CRA finds that the advantage tax applies where a specified beneficiary of an RCA assigns her rights to receive distributions from the RCA to secure a personal loan

CRA found that the advantage tax in s. 207.62 applied where a specified beneficiary of an RCA assigned her rights to receive distributions from the RCA in order to secure a personal loan. CRA added:

[T]he advantage tax is equal to the present value of the beneficiary’s savings from the secured borrowing terms as compared to those of an unsecured borrowing. If it had been determined that the loan terms did not reflect arm’s length terms, the full amount of the loan would have been subject to the advantage tax.

Neal Armstrong. Summary of 16 September 2016 Internal T.I. 2013-0500581I7 under s. 207.5(1) – advantage – (a).