Income Tax Folio S3-F1-C1, Shareholder Loans and Debts, April 10, 2025

Characterizing as loan

• 1.14 The determination of whether a loan has been received or a debt incurred is not based on accounting entries, which...

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Overview

1.18 … In very general terms, where the conditions set out in subsection 15(2.16) are met, subsection 15(2.17) deems that the...

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Ordinary course exception

1.28 The exception in S. 15(2.3) can apply where the debtor or borrower is a shareholder or a shareholder employee.

1.30...

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Bifurcation

• 1.39 Where a borrower has a total balance of loans owing to a corporation and only a portion was used for one of the described...

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Purpose of acquiring shares for employee’s own benefit

• Disposing of shares before the loan is repaid will generally be considered indicative of...

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Purpose of acquiring shares for employee’s own benefit

• Disposing of shares before the loan is repaid will generally be considered indicative of...

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Bona fide repayment arrangements

• 1.68 At the time the loan is made, the arrangements for repayment must be such that it is possible to determine,...

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Requirement to amend return where s. 15(2.6) not satisfied

• 1.73 Since it is not known whether the requirements of s. 15(2.6) are met until one...

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S. 20(1)(j) deduction by estate

• 1.78 A deceased shareholder's estate may be able to claim an s. 20(1)(j) deduction when the legal representative...

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Deferred imposition of Part XIII tax

1.90 … If there is no series of loans or other transactions and repayments, the non-resident who has...

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Loan qua shareholder

• 1.59 Factors that may indicate that a loan made by a corporation to a shareholder-employee arose because of a shareholding...

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