Subsection 15(1.1) - Conferring of benefit
Cases
Wong v. R., 99 DTC 458, [1999] 2 CTC 2173 (TCC)
It was accepted that the effect of an arrangement under which family members subscribed for non-voting Class B common shares of a corporation...
Wu v. R., 98 DTC 6004, [1998] 1 CTC 99 (FCA)
The Tax Court Judge had erred in finding that the relevant purpose under s. 15(1.1) must be demonstrated to have been in the conscious intent of...
Administrative Policy
2015 Ruling 2015-0604051R3 - Internal Reorganization
The U.S. parent (XXXco1) of a Canadian corporation (Canco1) transferred a portion of its Class A common shares of Canco1 to a U.S. subsidiary...
10 October 2014 APFF Roundtable Q. 19, 2014-0538041C6 F - 2014 APFF Roundtable, Q. 19 - Stock dividend
Mr. X holds all 100 of Opco's Class A shares with a fair market value of $1,000,000 and nominal ACB and PUC. Opco pays a stock dividend comprising...
26 November 2013 CTF Roundtable, 2013-0507981C6 - Stock dividend by a foreign corporation 15(1.1)
Under a proposed ruling request, Canco, which directly owned approximately 99.99% of all the common shares of ForOpco, which was resident in...
1 April 2003 External T.I. 2003-0004125 F - Freeze by Paying a Stock Dividend
A CCPC (Opco) paid a stock dividend of preferred shares with a fair market value of $800,00 and a paid-up capital of $80 to its sole shareholder,...
9 May 1990 Meeting (October 1990 Access Letter, ¶1474)
S.15(1.1) generally does not apply where the stock dividend by itself does not significantly reduce the value of a specified shareholder's...
Subsection 15(1.2)
Articles
Mark Coleman, Daniel A. Bellefontaine, "Forgiveness, Foreign Affiliates and FAPI: a Framework", Resource Sector Taxation (Federated Press), Vol. X, No. 1, 2015, p.694
Priority of s. 15(1.2) rule (pp. 698-9)
[T]he existence of this rule suggests that a forgiven shareholder loan will typically be considered a...
Subsection 15(1.21)
Administrative Policy
23 March 2004 External T.I. 2003-0049031E5 F - Paragraphe 15(2) de la Loi et "montant remis"
In 2003, Opco made an interest-free loan to the adult child of its sole shareholder in order to pay the tuition fees of the child, who was not an...
26 February 2004 External T.I. 2003-0045471E5 F - Prêt à un actionnaire
ABCco carries on a written communications consulting business and does not carry on a money lending business in the ordinary course of its...
Subsection 15(1.4) - Interpretation — subsection (1)
Paragraph 15(1.4)(c)
Administrative Policy
4 June 2024 STEP Roundtable Q. 2, 2024-1003641C6 - Salary to Family Members
Where a corporation pays wages to an individual employee who is not a shareholder but does not deal at arm’s length with a shareholder and a...
6 December 2016 External T.I. 2016-0666841E5 F - Sale of property for POD less than FMV
Opco’s shares are held as to 40%, 40% and 20% by Holdco A, Holdco B and Holdco C, which are wholly owned by three individual shareholders (A, B...
24 June 2015 External T.I. 2015-0575911E5 F - Benefit to shareholder or conferred on a person
Corporation A, which has equal unrelated Shareholders 1, 2, 3 and 4, disposes of a capital property to the spouse (who is not herself a...
3 March 2015 Internal T.I. 2014-0527841I7 F - Avantage imposable pour aéronef
In a situation where there was personal use of a corporate aircraft by the individual shareholder (Mr. A) of the "grandfather" (indirect parent)...
10 October 2014 APFF Roundtable, 2014-0538101C6 F - Avantage automobile en vertu de 15(5)
The son of the sole shareholder of a corporation works for the corporation and receives automobile benefits in the course of his employment. Is...
Paragraph 15(1.4)(e)
Finance
Comment on s. 15(1.4)(e) in the 16 May 2018 IFA Finance Roundtable
Most of the 2016 technical amendment proposals were enacted in the second Budget Bill for 2017. However, in the case of the foreign demergers rule...
Subsection 15(1.5)
Administrative Policy
2021 Ruling 2020-0875391R3 - Post-acquisition restructuring
The Taxpayer (a Canadian public corporation with a widely-dispersed shareholder base) and Pubco (a corporation, governed by the laws of (foreign)...
Paragraph 15(1.5)(a)
Articles
Tim Barrett, Andrew Morreale, "Foreign Affiliate Update", 2019 Conference Report (Canadian Tax Foundation), 35: 1 – 53
Share cancellation requirement
- The s. 15(1.5)(a) demerger rule does not apply where the shares of the demerging corporation are cancelled, which...
Paragraph 15(1.5)(c)
Articles
Tim Barrett, Andrew Morreale, "Foreign Affiliate Update", 2019 Conference Report (Canadian Tax Foundation), 35: 1 – 53
Undesirability of gain if demerger of top-tier affiliate
- Where the demerger is of a top-tier affiliate whose FMV exceeds the net surplus and the...
Subsection 15(2) - Shareholder debt
Cases
St-Pierre v. Canada, 2018 FCA 144
The taxpayer was the sole shareholder and director of a Quebec corporation (the “Corporation``) that realized an eligible capital amount on a...
