Dias – Tax Court of Canada denies ABILs to 2 individuals who lent to their SBCs through their Loanco rather than directly

The two individual taxpayers made loans to their two start-up retail-business companies (which were small business corporations) through another corporation (“201”) owned by them (which was not an SBC), rather than directly. Consequently, losses realized by them on their loans did not qualify as business investment losses. Graham J concluded (at para. 30):

Had they structured their affairs differently, they may have been successful in claiming ABILs, but in tax law form matters.

Neal Armstrong. Summary of Dias v. The Queen, 2021 TCC 85 under s. 39(1)(c).