A corporation's aircraft makes a commercial flight on which seats are still available, for which the price charged is $XXXXXXXXXX. An employee or shareholder takes a seat for personal purposes. CRA responded:
[T]he price that you charge your customers can be used as the basis for calculating the taxable benefit to be included in computing the income of your employees to the extent that:
- anyone, not just the corporation's employees or shareholders - can reserve a seat on the corporation's aircraft for $XXXXXXXXXX; and
- The price of $XXXXXXXXXX represents the price of a regular commercial economy airfare for a regularly scheduled flight to Montreal.
The founder-president of the corporation, who also is its majority shareholder, uses the corporation's aircraft for personal purposes, including for a return trip to Florida.
CRA stated:
[T]he benefit arising from the person's use of the aircraft by the corporation's founder-president should be based on the price of a regular first class ticket for a scheduled flight to the same destination, as the founder-president received the benefit as an employee of the corporation.
(2) When an aircraft is owned or leased primarily for business purposes and it makes a flight the main purpose of which is to provide free or subsidized transportation for the personal benefit of one or more employees or shareholders, the value of the resulting benefit is included in computing the income of the employee or shareholder.
After referencing the position in IT-160R3, para. 9, that a controlling shareholder generally will be considered to have received a benefit qua shareholder where “there is extensive use of the aircraft for personal purposes by the shareholder-employee or … relatives or friends,” CRA stated:
[T]he benefit arising from the person's use of the aircraft by the corporation's founder-president should be based on the price of a regular first class ticket for a scheduled flight to the same destination, as the founder-president received the benefit as an employee of the corporation.