5 December 2002 Internal T.I. 2002-0171847 F - RESIDENCE D'UNE FIDUCIE -- summary under Subsection 15(2.1)

The corporation of which Mr. X is a shareholder makes a loan to the trust of which he is a beneficiary for the construction of a residence which he ordinarily inhabits and rents from the trust. CCRA found that s. 15(2) would apply to include the amount of the loan in the trust’s income because the trust was connected with a shareholder of the lending corporation, i.e., as per s. 251(1)(b), Mr. X, as a shareholder of the corporation, was beneficially interested in the trust and, therefore, did not deal at arm’s length with it.