Amounts paid to a trust governed by a retirement compensation arrangement (RCA) were non-deductible in computing the corporation's income on the basis that the amounts paid were not paid to earn income and were not reasonable in amount. As per its summary, CRA stated:
It must be established what a reasonable businessman would have agreed to pay with only the interests of the corporation in mind. When assessing the reasonableness of an expense, an objective element must be sought.