Joncas v. The Queen, 2004 DTC 2315, 2005 TCC 647 (Informal Procedure) -- summary under Subparagraph 40(2)(g)(ii)

By services, 28 November, 2015

Interest-bearing advances made by the taxpayer to a cooperative corporation of which he was a member were found to have been made for the primary purpose of enabling the cooperative corporation to have the necessary operating funds for its business and to retain ownership of a helicopter that it used in its business. After noting that any surplus earnings of the cooperative would have been allotted as rebates or paid into reserve in accordance with the members' decision at the annual meeting, Lamarre Proulx T.C.J. stated (at p. 2322 and before finding that a loss subsequently sustained by the taxpayer on the advances gave rise to an allowable business loss):

"In the appellant's case, the monetary reward for his investment will not be potential dividend income, as in Byram, supra, but a reduction in the cost of services required by his businesses in the course of their affairs. It seems to me that the relationship is just as close as in the case of a shareholder who lends to his corporation ... . His purpose in making the loans to the Cooperative was to facilitate and promote the commercial activities of his businesses and thus to increase his own income."

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