Section 246

Subsection 246(1) - Benefit conferred on a person

Cases

Gestion M.-A. Roy Inc. v. Canada, 2024 FCA 16

Various whole life policies on the life of a resident individual (Mr. Roy) were owned by (i) a holding company (“Gestion Roy”), controlled by...

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Laliberté v. Canada, 2020 FCA 97

The founder and controlling shareholder of Cirque du Soleil, had been found by the Tax Court to have received a taxable benefit under s. 15(1) (or...

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Consultants Pub Création Inc. v. Canada, 2008 DTC 6610, 2008 FCA 60, aff'g Massicotte v. The Queen, 2006 TCC 618

The taxpayer wholly owned a corporation ("Amadéus") which, in turn, wholly owned another corporation ("Pub Création"), and the taxpayer was also...

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The Queen v. Kieboom, 92 DTC 6382, [1992] 2 CTC 59 (FCA)

S.245(2)(c) applied where the taxpayer permitted his wife and, later, his children, to subscribe for non-voting common shares of his private...

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Sweeney v. The Queen, 90 DTC 6507, [1990] 2 CTC 342 (FCTD)

In 1950, a written agreement between the taxpayer's father and the taxpayer provided that the son could purchase his father's shares in a company...

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Boardman v. The Queen, 85 DTC 5628, [1986] 1 CTC 103 (FCTD)

Since the taxpayer's legal obligations to his divorced wife were met by a court order which ordered the Registrar of Land Titles to transfer title...

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Mansfield v. The Queen, 83 DTC 5136, [1983] CTC 97 (FCTD), aff'd 84 DTC 6535, [1984] CTC 547 (FCA)

A company netted no cash from the sale of a $5,000 convertible debenture to its employee because it deposited with a bank an amount equal to the...

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The Queen v. Immobiliare Canada Ltd., 77 DTC 5332, [1977] CTC 481 (FCTD)

By purchasing debentures of a sister Canadian resident corporation from its non-resident parent the taxpayer eliminated withholding taxes that...

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The Queen v. Esskay Farms Ltd., 76 DTC 6010, [1976] CTC 24 (FCTD)

The taxpayer, wished to sell land to the City of Calgary in consideration for two annual instalments in order to defer a portion of the gain to...

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Words and Phrases
disbursement

David v. The Queen, 75 DTC 5136, [1975] CTC 197 (FCTD)

As a result of transactions wherein the shares of a company held by the taxpayers were purchased on behalf of a pension plan which then caused the...

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Indalex Ltd. v. The Queen, [1988] 1 CTC 60, 88 DTC 6053 (FCA)

It was found that the taxpayer, by purchasing aluminium from a Bermudan affiliate at a price that was 5% higher than what it would have paid if it...

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Laxton v. The Queen, 88 DTC 6008, [1988] 1 CTC 19 (FCTD), rev'd , in part, 89 DTC 5327 (FCA)

In a joint venture agreement it was agreed that an individual member of the joint venture ("Laxton") would be paid an annual management fee equal...

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MNR v. Enjay Chemical Co. Ltd., 71 DTC 5293, [1971] CTC 535 (FCTD)

In finding that a forgiveness of a portion of the trade indebtedness owing by the taxpayer to a U.S. affiliate would have given rise to a taxable...

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See Also

Gestion M.-A. Roy Inc. v. The King, 2022 TCC 144, aff'd 2024 CAF 16

Various whole life policies on the life of a resident individual (Mr. Roy) were owned by (i) a holding company (“Gestion Roy”), controlled by...

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Laliberté v. The Queen, 2018 TCC 186, aff'd 2020 FCA 97

The founder and controlling shareholder of Cirque du Soleil was found to have received a taxable benefit under s. 15(1) (or alternatively, under...

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Pelletier v. The Queen, 2004 DTC 3176 (TCC)

Although benefits were conferred on the taxpayers by virtue of their being able to acquire shares of a private company worth $300,000 for a...

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Husky Oil Ltd. v. The Queen, 95 DTC 316, [1995] 1 CTC 2184 (TCC), aff'd 95 DTC 5244 (FCA)

The taxpayer, which needed to "shelter" a capital gain previously realized by it, purchased from a vendor with which it dealt at arm's length the...

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Ovis Brooks v. Minister of National Revenue, 91 DTC 639, [1991] 1 CTC 2551 (TCC)

The taxpayer was deemed under former s. 245(2) to have disposed of an "economic interest" in a corporation wholly-owned by him when he caused it...

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Administrative Policy

10 October 2024 APFF Financial Strategies and Instruments Roundtable Q. 1, 2024-1023641C6 - Intercompany loans and taxable benefits

Could CRA confirm that an interest-free loan between two corporations (Aco and Bco) owned by different shareholders does not give rise to a...

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7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 2, 2022-0936281C6 F - police d'assurance-vie & avantage

Suppose that two brothers resident in Canada each have a Holdco owning 50% of Opco and that, in order to fund the buy-sell agreement on the death...

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2017 Ruling 2016-0660321R3 - Reorg of REIT to simplify multi-tier structure

A Canadian REIT (the “Fund”) holds the units and notes of a subsidiary unit trust (“Sub-Trust”), whose principal asset is most of the...

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6 December 2016 External T.I. 2016-0666841E5 F - Sale of property for POD less than FMV

Opco is held somewhat equally by three holding companies, each wholly-owned by an individual (A, B or C) who is unrelated to the others. Opco...

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14 March 2016 External T.I. 2016-0626781E5 - Neuman Type Situation

The only issued and outstanding share of Opco (which has retained earnings of $500,000) is 1 Class A common share, with a fair market value of...