Canada v. Gillette Canada Inc., 2003 DTC 5078, 2003 FCA 22
Some of the shares held by the taxpayer in its French subsidiary were purchased for cancellation by the subsidiary in consideration for the...
Magicuts Inc. v. Canada, 2001 DTC 5665, 2001 FCA 332
Whether there was an amount owing by the taxpayer to its non-resident parent turned on whether accounts between them were netted. The Court found...
Wallace v. Canada, 98 DTC 6326 (FCA)
The taxpayer became indebted to a company of which he was a sole shareholder as a result of a bank calling in a guarantee by the company of a loan...
Dunlop v. The Queen, 95 DTC 5351, [1995] 2 CTC 149 (FCTD)
The taxpayer failed to establish that a loan had been made to him directly by a brokerage firm ("Walwyn") rather than from a corporation ("Canam")...
The Queen v. Silden, 93 DTC 5362, [1993] 2 CTC 123 (FCA)
The taxpayer, who was an employee of a Norwegian multinational corporation ("Musnor") was transferred to Canada and issued 1/3 of the shares of a...
Nellis v. The Queen, 86 DTC 6377, [1986] 2 CTC 216 (FCTD)
"The purpose of Section 15 of the Income Tax Act is to prevent a corporation from distributing its profits to its shareholders under the guise of...
Schlamp v. The Queen, 82 DTC 6274, [1982] CTC 304 (FCTD)
The amount of a loan, made by a company to its shareholder for the purchase by him of a home for occupation by his family, was added to his income.
See Also
St-Pierre v. The Queen, 2017 TCC 69, rev'd 2018 FCA 144
The taxpayer was the sole shareholder and director of a Quebec corporation (``2869``) that realized an eligible capital amount on a disposition on...
Erb v. The Queen, 2000 DTC 1401 (TCC)
The taxpayers, along with related persons owned shares of a corporation ("Enterprises") and received draws from a partnership, of which they and...
Lemoine v. The Queen, 96 DTC 1655 (TCC)
The taxpayer was unsuccessful in his attempt to establish that a loan received by him from a controlled corporation (Lemoine Inc.) was in fact a...
Haynes v. The Queen, 94 DTC 1906, [1995] 1 CTC 2515 (TCC)
Before finding that the taxpayer had received $210,000 from his corporation as an appropriation rather than a loan, Margeson TCJ. stated (p. 1910)...
285614 Alberta Ltd. and Maplesden v. Burnet, Duckworth & Palmer, [1993] WWR 374, 8 BLR (2d) 280 (Alta. Q.B.)
Te defendant was found to be negligent in not advising of the risk that the signing by the individual plaintiff of a demand promissory note as...
Laflamme v. MNR, 93 DTC 50, [1992] 2 CTC 2596 (TCC)
In finding that the inclusion of the amount of a loan made to the taxpayer by a corporation owned by his father in the taxpayer's income was not...
Tonolli Canada Ltd. v. Minister of National Revenue, 91 DTC 520, [1991] 1 CTC 2607 (TCC)
After a venture carried on through a U.S. subsidiary which was owned by the taxpayer and its Netherlands parent proved to be unsuccessful, the...
Wolinsky v. MNR, 90 DTC 1854, [1990] 2 CTC 2417 (TCC)
The non-payment of interest did not constitute the "making of a loan" for purposes of the pre-1982 version of the provision, although it resulted...
Miconi v. MNR, 85 DTC 696, [1985] 2 CTC 2457 (TCC)
A real estate property was found to be beneficially owned by the taxpayer rather than by a corporation controlled by him, with the result that...
Heal v. MNR, 80 DTC 1169, [1980] CTC 2199 (TCC)
Before finding that an advance by the company of which the taxpayer was the principal shareholder to aid in his construction of a home was...
Administrative Policy
25 February 2022 External T.I. 2020-0873761E5 F - Shareholder loan
On January 1, 2019, the Corporation (which had a calendar year) made the loan of $1,000, bearing interest at 5% per annum, to a shareholder (Mr....
27 February 2014 External T.I. 2013-0506401E5 - Loan from a partnership to an individual
A partnership between Holdco1 as the 99.9% LP and Holdco2 as the 0.1% GP makes a $2 million non-interest-bearing demand loan to the taxpayer, the...
2010 Ruling 2010-0353141R3 - Related Foreign Entity Financing
a loan from a controlled foreign affiliate to a related non-resident entity will not trigger the application of s. 15(2) and Part XIII.
7 September 2006 External T.I. 2006-0172841E5 F - 15(2) - employé non-actionnaire au moment du prêt
CRA indicated that s. 15(2) can apply to a non-shareholder, non-connected employee who receives a loan from the employer to enable the employee to...
8 October 2004 APFF Roundtable Q. 4, 2004-0088411C6 F - Prêt à une société de personnes par une société
Two individuals equally own a corporation and have equal interests in a professional partnership. The corporation on-lends the proceeds of a loan...
30 April 2004 External T.I. 2003-0045851E5 F - L'affaire Gillette Canada inc.
Does CRA agree with the TCC and FCA Gillette Canada decisions regarding the application of ss. 15(2) and (2.1)? CRA responded:
We disagree with...
