Section 15(1) | ||||||||||||||
It prevents shareholders to take the fund out from corporation tax free | ||||||||||||||
- e.g payment for personal , personal expense, cottage for personal use | ||||||||||||||
- amount cannot be expensed of corporation, it must be included in shareholder loan | ||||||||||||||
- amount is tax as original income for shareholder | ||||||||||||||
- it cannot be included as dividend (115) since it has dividend tax credit | ||||||||||||||
- if the benefit goes to related person (e.g spouse), the benefit is tax backed at shareholder's income | ||||||||||||||
- all the benefit is calculated at fair market value | ||||||||||||||
- if shareholder sells capital to corporation for value over the FMV, the amount (POD -FMV) will go to 15(1), but excluded from calculating corp's capital gain | ||||||||||||||
-if sharehlder receives capital from corp for value under FMV, the amount (FMV-POD) will go to 15(1) | ||||||||||||||
1. selling | 2. buying | |||||||||||||
POD | 150000 | POD | 50000 | |||||||||||
FMV | 100000 | FMV | 75000 | |||||||||||
ACB | 40000 | ACB | 10000 | |||||||||||
taxable benefit15(1) for shareholder | 50000 | taxable benefit15(1) for shareholder | 25000 | |||||||||||
capital gain | 60000 | |||||||||||||
cost will be deemed to FMV | 100000 | ACB will be | 75000 | |||||||||||
section 15(1.2) | ||||||||||||||
forgiven amount = amount borrowed from corp - repayment | ||||||||||||||
- amount included in 15(2) must be excluded from 15(1.2) | ||||||||||||||
section 15(2) | ||||||||||||||
loan to shareholder | ||||||||||||||
- does not apply to loan borrowred to canadian corp or partnership | ||||||||||||||
- the loan to the related person (non arm length), the amount will be included the person's income | ||||||||||||||
- amount can be deducted to subsequent year if the loan is repayed in that year | ||||||||||||||
exception | ||||||||||||||
1. repayment for the loan within a year following the end of taxation year | ||||||||||||||
2. to the shareholder who is also an employee if they use the loan for 15(2.4) exception | ||||||||||||||
a. purchase a dwelling for personal use | ||||||||||||||
b. purchase treasury shares of the corporation (applied to spouse) | ||||||||||||||
c. purchase automobile for performing duties of employment | ||||||||||||||
section 15(5) | ||||||||||||||
benefit for using vehicle | ||||||||||||||
- calculation is the same as to calculate the benefit for employees | ||||||||||||||
Penalty - section 163(2) | ||||||||||||||
50% for the amount not included | ||||||||||||||