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16 April 2012 External T.I. 2011-0411491E5 - Taxation of distributions of a US LLC

In…2011-0411491E5, CRA commented on an interest in a United States Limited Liability Corporation (LLC) held by an Alberta Unlimited Liability...

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24 June 2015 External T.I. 2015-0575911E5 F - Benefit to shareholder or conferred on a person

Corporation A, is wholly owned by Holdco, which has equal unrelated Shareholders 1, 2, 3 and 4. Corporation A disposes of a capital property to...

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3 March 2015 Internal T.I. 2014-0527841I7 F - Avantage imposable pour aéronef

In a wholly-owned stacked structure of three Corporations (C holding D, holding E), Corporation E acquired an aircraft for business use but with...

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12 December 2012 Internal T.I. 2012-0464411I7 - Indirect Benefit

A taxable Canadian corporation (Holdco) which is wholly-owned by a trust of which Mr. A is the sole trustee and is a discretionary beneficiary,...

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16 April 2012 External T.I. 2011-041149

A Canadian-resident individual owns all the shares of an Alberta unlimited liability company which, in turn, owns a majority of the membership...

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10 January 2011 Internal T.I. 2009-0344251I7 - Application of subsection 246(1)

In a situation where a second-tier subsidiary provides a benefit to the shareholder of a first-tier corporation, s. 246(1) can be applied on its...

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8 October 2010 Roundtable, 2010-0371901C6 F - avantage à l'actionnaire, assurance-vie

Question 2 at the May 4, 2010 CALU Roundtable concerned the situation where (A) Holdco holds an insurance policy on the life of its shareholder,...

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4 May 2010 CALU Roundtable, 2010-0359421C6 - Shareholder's benefit and life insurance

S. 246(1) could apply where a corporation (Parentco) holds a life insurance policy for which it pays the premiums and designates its subsidiary...

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4 December 2009 Internal T.I. 2009-0344991I7 F - Paragraphe 246(1) et le jugement Massicotte

Mr. X, who is the sole shareholder of Holdco, which in turn is the sole shareholder of Opco receives, along with four Opco employees receive...

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2 December 2008 Internal T.I. 2008-0270981I7 F - Entreprise de prestation de services personnels

Mr. A wholly-owned Holdco, which held a minority interest in Opco. The principal residence of Mr. A and Ms. A (spouses), held by Holdco, is...

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25 February 2008 Internal T.I. 2007-0243871I7 F - Avantages imposables

After finding that a corporation’s payment of the personal expenses of an unpaid director gave rise to s. 6(1)(a) inclusions to him, the...

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14 June 2007 External T.I. 2006-0209341E5 F - Utilisation d'un bien d'une société de personnes

A partnership in whose farming business the partners are actively involved owns the residence of one of the partners, who does not pay rent, but...

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20 March 2007 External T.I. 2006-0173711E5 F - Paiement des impôts d'une fiducie

Mr. A is one of the two trustees for an inter vivos trust for his minor children that provides for the distribution of all income to the...

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17 December 2003 Internal T.I. 2003-0047367 F - Benefit Conferred on Non-arm's Length Person

The four equal common shareholders of Opco were X (a director and vice president), his wife ("Y"), Y's sister and the sister's husband, and X and...

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6 October 2003 External T.I. 2003-0040145 F - TRANSFERT D'UNE POLICE D'ASSURANCE-VIE

A shareholder transferred a universal life insurance policy, that was an exempt policy, on the individual’s life to a wholly-owned corporation...

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25 March 1994 External T.I. 9335505 - INTEREST REDUCE 15(1) BENEFIT

"It our general position that the term 'shareholder' as used in subsection 15(1) of the Act would not include a person who indirectly controls a...

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93 A.P.F.F. Round Table, Q.17

Where a taxpayer transfers assets to an unrelated corporation applying the s. 85(1) rollover, it is not possible to rule out the application of...

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24 March 1993 T.I. (Tax Window, No. 38, p. 1, ¶2490)

Re potential application of s. 246(1) to a holder of common shares where his father exchanges preferred shares of the corporation for preferred...

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90 C.R. - Q.47

Where a Canadian corporation borrows funds from an arm's length lender and the Canadian corporation's non-resident parent guarantees the loan for...

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80 C.R. - Q.55

The listing in IT-453 of conferral-of-benefit situations was not intended to be comprehensive.

IT-239R2 "Deductibility of Capital Losses from Guaranteeing Loans for Inadequate Consideration and from Loaning Funds at less than a Reasonable Rate of Interest in Non-arm's Length Circumstances"

Former s. 245(2) may have been applied in situations where there is a material benefit to other shareholders as a result of a minority shareholder...

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Paragraph 246(1)(a)

Administrative Policy

15 May 2019 IFA Roundtable Q. 7, 2019-0798821C6 - Subsection 246(1) and Non-Residents

An indirect benefit would be included in computing a non-resident’s income under s. 15(1) if the amount of the benefit were a payment made...

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5 November 2003 Internal T.I. 2003-0043277 F - Benefit-Use of Automobiles

The CEO ("X") of an automobile sales company ("Opco"), and X's spouse held 51% and 49% of the shares of a holding company ("HoldcoX"), which held...

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Subsection 246(2) - Arm’s length

Cases

Jobin v. The Queen, 78 DTC 6538, [1979] CTC 493 (FCTD)

What is now s. 245(3) did not apply to an arm's length sale of all the shares of a company, an operation which admittedly entailed the stripping...

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See Also

Extendicare Health Services Inc. v. MNR, 87 DTC 5404, [1987] 2CTC 179 (FCTD)

"[T]he term 'bona fide', when used as an adjective, is generally taken to mean 'honestly', 'genuinely' or 'in good faith'."

Words and Phrases
bona fide