In Coutre v. The Queen, 2009 TCC 456, the taxpayer tried to argue that, if an assessment under subsection 15(1) is made against a shareholder, then the Minister, to prevent double taxation, must reduce the benefit by the amount of any outstanding shareholder loan.
Mr. Justice McArthur, in dismissing the appeal, was having none of it: “In this appeal, the Appellant is seeking the right to rewrite his own transactional history, and to do what perhaps he should have done before. This is retroactive tax planning and it is not permissible. See Adam v. Minister of National Revenue [[1985] DTC 667].”
The Court’s decision in this case seems to have been coloured by a belief that the taxpayer was cavalier about valuing property that was transferred from a corporation that he controlled to his wife (which under-valuation was the basis of the 15(1) benefit (cf ¶28 of the decision)). That is, the Court seemed to believe that the taxpayer was trying to slide one past the Minister and then, after he was caught, cut his losses by “agreeing” that his shareholder loan should be reduced.
Query whether the result would have been different if the taxpayer had purchased the property, at a price determined by a bona fide valuation, under an agreement that included a price adjustment clause. In those circumstances, would the court have had more sympathy and required the Minister to reduce the benefit by offsetting it against the shareholder loan?