23 March 2004 External T.I. 2003-0049031E5 F - Paragraphe 15(2) de la Loi et "montant remis"
In 2003, Opco made a loan to the adult child of its sole shareholder in order to pay the tuition fees of the child, who was not an employee. The...
23 January 2001 External T.I. 2000-0045445 F - DETTE D'UN ACTIONNAIRE - FIDUCIE
Opco, a private corporation carrying on a business, indirectly acquires a capital property by forming a trust, advancing $10,000 to it with the...
17 February 1997 External T.I. 9640655 - LOAN TO A FUTURE SHAREHOLDER
S.15(2) does not apply to a loan made by a corporation to an individual who only becomes a shareholder of the corporation after the loan is made.
25 November 1993 Income Tax Severed Letter 9323577 - Interest Costs on Bridge Financing upon Relocation
RC's policy is that an employee will not be subject to a taxable benefit for the interest costs associated with bridge financing arrangements...
5 January 1993 T.I. 923226 (November 1993 Access Letter, p. 491, ¶C9-290; (Tax Window, No. 28, p. 16, ¶2375)
A loan may still qualify after its transfer at fair market value to a related corporation by which the employee is also employed, because the...
92 C.R. - Q.43
Where an open or running account of a shareholder with a corporation is cleared at every year-end by the payment of salaries or dividends, s....
19 November 1990 T.I. (Tax Window, Prelim. No. 2, p. 19, ¶1050)
Because the application of s. 15(2) is determined only at the time the debt is incurred, it will not apply by virtue only of the debtor having...
October 1989 Revenue Canada Round Table - Q3 (Jan. 90 Access Letter, ¶1075)
A partnership is a person for purposes of s. 15(2).
84 C.R. - Q.16
"Taxpayer" in s. 20(1)(j) is considered to include a partnership where a loan subject to s. 15(2) previously has been included in the...
80 C.R. - Q.39
If a person who holds shares as a nominee or trustee is not in his personal capacity a shareholder of the corporation or a related corporation and...
80 C.R. - Q.7
The holding of the shares by a trustee will not cause the loss of the exemption, provided that the shareholder was the beneficial owner.
Articles
John Lorito, Trevor O'Brien, "International Finance – Cash Pooling Arrangements", 2014 Conference Report, (Canadian Tax Foundation), 20:1-33
Withholding based on net increase (p. 16)
If the shareholder loan rules apply to loans made by a Canadian resident corporation to a non-resident,...
Randy S. Morphy, "The Modern Approach to Statutory Interpretation, Applied to the Section 15 Anomaly in Foreign Affiliate Financing", Canadian Tax Journal, (2013) 61:2, 367-85: summary under s. 15(2.3).
Chris Van Loan, "Canada Revenue Agency Rules Positively on Second Tier Financing Structure", Business Vehicles, Vol. XIII, No. 4, 2010, p. 713.
Singer, "Shareholder Loan Can Be Used to Acquire Recreational Home Outside of Canada", Taxation of Executive Compensation and Retirement, December 1990/January 1991, p. 381.
"Loan May Be Disqualified Where it is Made to Acquire Dwelling Already Occupied as Owner", Taxation of Executive Compensation and Retirement, March 1990, p. 249.
Paragraph 15(2)(a)
Administrative Policy
27 October 2004 External T.I. 2004-0088581E5 F - Prêt à un actionnaire
CRA indicated that where s. 15(2.4)(b) applies, this exception continues to apply if, subsequent to obtaining the loan, the individual is no...
Paragraph 15(2)(b)
Administrative Policy
27 October 2004 External T.I. 2004-0088581E5 F - Prêt à un actionnaire
CRA indicated that the availability of the s. 15(2.4) exception was questionable given that the individual was the sole employee and shareholder...
Subsection 15(2.01)
Articles
Sam Li, "The Revised Shareholder Loan Rules", International Tax Highlights, Vol. 3, No. 4, November 2024, p. 9
Excluded loan scope (p. 11)
S. 15(2.01) of the August 12, 2024 draft legislation proposes to exclude from the application of s. 15(2) a loan the...
CPA Canada, "Submission regarding Technical Amendments Legislation in Budget 2024 included in the August 2024 Draft Legislation", 11 September 2024 CPA Canada submission
Insufficient scope to the s. 15(2.01) exceptions re foreign subsidiaries held through foreign partnerships (pp. 2-4)
- Notwithstanding the...
Subsection 15(2.1)
Administrative Policy
25 November 2021 CTF Roundtable Q. 8, 2021-0911881C6 - ss 15(2) and FA rules
A partnership (P), whose partners (FA1 and FA2) are foreign subsidiaries of Canco, borrows money from another foreign subsidiary (FA3) of Canco in...
7 June 2011 Internal T.I. 2011-0397921I7 F - Financement inter-sociétés
Canco makes a loan to a partnership (“XXXXXXXXXX Partnership”) that is wholly-owned by an indirect U.S. parent of Canco (the general partner)...
5 December 2002 Internal T.I. 2002-0171847 F - RESIDENCE D'UNE FIDUCIE
The corporation of which Mr. X is a shareholder makes a loan to the trust of which he is a beneficiary for the construction of a residence which...
