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 reimbursements from Holdco and Opco for personal expenses. Should s. 246(1) be used as the sole basis for assessment? The Directorate responded:
[S]ubsection 246(1) is generally a provision of subsidiary application since it must be shown that the value of the benefit is not otherwise included (for example, by virtue of paragraph 6(1)(a) or subsection 15(1)) in computing the taxpayer's income … . On the other hand … Massicotte … held that the Minister of National Revenue may assess a taxpayer solely on the basis of section 246 despite the fact that paragraph 6(1)(a) could have been argued … .
… Thus, while the Minister may invoke subsection 246(1) as the sole ground for assessment, we believe it is preferable that the assessment refer - if the facts of the situation are appropriate - to the provisions of specific application. … [T]herefore … the assessment should rely on paragraph 6(1)(a) and/or subsection 15(1) as the main grounds … .