Melançon - Tax Court of Canada finds that the failure of a house construction company to charge a mark-up on its costs incurred for shareholder work generated a taxable benefit

The taxpayer, who was the sole shareholder of a home construction company that handled the construction of his personal residence, reimbursed his company for all of its third-party costs in constructing the home. Smith J confirmed CRA’s assessment of a shareholder benefit on the taxpayer, that was computed by applying the profit margin of 8.09% that the company averaged on its other house construction business in that year to the costs that were incurred by it on this house.

Neal Armstrong. Summary of Melançon v. The Queen, 2018 CCI 73 under s. 15(1) and General Concepts – Effective Date.