Subsection 15(2.11) - Pertinent loan or indebtedness
Administrative Policy
Notice to Tax Professionals: Updates to filing process for a pertinent loan or indebtedness election, 25 March 2022
Expanded election disclosure and change to permit election to be made on loan-by-loan basis
… Effective for any elections made on or after April...
“Pertinent loans or indebtedness (PLOI)” under “Understanding Interest” 25 March 2022
Information to be provided in respect of the PLOI election
Currently there is no prescribed form to file a PLOI election. The PLOI election should...
7 November 2014 External T.I. 2014-0542061E5 - Section 15(2.12), follow up to 2014-051943
A CRIC remits Part XIII tax under s. 214(3)(a) on the amount of a loan to non-resident "Parentco" and, more than two years after the end of the...
2 October 2014 External T.I. 2013-0506551E5 - Transitioning from 15(2) to a PLOI
Can a s. 15(2) loan made to a non-resident person prior to March 29, 2012 ("Original Loan") be transitioned to the pertinent loan or indebtedness...
8 September 2014 External T.I. 2013-0482991E5 - 15(2) and related provisions
Debtco, a non-resident corporation which is connected to the non-resident wholly-owning parent (Parentco) of Canco, became indebted to Canco...
6 August 2014 External T.I. 2014-0519431E5 - Section 15(2.12)
Is the CRIC required to file an amended return, on late-filing a PLOI election, to reflect the additional s. 17.1(1) interest income? CRA...
18 June 2014 Internal T.I. 2014-0534541I7 - PLOI Elections
Blanket election
Although a taxpayer may file a single written communication containing a PLOI election for various particular amounts owing, that...
Pertinent loans or indebtedness Historical CRA Webpage: 17 January 2014
Required particulars in filing letter
File the election at the tax Centre of the CRIC... . The election must include the following:
- the name and...
23 May 2013 IFA Round Table Q. 6(c)
Will CRA permit a blanket PLOI election (specifying that it is being made for each debt owing from the particular debtor to the particular...
Finance
16 May 2018 IFA Finance Roundtable, Q.9
S. 15(2.11) PLOI elections can be made to elect out of s. 15(2) only by corporations resident in Canada (CRICs) where controlled by a non-resident...
Articles
Bal Katlai, "Simple Planning Around Outbound Loans Using Tax Incentives", Canadian Tax Highlights, Vol. 27, No. 12, December 2019, p. 9
Example of Canco being able to keep a loan to its NR parent outstanding indefinitely by offsetting PLOI interest by SR&ED credits (p. 9)
What if...
Joint Committee, "Foreign Affiliate Dumping, Derivative Forward Agreement and Transfer Pricing Amendments Announced in the 2019 Federal Budget", 24 May 2019 Submission of the Joint Committee
- The ss. 15(2) and (2.11) rules should permit PLOI loans to be made by a CRIC to any non-resident person who is a “parent” under the expanded...
Paragraph 15(2.11)(d)
Administrative Policy
15 May 2024 IFA Roundtable Q. 6, 2024-1007591C6 - PLOI Election Administrative Relief
Effective March 25, 2022, CRA adopted an administrative policy that requires only one PLOI election to be made in respect of each loan or...
Subsection 15(2.12)
Administrative Policy
15 May 2024 IFA Roundtable Q. 4, 2024-1007571C6 - Late-filed PLOI election
CRA indicated that it has revised its procedures for the late-filing of a PLOI election. Although this can still be accomplished by the...
Subsection 15(2.13)
Administrative Policy
26 May 2016 IFA Roundtable Q. 11, 2016-0642031C6 - PLOI late-filed penalties
A corporation resident in Canada (“CRIC”) has balances of accounts receivable reflecting the accumulation of hundreds of sales including to...
Subsection 15(2.16)
Finance
6 October 2017 APFF Financial Strategies and Instruments Roundtable, Q.13
The Explanatory Notes to s. 15(2.16) indicate that there is no objective of attacking commonplace loan transactions which are not intended to...
Paragraph 15(2.16)(c)
Administrative Policy
8 May 2018 CALU Roundtable Q. 1, 2018-0745491C6 - Back-to-back loans
In 2017-0690691E5 F, a 50% limited partner (Ms. X) funded her investment in a limited partnership (jointly owned with her husband) with a $3M bank...
Subparagraph 15(2.16)(c)(i)
Clause 15(2.16)(c)(i)(B)
Administrative Policy
31 October 2017 External T.I. 2017-0690691E5 F - New section 15 back to back loan rules
99.99% of the units of LP were held by Mr. and Ms. X (spouses) and 0.01% of its units were held by a general partner that was a subsidiary of a...
Subparagraph 15(2.16)(c)(ii)
Administrative Policy
31 October 2017 External T.I. 2017-0690691E5 F - New section 15 back to back loan rules
A 50% limited partner (Ms. X) funded her investment in an LP jointly owned with her husband through a $3M bank loan that was secured by a pledge...
14 September 2017 Roundtable, 2017-0703901C6 - CPA Alberta 2017 Q11: Shareholder loans
1. Where the security provided by the corporation may be used only for repayment of the arm’s length debt owing by the shareholder, will the...
May 2017 CPA Alberta Roundtable, ITA Q.11
The Technical Notes to s. 15(2.16) indicate that “it is intended that a specified right will not exist if it is established that all of the net...
