The son of the sole shareholder of a corporation works for the corporation and receives automobile benefits in the course of his employment. Is the father taxable on a shareholder benefit under s. 15(5) notwithstanding that his son must include the same benefit in his income under s. 6? After noting that in the absence of s. 15(1.4)(c), the benefit would be taxable to father under s. 15(5), CRA stated (TaxInterpretations translation):
[P]aragraph 15(1.4)(c) provides in particular that a benefit conferred by a corporation on an individual is a benefit to a shareholder of the corporation if the individual does not deal at arm's length with the shareholder. However, this rule does not apply to the extent that the value of the benefit is included in computing the income of the individual or another person. …
If the automobile benefit was conferred on Son…in his capacity of employee of the corporation and Son included the value of the benefit in computing his income from employment…no amount would be included in computing income of his father under subsection 15(1)… .