Ideas in this flowchart

• A corporate cheque paid the shareholder’s personal home-purchase cost, leading to related reassessments.
• The taxpayer was away on vacation during the summer of that year.
• His daughter, an inexperienced bookkeeper, handled the payment.
• She used a presigned blank cheque from the corporation’s bank account.
• The cheque paid $28,490.37 to the law firm representing the taxpayer for the purchase of his new home.
• The payment was erroneously recorded as a corporate legal expense.
• It should instead have been debited to the shareholder’s loan account.
• At all relevant times, the shareholder loan account had a credit balance of at least $150,000.
• After the error was discovered in 1991, the corporate expense was disallowed.
• The corporation was reassessed to increase its income by $28,490.37.
• The taxpayer was also reassessed by the same amount because the corporation was considered to have conferred a shareholder benefit under subsection 15(1) of the Income Tax Act.