by a trustee will not cause the loss of the exemption, provided that the shareholder was the beneficial owner.
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Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 32 |
IT-119R4 "Debts of Shareholders and Certain Persons Connected with Shareholders"
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Tax Topics - Income Tax Act - Section 15 - Subsection 15(2.4) - Paragraph 15(2.4)(e) | 151 | |
Tax Topics - Income Tax Act - Section 15 - Subsection 15(2.4) - Paragraph 15(2.4)(f) | 134 |
Articles
John Lorito, Trevor O'Brien, "International Finance – Cash Pooling Arrangements", 2014 Conference Report, (Canadian Tax Foundation), 20:1-33
Withholding based on net increase (p. 16)
If the shareholder loan rules apply to loans made by a Canadian resident corporation to a non-resident,...
Randy S. Morphy, "The Modern Approach to Statutory Interpretation, Applied to the Section 15 Anomaly in Foreign Affiliate Financing", Canadian Tax Journal, (2013) 61:2, 367-85: summary under s. 15(2.3).
Chris Van Loan, "Canada Revenue Agency Rules Positively on Second Tier Financing Structure", Business Vehicles, Vol. XIII, No. 4, 2010, p. 713.
Singer, "Shareholder Loan Can Be Used to Acquire Recreational Home Outside of Canada", Taxation of Executive Compensation and Retirement, December 1990/January 1991, p. 381.
"Loan May Be Disqualified Where it is Made to Acquire Dwelling Already Occupied as Owner", Taxation of Executive Compensation and Retirement, March 1990, p. 249.
Paragraph 15(2)(a)
Administrative Policy
27 October 2004 External T.I. 2004-0088581E5 F - Prêt à un actionnaire
CRA indicated that where s. 15(2.4)(b) applies, this exception continues to apply if, subsequent to obtaining the loan, the individual is no...
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Tax Topics - Income Tax Act - Section 15 - Subsection 15(2) - Paragraph 15(2)(b) | exception unavailable to the extent loan funded renovations | 73 |
Paragraph 15(2)(b)
Administrative Policy
27 October 2004 External T.I. 2004-0088581E5 F - Prêt à un actionnaire
CRA indicated that the availability of the s. 15(2.4) exception was questionable given that the individual was the sole employee and shareholder...
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Tax Topics - Income Tax Act - Section 15 - Subsection 15(2) - Paragraph 15(2)(a) | exception continues to apply following cessation of employment | 30 |