Income Tax Act — I-3.3 15
Benefit conferred on shareholder 15 (1) If, at any time, a benefit is conferred by a corporation on a shareholder of the corporation, on a member of a partnership that is a shareholder of the corporation or on a contemplated shareholder of the corporation, then the amount or value of the benefit is to be included in computing the income of the shareholder, member or contemplated shareholder, as the case may be, for its taxation year that includes the time, except to the extent that the amount or value of the benefit is deemed by section 84 to be a dividend or that the benefit is conferred on the shareholder (a) where the corporation is resident in Canada at the time, (i) by the reduction of the paid-up capital of the corporation, (ii) by the redemption, acquisition or cancellation by the corporation of shares of its capital stock, (iii) on the winding-up, discontinuance or reorganization of the corporation’s business, or (iv) by way of a transaction to which subsection 88(1) or (2) applies; (a.1) where the corporation is not resident in Canada at the time, (i) by way of a distribution to which subsection 86.1(1) applies, (ii) by a reduction of the paid-up capital of the corporation to which subclause 53(2)(b)(i)(B)(II) or subparagraph 53(2)(b)(ii) applies, (iii) by the redemption, acquisition or cancellation by the corporation of shares of its capital stock, or (iv) on the winding-up, or liquidation and dissolution, of the corporation; (b) by the payment of a dividend or a stock dividend; (c) by conferring, on all owners of common shares of the capital stock of the corporation at that time, a right in respect of each common share, that is identical to every other right conferred at that time in respect of each other such share, to acquire additional shares of the capital stock of the corporation, and, for the purposes of this paragraph, (i) the shares of a particular class of common shares of the capital stock of the corporation are deemed to be property that is identical to the shares of another class of common shares of the capital stock of the corporation if (A) the voting rights attached to the particular class differ from the voting rights attached to the other class, and (B) there are no other differences between the terms and conditions of the classes of shares that could cause the fair market value of a share of the particular class to differ materially from the fair market value of a share of the other class, and (ii) rights are not considered identical if the cost of acquiring the rights differs; or (d) by an action to which paragraph 84(1)(c.1), (c.2) or (c.3) applies. Conferring of benefit (1.1) Notwithstanding subsection (1), if in a taxation year a corporation has paid a stock dividend to a person and it may reasonably be considered that one of the purposes of that payment was to significantly alter the value of the interest of any specified shareholder of the corporation, the fair market value of the stock dividend shall, except to the extent that it is otherwise included in computing that person’s income under any of paragraphs 82(1)(a), (a.1) and (c) to (e), be included in computing the income of that person for the year. Forgiveness of shareholder debt (1.2) For the purpose of subsection 15(1), the value of the benefit where an obligation issued by a debtor is settled or extinguished at any time shall be deemed to be the forgiven amount at that time in respect of the obligation. Forgiven amount (1.21) For the purpose of subsection 15(1.2), the forgiven amount at any time in respect of an obligation issued by a debtor has the meaning that would be assigned by subsection 80(1) if (a) the obligation were a commercial obligation (within the meaning assigned by subsection 80(1)) issued by the debtor; (b) no amount included in computing income (otherwise than because of paragraph 6(1)(a)) because of the obligation being settled or extinguished were taken into account; (c) the definition forgiven amount in subsectio