Principal Issues: 1) Does 15(1) apply in circumstances where
a) Parentco is the policyholder of a life insurance policy and its subsidiary is the beneficiary.
b) Same situation but Subco reimburses Parentco the payment of the premium.
c) Sisterco 1 and Sisterco 2 are wholly-owned by an individual. Sisterco 1 owns the policy, Sisterco 2 is the beneficiary and would reimburse Sisterco 1 the amount of the premium paid.
2) In situations 1b) and c), will the ACB to the policyholder be affected by the reimbursement?
Position: 1a) No but subsection 246(1) may apply to Subco.
1b) and 1c) Subsection 9 and paragraph 12(1)(x) could apply to include in the income the reimbursement received. Subsection 15(1) is not applicable to Parentco if the reimbursement is included in its income. Subsection 15(1) is not applicable to Sisterco 1.
Reasons: 1)a),b),c) 15(1) applies to a shareholder who receives a benefit and that determination is a question of fact.