A home or cottage is held by a trust with Mr. X and his family as well as a corporation owned by his spouse, as beneficiaries. If that property is made available to the corporation’s shareholder, will the shareholder be required to include a taxable benefit in her income?
CRA indicated that this turned on whether (i) the trust specifically granted a right to use the property to the corporation, with such newly-created property then being distributed for not consideration by the corporation its shareholder without consideration, or (ii) the trust allowed the shareholder to use the property held by the trust. In the second case, there would be no benefit under s. 15(1), and also no benefit under s. 105(1) given that the shareholder was related to a beneficiary – whereas, in the first case, there could be a s. 15(1) benefit conferred by the corporation.