Brulé,
T.C.J.:—This
is
an
appeal
commenced
by
the
appellant
Sharon
Buckland
from
a
reassessment
of
income
tax
for
the
1985
taxation
year.
Subsequently
upon
application
the
Court
under
the
provisions
of
subsection
174(3)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
joined
Donald
Buckland
and
D.J.
Buckland
&
Associates
Ltd.
as
third
parties
to
the
appeal.
In
his
successful
application
the
Minister
requested
a
determination
of
the
following
questions:
(1)
Does
the
amount
of
$14,024
paid
to
Sharon
Buckland
by
the
company
constitute
income
from
employment?
(2)
If
not,
was
the
said
amount
paid
at
the
direction
of
Donald
Buckland
for
the
benefit
of
Sharon
Buckland
or
as
a
benefit
he
wished
to
have
conferred
upon
her?
(3)
Does
the
amount
paid
by
the
company
to
Sharon
Buckland
constitute
an
expense
of
the
company
incurred
for
the
purpose
of
gaining
or
producing
income?
Facts
In
1984
Sharon
Buckland
was
married
to
Donald
Buckland.
On
September
18,
1984
Mrs.
Buckland
sued
Mr.
Buckland
for
divorce.
Until
minutes
of
settlement
were
entered
into
late
in
November
1984
the
appellant
was
a
shareholder
and
employee
of
D.J.
Buckland
and
Associates
Ltd.
(hereinafter
referred
to
as
"the
company”).
During
the
period
of
difficulty
in
the
marriage
the
appellant
wrote
cheques
on
the
company
account
as
she
was
authorized
to
do.
Her
evidence
was
that
these
funds
were
used
for
the
support
of
herself
and
her
children.
She
indicated
that
she
had
her
husband's
approval
for
this,
a
fact
which
was
denied
by
Mr.
Buckland.
There
was
no
documentary
evidence
as
to
the
taking
of
funds
and
only
when
he
reviewed
bank
statements
did
Mr.
Buckland
become
aware
of
what
was
involved.
In
total
the
sum
of
$14,024
was
taken
by
the
appellant.
Most
of
the
funds
were
taken
after
the
September
18,
1984
divorce
petition,
according
to
the
evidence
given.
After
discussing
the
matter
with
his
accountant
and
solicitor
and
deciding
that
the
appellant
used
the
funds
for
her
sole
benefit
and
was
under
no
restriction
as
to
the
funds,
the
company,
to
cover
the
debt
balance
in
its
records,
issued
a
T4A
to
Mrs.
Buckland
in
1985
for
$14,024.
This
amount
was
said
to
constitute
income
from
employment
paid
as
a
bonus
in
1985
by
way
of
an
offset
to
amounts
due
to
the
company
by
Mrs.
Buckland.
Analysis
The
Minister
has
taken
the
position
that
when
the
bonus
was
paid
it
must
be
included
in
the
appellant's
income.
On
the
other
hand
the
appellant
maintains
that
the
moneys
involved
were
for
the
benefit
of
Mr.
Buckland
and
should
be
regarded
as
his
income.
The
real
issue,
however,
is
whether
the
$14,024
must
be
qualified
as
income
or
as
a
shareholder's
loan.
The
matter
of
moneys
being
taken
from
a
company
was
dealt
with
in
the
case
of
The
Queen
v.
Fred
E.
Poynton,
[1972]
C.T.C.
411;
72
D.T.C.
6329,
a
decision
of
the
Ontario
Court
of
Appeal.
In
that
case
the
Court
held
that
the
word
“income”
in
the
Income
Tax
Act
is
sufficiently
wide
to
include
money
other
than
that
received
from
bona
fide
transactions.
At
page
420
(D.T.C.
6335)
of
the
reasons
the
following
was
said:
If
it
is
a
material
acquisition
which
confers
an
economic
benefit
on
the
taxpayer
and
does
not
constitute
an
exemption,
e.g.
loan
or
gift,
then
it
is
within
the
allembracing
definition
of
section
3.
[Now
paragraph
6(1)(a)
of
the
Income
Tax
Act.]
This
passage
was
quoted
with
approval
by
the
Supreme
Court
of
Canada
in
The
Queen
v.
Elizabeth
Joan
Savage,
[1983]
C.T.C.
393;
83
D.T.C.
5409
at
399
(D.T.C.
5414).
As
to
the
amount
that
was
taken
by
the
appellant
to
be
considered
as
a
true
shareholder's
loan
there
is
no
difficulty
in
concluding
this
was
not
so.
To
be
a
proper
shareholder
loan
there
must
be
a
bona
fide
agreement
between
the
parties.
This
was
set
out
in
the
case
of
John
Altenhof
v.
M.N.R.,
[1973]
C.T.C.
2303;
73
D.T.C.
239.
In
the
recent
case
of
Gérald
Doyon
and
Jean
Leduc
v.
M.N.R.,
[1990]
1
C.T.C.
2242;
90
D.T.C.
1132,
the
Court
said
at
2244
(D.T.C.
1134):
[Translation]
For
there
to
be
a
loan,
as
in
any
contract,
certain
things
must
be
clear.
In
the
case
of
a
loan,
the
amount
loaned
and
the
intention
to
lend
and
to
borrow
must
be
certain.
There
must
be
a
meeting
of
minds
on
a
purpose.
What
is
needed
then
by
way
of
documentation
to
establish
a
valid
loan?
In
some
cases
such
exists
especially
in
larger
companies.
Frequently
in
smaller
companies
moneys
paid
out
are
only
later
categorized
as
a
loan,
salary,
bonus
or
even
a
dividend
and
then
reflected
in
the
annual
financial
report.
In
the
present
case
the
appellant
had
authority
to
write
cheques
which
resulted
in
the
funds
going
to
her.
She
was
in
no
way
under
any
restriction
as
to
the
use
of
these
funds.
As
an
employee
she
had
been
paid
a
salary
and
bonuses
in
previous
years.
To
put
the
blame
on
her
husband
saying
that
he
should
be
taxed
on
the
amounts
involved
is
not
justifiable
on
the
evidence
presented.
The
Federal
Court
decision
of
The
Queen
v.
Norman
Kenneth
Ans,
[1983]
C.T.C.
8;
83
D.T.C.
5038
held
that
a
company
was
justified
in
crediting
the
amount
of
a
bonus
payable
to
the
taxpayer
against
the
outstanding
balance.
The
actual
sum
of
the'"
bonus”
was
not
received
in
the
same
year
as
the
moneys
involved
but
this
did
not
deter
the
inclusion
to
income
of
the
taxpayer
in
the
year
the
bonus
was
declared.
In
dealing
with
the
determination
of
the
question
requested
by
the
Minister,
supra,
it
is
concluded
that
the
amount
of
$14,024
paid
to
Sharon
Buckland
by
the
company
did
constitute
income
from
employment.
As
a
result
of
this
decision
it
is
not
necessary
to
deal
with
the
other
questions.
The
final
analysis
is
that
the
Minister
was
not
in
error
in
assessing
the
appellant
the
amount
of
$14,024
in
1985
by
way
of
a
bonus.
The
appeal
is
accordingly
dismissed.
Appeal
dismissed.
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