CRA indicates that a sole shareholder who did not receive salary every year could receive a death benefit

CRA considers that if a sole shareholder was paid “over the years” for his or her employment services, the receipt only of dividends for the two years preceding death would not preclude an amount paid by the corporation after death from qualifying as a death benefit. CRA also stated that “the payment of the death benefit may be staggered over more than one taxation year.”

Neal Armstrong. Summary of 14 March 2017 External T.I. 2016-0656101E5 Tr under s. 248(1) – death benefit.