Subsection 15(2.17)
Articles
Amanda S.A. Doucette, Britney Wangler, "Normal Borrowing by CCPC Owners Can Create an Income Inclusion", Canadian Tax Focus, Vol. 7, No. 1, February 2017, p. 1
Potential application of s. 15(2.17) where corporation guarantees loan to individual shareholder (p. 1)
[T]he back-to-back loan rules…may have...
Finance
26 April 2017 IFA Finance Roundtable, Q.13
[intention is to limit the imputation of a shareholder loan to Canco to the amount of Canco’s...
Subsection 15(2.18)
Articles
Jason Boland, Christopher Montes, "A Detailed Review of the Back-to-Back Loan Rules", 2016 Conference Report (Canadian Tax Foundation), 26:1-32
FIFO treatment of repayments (p. 26:25)
Finance has indicated that repayments are considered to occur on a first-in-first-out basis, in accordance...
Subsection 15(2.2) - When s. 15(2) not to apply — non-resident persons
Administrative Policy
21 June 1995 External T.I. 9510915 - 6363-1 FOREIGN AFFILIATES - DEEMED ABI
With respect to a loan by a wholly-owned foreign affiliate of a Canadian corporation ("Canco") to a non-resident corporation that was related to...
Subsection 15(2.3) - When s. 15(2) not to apply — ordinary lending business
Administrative Policy
2012 Ruling 2011-0417711R3
Canco, which is a grandchild subsidiary of Parentco (a resident of Country 1), borrows money from time to time under note offerings in Canada or...
9 May 2011 External T.I. 2010-0385211E5 F - Entreprise habituelle de prêt d'argent
A corporation whose business it was to purchase and sell shares of private and public corporations, sold all its shares and used the proceeds to...
2007 Ruling 2007-0226281R3 - Withholding Exemption - Use of Finco
Non-resident bondholders make a loan to a corporation ("Finco") which is wholly-owned by a charitable discretionary trust and Finco lends the...
8 February 2006 External T.I. 2004-0064811E5 - Subsection 15(2)
Cansub is a wholly-owned subsidiary of Canco which, in turn, is wholly-owned by MNC, a non-resident multi-national corporation. All the treasury...
2006 Ruling 2006-0211781R3 - Withholding Tax Exemption
Non-resident term lenders make a loan to a newly-incorporated wholly-owned subsidiary ("Finco") of the general partner of a Canadian limited...
2006 Ruling 2006-0191881R3 - Witholding Tax Exemption
Ruling that s. 15(2.3) will apply to a loan made by an indirect special purpose finance subsidiary of an income fund to an indirect general...
1996 Tax Executive Institute Round Table, Q. X (Draft, No. 963906)
"When a loan is made to a shareholder in the ordinary course of the creditor's business with the same terms and conditions as offered to the...
Articles
John Lorito, Trevor O'Brien, "International Finance – Cash Pooling Arrangements", 2014 Conference Report, (Canadian Tax Foundation), 20:1-33
Descripton of physical and notional cash pooling (pp. 2-3)
[I]n general terms there are essentially two types of cash pooling arrangements [fn 1:...
Randy S. Morphy, "The Modern Approach to Statutory Interpretation, Applied to the Section 15 Anomaly in Foreign Affiliate Financing", Canadian Tax Journal, (2013) 61:2, 367-85:
Example 1 – loan to direct foreign sub (pp. 369-370)
In example 1, a Canadian parent ("Canco") makes an interest-free loan ("the loan") to a...
Guy Fortin, Melanie Beaulieu, "The Meaning of the Expressions ‘In the Ordinary Course of Business' and ‘Directly or Indirectly'", 2002 Conference Report (Toronto: Canadian Tax Foundation, 2003) 36:1-60.
Subsection 15(2.4) - When s. 15(2) not to apply — certain employees
See Also
Goreham v. The Queen, 2000 DTC 1561 (TCC)
At the time the taxpayer received a loan from a company carrying on a fishing business that was beneficially owned, as to 50%, by the taxpayer and...
Lavoie v. The Queen, 95 DTC 673, [1995] 2 CTC 2709 (TCC)
Before finding that a demand promissory note signed by the taxpayer to evidence a loan made to him by a corporation he controlled did not...
Kalousdian v. The Queen, 94 DTC 1722, [1994] 2 CTC 2127 (TCC)
Mogan TCJ. accepted evidence that a loan made to the taxpayer by a corporation owned equally by him and an unrelated individual was made to him on...
Spencer v. The Queen, 93 DTC 1222, [1993] 2 CTC 2765 (TCC)
Oral evidence by the individual's shareholder of his intent to repay money that had been advanced to him by a numbered corporation to construct a...
Kanters v. MNR, 92 DTC 1508, [1992] 1 CTC 2413 (TCC)
What at best was an agreement for the shareholders to repay money to the corporation when the operation in which they invested the loaned monies...
Deckelbaum v. MNR, 82 DTC 1636, [1982] CTC 2659 (T.R.B.)
A home purchase loan arrangement was evidenced by a resolution of the corporation authorizing the making of the loan and providing for its...
Fabry v. MNR, 81 DTC 638 (T.R.B.)
The terms of a mortgage owing by the taxpayer to his company the proceeds of which were used to finance the acquisition and completion of...
Hendriks v. MNR, 81 DTC 939, [1981] CTC 3029 (T.R.B.)
