June 8, 2023

When Insurance Premiums Lead to Unwanted Shareholder Benefits

Insights from the FCA's Decision in Management M.-A. Roy Inc. v. HMK

Management M.-A. Roy Inc. v. HMK (“Gestion Roy”) centers around whether an Opco’s decision to pay insurance premiums, with two Holdcos as the policy owners, gives rise to a shareholder benefit under subsection 15(1) of the Income Tax Act. If such a benefit exists, then subsection 15(1) warrants the inclusion of its value in the shareholder’s income.

The Canada Revenue Agency included the value of the benefit in the taxpayer’s income based on subsection 15(1) of the ITA. However, the taxpayer disagreed with this reassessment and decided to appeal the decision to the Tax Court of Canada. The TCC dismissed the taxpayer’s appeal, but the taxpayer still disagrees with the TCC’s ruling and has now appealed the decision to the Federal Court of Appeal.

Right now, we are waiting for the FCA to share its decision.

When the FCA releases its decision, Peter and James will complete their summary and share the critical insights on this page.

Stay tuned for the upcoming article by Peter and James!

Insights

The Tax Court of Canada’s recent ruling in Fiera Foods Company v. HMK1 has significant implications for businesses claiming Input Tax Credits (ITCs) under the Excise Tax Act (ETA).

Section 111 of the Income Tax Act (“ITA”) allows taxpayers to carry losses back and forward to offset income in different taxation years. However, subsection 111(5) restricts non-capital loss...

Key Points in Glencore The case involves an appeal against a reassessment under the Income Tax Act, where the Minister of National Revenue assessed as income certain fees Falconbridge received due to...

Management M.-A. Roy Inc. v. HMK (“Gestion Roy”) centers around whether an Opco’s decision to pay insurance premiums, with two Holdcos as the policy owners, gives rise to a shareholder benefit under...

We’re delighted to announce our newly updated chapter on Corporate Residence & Tax Disputes in Canada (2023), published by Thomson Reuters, is now available.

Thompson Reuters considers the authors “leading tax experts and litigators”. The authors agreed to grant TR partial rights to this work. This article first appeared in TR’s Tax Dispute and Resolution...

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When Insurance Premiums Lead to Unwanted Shareholder Benefits

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