Benefit Valuation

"The respondent stated that the appellant, his wife Beatrice, and their three children owned all of the issued voting shares of Andrich Developments Limited, with the appellant and his wife holding 1,400 shares each and the children holding 400 shares each. The corporation constructed a luxury single-family residence on a 16-acre lot owned by it, at a cost of $395,549.34, for the benefit of the appellant and his wife. The residence was charged with a first mortgage of $79,413.55, leaving the corporation's equity at $316,135.79. During the 1979 taxation year, the corporation paid mortgage interest of $7,566, municipal taxes of $420, and insurance premiums of $813 in respect of the residence. The respondent alleged that a reasonable estimate of the benefit conferred on the appellant during 1979 was $6,526, that an investor could expect a nine per cent return on capital from an effectively risk-free investment in 1977, and that the corporation did not build the residence for the purpose of producing or gaining income from a business or property."