Bona fide arrangements for the repayment of a loan from the corporation to the taxpayer were found not to exist in light of the fact that the loan...
Reekie v. MNR, 80 DTC 1447, [1980] CTC 2502 (T.R.B.)
A promissory note and a letter acknowledging indebtedness, which were prepared in the taxation year following the taxation year in which the loan...
Altenhof v. MNR, 73 DTC 239, [1973] CTC 2303 (T.R.B.)
The taxpayer was unable to establish that at the time he received an advance from the corporation arrangements were made for its repayment or that...
Administrative Policy
5 February 2002 External T.I. 2001-0115475 - LOAN TO PURCHASE SHARES
Where a loan which previously had been exempted under s.;15(2.4)(c), (e) and (f) subsequently was assigned to a partnership without being novated,...
26 May 1997 External T.I. 9705455 - Timing when to be specified employee
Where a loan is received by an employee who is not a specified employee at that time, but later in the year becomes a specified employee, the...
1996 Tax Executive Institute Round Table, Q. X (Draft, No. 963906)
"With respect to a loan which is excluded from a shareholder's income by reason of proposed subsection 15(2.4) or (2.5) of the Act, we expect...
11 August 1995 External T.I. 9509745 - SHAREHOLDER/EMPLOYEE HOUSING LOAN
Where changes to an original loan result in its novation, the new loan, because it serves to refinance an existing debt, will not qualify for the...
Income Tax Regulation News, Release No. 3, 30 January, 1995 under "Paragraph 15(2)(b) and 20(1)(j)"
bona fide repayments of shareholder loans which are the result of the declaration of dividends, salaries or bonuses should not be considered part...
30 March 1994 Internal T.I. 9336137 - ALLOCATION OF S/H LOAN TO FARM AND P/R
Where a loan made by the corporation to the employee exceeds the amount used for a qualified purpose (in this case, because the loan proceeds were...
28 March 1994 External T.I. 9332255 - MEANING OF "DWELLING"
When asked whether the exemption would apply to the making of a loan of $100,000 for the acquisition by an individual of a 20-year lease of a...
17 June 1994 External T.I. 9332295 - shareholder loans-employee gifts loan to spouse for home
"It is our view that a loan will not meet the exclusion requirements of subparagraph 15(2)(a)(ii) of the Act where the individual to receive the...
20 May 1994 External T.I. 9400835 - LOAN TO A SHAREHOLDER
Commercial housing loans specify a term (the maximum of which is normally seven years) under which the loan can be renewed, at which point the...
93 C.R. - Q. 17
It normally is unreasonable and inconsistent with normal commercial practice for a lender to loan a large sum of money without security or not to...
92 C.R. - Q.42
The exception in s. 15(2)(a)(ii) will not apply to loans made or indebtedness arising in respect of repairs, alterations, or renovations to a...
30 November 1991 Round Table (4M0462), Q. 2.3 - Housing Loan (s.15(2)(a)(ii), I.T.A.) (C.T.O. September 1994)
Where changing an interest-bearing loan into an interest-free loan results under the applicable civil legislation in a new security, the new...
30 November 1991 Round Table (4M0462), Q. 2.1 - Automobile Loan (s.15(2)(a)(iv), I.T.A.) (C.T.O. September 1994)
Although RC does not apply tests of minimum degree or percentage of use of an automobile in the performance of the duties of an employee's office...
7 October 1991 T.I. (Tax Window, No. 10, p. 6, ¶1507)
An employee housing loan which was repayable over a 25-year period would not have a reasonable repayment term, although a repayment or renewal...
4 April 1991 T.I. (Tax Window, No. 2, p. 28, ¶1221)
If under the terms of a separation agreement entered into some years after the acquisition of the home, the employee must leave the home, s....
21 September 1990 T.I. (Tax Window, Prelim. No. 1, p. 7, ¶1002)
Where the amount of a loan from an employer in respect of a recreational property ordinarily inhabited by the employee is in excess of the...
86 C.R. - Q.61
The loan need not be interest-bearing in order to demonstrate a bona fide arrangement for repayment.
86 C.R. - Q.63
Where a public corporation makes a bona fide loan to a shareholder qua employee rather than qua shareholder, on the same conditions as to other...
Paragraph 15(2.4)(a)
See Also
Canadian Occidental U.S. Petroleum Corp. v. The Queen, 2001 DTC 295 (TCC)
The taxpayer lent money on an interest-free basis to a non-resident wholly-owned subsidiary in 1988 and then, in November 1994 transferred the...
Paragraph 15(2.4)(b)
Paragraph 15(2.4)(e)
See Also
Mast v. The Queen, 2013 TCC 309
The taxpayer was the sole shareholder, and he and his wife were the only regular employees, of a corporation engaged in a packaging business. He...
Administrative Policy
14 June 2019 External T.I. 2019-0808411E5 - Application of 15(2.4) to home purchase loan
A Canadian-controlled private corporation (“Eco”) hires an individual (“Mr. A”) as CEO. Mr. A will also acquire 3% of Eco’s...
4 November 2011 External T.I. 2011-0406271E5 - Sole Shareholder-Employee Home Purchase Loan
A loan made in 2011 by a corporation to its sole shareholder-employee to facilitate the repayment of a secured line of credit used to finance a...
