CRA finds that a shareholder benefit from using the corporate aircraft is reduced by an interest-free loan made by the shareholder to fund its purchase

IT-432R2, para. 11 indicates that the value of a taxable benefit conferred on a shareholder respecting property made available by the corporation can usually be determined by multiplying a normal rate of return by the greater of the cost and fair market value of the property and adding the operating costs related to the property - but that the amount representing the greater of the cost and fair market value of the property may first be reduced by any outstanding interest-free loans or advances to the corporation made by the shareholder. Although this position was not repeated in AD-18-01 on aircraft benefits, CRA has now stated:

Where a shareholder grants an interest-free loan to the shareholder’s corporation and that corporation uses that amount to acquire an aircraft that is made available to that shareholder for the shareholder’s personal use, the CRA could accept in determining the available-for-use amount that the initial cost of the aircraft is first reduced by the amount of the interest-free loan that the shareholder made to the corporation to enable the corporation to acquire that aircraft.

Neal Armstrong. Summary of 5 October 2018 APFF Roundtable, Q.14 under s. 15(1).