Where a corporation confers a benefit on the wife of a shareholder, CRA will apply the s.15(1.4)(c) inclusion to that shareholder rather than the other shareholders (his brothers)

S. 15(1.4) extends the operation of s. 15(1) by assimilating benefits conferred on an individual who does not deal at arm's length with, or is affiliated with, a shareholder of a corporation, to benefits conferred on the shareholder – except where the benefit is (already) included in the income of the individual or another person.  Where the corporation, with four equal shareholders who are siblings, confers a benefit on the spouse of Sibling 4, CRA arguably has a choice as to which sibling will have the s. 15(1.4)(c) income inclusion, given that the spouse is related to each sibling.  Not surprisingly, CRA will include the benefit in Sibling 4's income only.  CRA was not asked, and it might not always be clear, whether the same approach would apply where the other shareholders are instead parents, children or personal holding companies.

Neal Armstrong. Summaries of 24 June 2015 T.I. 2015-0575911E5 F under s. 15(1.4)(c), s. 56(2) and s. 246(1).