Court Decisions

"In Harding v. The Queen, (2022 TCC 3), the Tax Court of Canada considered whether a shareholder benefit under subsection 15(1) was conferred where family members were designated as revocable beneficiaries under life insurance policies held by the taxpayer’s spouse or a corporation controlled by the taxpayer. The corporation paid the premiums, and the Court confirmed the Canada Revenue Agency position that a shareholder benefit had been conferred on the taxpayer equal to the pro rata share of premiums relating to beneficiary designations in favour of family members. In Gestion M-A Roy Inc. c. Le Roi, (2022 TCC 144, affirmed by the Federal Court of Appeal in 2024 CAF 16), a shareholder benefit under subsection 15(1) was found to have been conferred on a holding corporation whose operating subsidiary was the revocable beneficiary of policies and paid the premiums. A benefit under subsection 246(1) was also found for another holding corporation that owned policies while the operating subsidiary was the revocable beneficiary and premium payor. The benefits were equal to the premiums paid, despite the operating subsidiary being named as beneficiary. These decisions appear to conflict because Harding recognized a benefit to a shareholder or related person designated as beneficiary, while Gestion Roy did not appear to ascribe value to the operating subsidiary’s beneficiary designation."