26 February 2004 External T.I. 2003-0045471E5 F - Prêt à un actionnaire
ABCco carries on a written communications consulting business and does not carry on a money lending business in the ordinary course of its...
19 February 2002 External T.I. 2002-0118495 - S/H LOAN TO EMPLOYEE TO BUY SHARES FROM S/H
A loan made by a closely-held private corporation at the direction of its controlling shareholder to enable an employee to buy shares from such...
9 January 2001 External T.I. 2000-0059995 - SHAREHOLDER LOANS
Before concluding that s. 15(2.4)(b) did not apply to a housing loan received by a specified employee, the Directorate stated that "it has...
IT-119R4 "Debts of Shareholders and Certain Persons Connected With Shareholders" 7 August 1998
11. Whether or not a loan made by a corporation to an individual is considered to have been received by that individual in his or her capacity as...
Paragraph 15(2.4)(f)
See Also
Mast v. The Queen, 2013 TCC 309
This case is summarized above under s. 15(2.4)(e). Angers J found that there were no bona fide repayment arrangements for the taxpayer to repay a...
Davidson v. R., 99 DTC 933, [1999] 3 CTC 2159 (TCC)
Before finding that a loan made by a family company to the taxpayer to finance the acquisition of a home satisfied the requirements for bona fide...
Administrative Policy
24 April 2001 Internal T.I. 2001-0067007 - SHAREHOLDER LOANS
Loans from a corporation to an employee/shareholder that were used to acquire previously issued publicly traded shares of the corporation, where...
IT-119R4 "Debts of Shareholders and Certain Persons Connected With Shareholders" 7 August 1998
12. In considering whether any arrangements for repayment were bona fide, the extent to which the arrangements have been carried out by the...
Subsection 15(2.5)
Articles
Elizabeth Boyd, Jeremy J. Herbert, "Trusts Holding Shares For Employees", draft 2023 CTF Annual Conference paper
Considerations for structuring a market maker trust (pp. 40-43)
- Given the specified employee rules, market maker trusts are commonly used in...
Subsection 15(2.6) - When s. 15(2) not to apply — repayment within one year
See Also
Magicuts Inc. v. The Queen, 98 DTC 2085, [1999] 1 CTC 2842 (TCC)
There was insufficient evidence to establish that there was an agreed intention between the taxpayer and its non-resident shareholder to set-off...
Ozawa v. R., 97 DTC 1500, [1998] 2 C.T.C. 2035 (TCC)
Before going on to find that amounts advanced by a corporation to the taxpayer had not been eliminated by way of set-off against amounts allegedly...
Meeuse v. The Queen, 94 DTC 1397 (TCC)
Each of the loans made to the taxpayer by her husband's company were for separate purposes, for example, financing her acquisition of an...
Uphill Holdings Ltd. v. MNR, 93 DTC 148, [1993] 1 CTC 2021 (TCC)
After noting (at para. 33) that "the object of 15(2)(b) is to prevent the use of a shareholder loan account for indefinite tax deferral purposes...
David Weisdorf v. Her Majesty the Queen, [1993] 2 CTC 2756
At issue was whether an amount, which was lent to the taxpayer, who was "connected" with a shareholder of the corporation (“Steel”), was...
Attis v. MNR, 92 DTC 1128, [1992] 1 CTC 2244 (TCC)
The taxpayer initially advanced significant sums to his corporation, but subsequently began to withdraw amounts from it for personal ends. For the...
William G. Docherty v. Minister of National Revenue, 91 DTC 537, [1991] 1 CTC 2409 (TCC)
In finding that the elimination of indebtedness of the taxpayer to his corporation by set-off was sufficiently evidenced by information contained...
Burgeo Trawlers Limited v. Minister of National Revenue, 91 DTC 231, [1991] 1 CTC 2053 (TCC)
At a shareholders' meeting, it was decided that capital of the shareholders would be returned to them by way of offset against advances to the...
Taylor v. MNR, 87 DTC 475, [1987] 2 CTC 2178 (TCC)
At the end of the following taxation year, the taxpayer owed $22,529 to the corporation in respect of advances which it had made to him, and the...
Administrative Policy
25 February 2022 External T.I. 2020-0873761E5 F - Shareholder loan
CRA indicated that where a corporation with calendar taxation years makes an interest-bearing loan to its individual shareholder, and the accrued...
6 April 2018 External T.I. 2018-0738871E5 F - Shareholder
A shareholder (Taxpayer A) who received a loan from a corporation in 2017, repaid the loan at the end of 2018 (after filing Taxpayer A’s 2017...
27 February 2018 Internal T.I. 2017-0682631I7 - Subsection 15(2.6) - Series of Loans
Canco (along with other members of the group) was part of a “physical” cash pooling arrangement with a non-resident affiliate (Finco) under...
24 April 2015 External T.I. 2014-0560401E5 - Subsections 15(2) and 227(6.1) and Part XIII tax
Canco assigned a loan (the "Debt") owing to it by a non-resident sister company to their non-resident parent (Parentoco) in repayment of a loan...
9 October 2015 APFF Roundtable Q. 19, 2015-0595621C6 F - Cash pooling and subsection 15(2)
CRA indicated that it does not have the discretion to not apply s. 15(2), where the applicable statutory exceptions are not available, to amounts...
