Jackman – Tax Court of Canada finds that the use of corporate yacht for marketing involving socializing did not generate a shareholder benefit

The individual shareholder of a corporation (“C.A.B.”), that owned a marina on Vancouver Island, used a 36-foot yacht to stay at other marinas and at boat shows, where he would mingle socially with the boaters and promote the use of the C.A.B. marina (as well as operating a promotional booth, when at a boat show). Personal use (e.g., taking friends or family out for whale watching) was only occasional, and Boyle J found that the personal use was around 5%, so that the charge paid by the taxpayer for such personal use of $18,000 per annum was reasonable. There was no shareholder benefit.

Boyle J stated:

Once it is established that business marketing activities were bona fide and primarily undertaken for business purposes, and that the expenses were themselves reasonable, it does not matter that the marketing involves socializing with clients, potential clients and/or other persons or entities relevant to its business.

Boyle J appeared to be critical of Crown counsel for not having conceded after the evidence was in, stating:

Even after the evidence was all before the court, unchallenged even as to credibility, this appeal carried on into its second day for argument. This all appears to have been driven by one or more CRA officials who did not attend for any of the evidence. It is the Department of Justice that represents the respondent Her Majesty the Queen. CRA is not Justice’s client in a solicitor-client relationship.

Neal Armstrong. Summary of Jackman v. The Queen, 2022 TCC 73 under s. 15(1).