Pelletier – Court of Quebec finds that the shareholder benefit from personal use of a corporate aircraft should reflect GAAP depreciation rather than CCA (25% d.b.) rates
A corporate helicopter was used partly for the personal use of the individual shareholder (Pelletier). The ARQ (contrary to the CRA approach) assessed to increase the amount of the shareholder benefit includible in the income of Pelletier on the basis that the value of the depreciation of the helicopter should be increased from the 4% straight-line rate used in preparing the corporation’s financial statements to the 25% declining-balance rate applicable to Class 9 property (such as helicopters).
Dortélus JCQ noted that the appropriate test was that of “what would the shareholder have paid to receive the benefit had he not been a shareholder” He accepted that the 4% rate accorded with generally-accepted accounting principles, and found that Pelletier had established that the 4% rate was “more in line” with this test.
Neal Armstrong. Summary of Pelletier v. Agence du revenu du Québec, 500-80-035631-176, 500-80-035644-179, 11 February 2021 (Court of Quebec) under s. 15(1).