8 September 2014 External T.I. 2013-0482991E5 - 15(2) and related provisions
Debtco, a non-resident corporation which is connected to the non-resident wholly-owning parent (Parentco) of Canco, is indebted to Canco. Canco...
2014 Ruling 2013-0505181R3 - 15(2.6) Series of Loans and Repayments
underline;">: Structure/accounting standards. Parentco, a non-resident and an indirect subsidiary of non-resident Pubco, wholly-owns Canco....
10 January 2014 External T.I. 2013-0506571E5 F - Subsections 15(2) and 15(2.6)
Facts
Each year, Aco makes monthly advances to its sole individual shareholder, A; and each year Aco pays a dividend to A which has the effect of...
23 May 2013 Roundtable, 2013-0483751C6 - Foreign Affiliate Dumping
CRA was asked in the context of s. 212.3(10)(c)(i) whether it would accept FIFO as the method to track the origination and settlement of multiple...
12 June 2012 STEP Roundtable, 2012-0442911C6 - STEP CRA Round Table - June 2012
A shareholder loan repaid by the executors of the shareholder within one year after the end of the creditor's taxation year in which the loan was...
15 August 2012 External T.I. 2012-0443581E5 - Shareholder Loans
Before indicating that repayments made in 2011 (which exceeded the shareholder loan balance at the end of 2010), likely could be applied first...
17 February 2004 External T.I. 2003-0033915 - Cash pooling - shareholder benefit
In indicating that a cash pooling arrangement entered into by a Canadian subsidiary with its non-resident parent corporation could result in an...
6 December 2000 TEI Roundtable Q. 25, 2000-0056035 - SHAREHOLDER LOANS
The CCRA gave a generally favourable response to a question asking for confirmation that the exception in s. 15(2.6) will apply where loans are...
5 October 1992 Income Tax Severed Letter 9219115 - Exempt Shareholder Loans
Yco, a Canadian manufacturing subsidiary of Xco with a calendar year, regularly purchases items from and sells items to Xco in the ordinary course...
92 C.R. - Q.44
Although there is no statutory relief to a non-resident where a particular loan, that previously was subject to s. 15(2) and s. 214(3)(a), is...
5 October 1992 External T.I. 5-921911
Canco makes loans in 1992 and 1993, evidenced by promissory notes, to its U.S. parent, with the loans being repaid by the end of 1993. Would such...
30 November 1991 Round Table (4M0462), Q. 3.4 - Series of Loans and Repayments (C.T.O. September 1994)
S.15(2) will apply where a corporation makes monthly advances to its sole shareholder, with such advances being repaid through a payment of...
18 January 1990 T.I. (June 1990 Access Letter, ¶1256)
Where trade accounts receivable arise from sales of a subsidiary corporation to its non-resident parent, the creation of each account receivable...
IT-119R4 "Debts of Shareholders and Certain Persons Connected With Shareholders" 7 August 1998
27 Repayments are considered to apply first to the oldest loan or debt outstanding ("first-in, first -out basis") unless the facts clearly...
Articles
PWC, "Tax Insights: Cross-border cash pooling arrangements ─ Recent developments", Issue 2018-41, 2 November 2018
CRA expansive view of series in cash pooling context (p.2)
2017-0682631I7 … concluded that transactions occurring as part of a physical cash...
Didier Fréchette, Ryan Rabinovitch, "Current Issues Involving Foreign Exchange", 2015 CTF Annual Conference paper
Conversion into shares on a s. 51 rollover basis nonetheless would give rise to a repayment for s. 15(2.6) purposes (pp. 26: 24-25)
A Canadian...
Subsection 15(3) - Interest or dividend on income bond or debenture
Administrative Policy
IT-52R4 "Income Bonds and Income Debentures"
Subsection 15(5) - Automobile benefit
Cases
Meuse v. The Queen, 94 DTC 6640, [1995] 1 CTC 21 (FCTD)
Because the taxpayer had not filed a form td-5 until the date on which his appeals to the Tax Court were to be heard, he had not adhered to the...
Administrative Policy
5 October 2012 Roundtable, 2012-0454121C6 F - Automobiles de collections
Dozens of collectible vehicles that are treated by a corporation as an investment but its shareholder, who has control of the vehicles at all...
27 October 2004 External T.I. 2004-0080191E5 F - Paragraphes 6(1) et 6(2) de la Loi
An employee, after being subject to a standby charge for four years pursuant to s. 6(1)(e), purchased the automobile from his employer for less...
5 November 2003 Internal T.I. 2003-0043277 F - Benefit-Use of Automobiles
An individual (Y) held 24% of the shares of an automobile sales company ("Opco") whose other shares were held by related individuals through...
Subsection 15(7)
Administrative Policy
5 October 2012 Roundtable, 2012-0451241C6 F - Benefit conferred on a NR shareholder by a NR corp
In the course of finding that the gratuitous use by the non-resident shareholder of a Canadian property of the non-resident corporation likely...
Subsection 15(9)
Administrative Policy
16 August 2017 Internal T.I. 2015-0622751I7 - Part XIII Tax on Benefit to Non-resident
Using funds generated from operations, Opco, which is a foreign affiliate both of its parent (Canco) and grandparent (Can Holdco ), subscribes...