A person (other than a corporation resident in Canada) or a partnership (other than a partnership whose members are each a corporation resident in Canada) is deemed to receive a taxable benefit if it contracts a debt with a corporation because it is a shareholder of the corporation.

Calculating the value of the benefit

The value of the benefit is calculated as follows:

• the interest on each debt, calculated at the prescribed rate for the period of the year during which the debt is outstanding;

minus

• the interest for the year paid on each debt within 30 days after the end of the year.

You have to include the value of the benefit in box O of the shareholder's RL-1 slip (see courtesy translation RL-1-T).

If a shareholder who is an employee receives a loan that is made to the person because the person is a shareholder, the value of the benefit must be calculated as it is for shareholders and included in box O only. However, if the loan is made to the person because the person is an employee, the value of the benefit must be calculated in the same way as for an employee who receives a loan and included in boxes A and L and, where applicable, in box G of the employee's RL-1 slip (see the Benefit Provided to an Employee page).

If a person who is connected to a shareholder receives a loan and does not contract the debt by reason of an office or employment, the value of the benefit must be calculated as it would be for a shareholder who receives the benefit as a shareholder. It must be included in box O of the person's RL-1 slip (rather than the shareholder's RL-1 slip).