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 them because they are 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 they are 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 (not in the shareholder's RL-1 slip).