Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
| |
July 10, 1991 |
| TO: |
FROM |
| Audit Applications Division |
Business and General Division |
| |
L. Holloway |
| |
957-2104 |
| Attention: Adele St-Amour |
| |
FILE |
903617 |
SUBJECT: Lloyd Youngman v. The Queen, 90 DTC 6322, Subsection 15(1) of the Act Your file 10250
This is in response to your memo dated December 12, 1990, concerning the proposed application of the Youngman case. We apologize for any inconvenience the delay in our response may have caused.
Audit Applications Position
Specifically, you stated in this memo that the Youngman principle will only be applicable in circumstances similar to those of that case. In addition, you are also of the opinion that in such cases, the benefit offset is a form of payment akin to interest on the money advanced and should be included in the shareholder's income in accordance with the general principle of constructive receipt or alternatively the barter principle.
Rulings Comments
21(1)(b)
In the Youngman case, the reduction of the benefit "by an amount equal to the interest that should normally have been paid on the balance of the loan" was allowed by the court because the shareholder "had himself lent more than $100,000, without interest to the company in order to help finance the construction of the house." Based on this statement. only where a loan is directly related to the property for which a benefit is being assessed should it be allowed to reduce any subsection 15(1) benefit calculated. Where for example a loan is made to the corporation for a non specific purpose, such a reduction should not be allowed.
We trust these comments are of assistance.for Director
Business and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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