6 worked Shareholder Loan Audit Support case studies — the position a client typically comes to us with, what we do, and what it is worth. Each is an illustrative example built on the rules that apply to shareholder loan audit support work, not a specific client's file.
Case Study 1 · Sale and succession
$185,000 Sheltered By The Lifetime Capital Gains Exemption — Late-Objection Taxpayer, Guelph
Client: A taxpayer whose objection window has closed · Where: Guelph, Ontario · Engagement: 10 weeks, fixed fee
Gain sheltered$185,000
ClosingOn schedule
Share qualificationMet
The situation — A taxpayer whose objection window has closed, Guelph, Ontario
A taxpayer whose objection window has closed in Guelph, Ontario had an offer on the table and 26 months to close. The shares did not qualify for the capital gains exemption. Passive assets sitting inside the operating company, disqualifying the shares was part of the reason.
What we did for A taxpayer whose objection window has closed, Guelph, Ontario
We purified the corporation so the shares met the qualifying tests. We answered each query in writing with an indexed document package, so the file showed exactly what the auditor had received and on what date. All of it was done well ahead of the closing date.
The result — A taxpayer whose objection window has closed, Guelph, Ontario
The sale closed on schedule with $185,000 sheltered by the lifetime capital gains exemption across the shareholders.
Case Study 2 · Backlog brought current
3 Years Filed, $33,500 Removed From The Assessed Balance — Importer Under Audit, Ottawa
Client: An importer under a customs and GST audit · Where: Ottawa, Ontario · Engagement: 8 weeks, fixed fee
Years filed3
Assessed balance removed$33,500
CollectionsStopped
The situation — An importer under a customs and GST audit, Ottawa, Ontario
An importer under a customs and GST audit in Ottawa, Ontario had not filed for 3 years. The CRA had issued arbitrary assessments. The business was carrying an audit conducted over the phone, with nothing on file showing what had been provided or when. That came on top of a growing interest balance.
What we did for An importer under a customs and GST audit, Ottawa, Ontario
We started with the oldest year and worked forward so each year's closing balances fed the next. We assembled the contemporaneous records, filed a structured response to each proposed adjustment with the supporting documents indexed, and had the proposal withdrawn. We filed the years in sequence rather than all at once.
The result — An importer under a customs and GST audit, Ottawa, Ontario
Every year is now filed and assessed on actual figures. The notional assessments were vacated and $33,500 of the estimated balance came off, with a payment arrangement covering the rest.
Case Study 3 · Structure rebuilt
Holding Structure Added, $16,500 Saved Annually — Family Business Under Review, Burnaby
Client: A family business under a related-party review · Where: Burnaby, British Columbia · Engagement: 10 weeks, fixed fee
Annual saving$16,500
ReorganisationTax-neutral
StructureMatches operations
The situation — A family business under a related-party review, Burnaby, British Columbia
The structure at a family business under a related-party review in Burnaby, British Columbia needed fixing. The file was carrying a proposal letter with a 30-day response window and no supporting records assembled. Every option for fixing it ran through a reorganisation that had to be done without triggering tax.
What we did for A family business under a related-party review, Burnaby, British Columbia
We worked with the client's lawyer. Together, we kept the waiver narrowed to the issue actually under review and let the remaining years close on the normal reassessment period. We also prepared the elections, resolutions and valuations the structure needed to stand up.
The result — A family business under a related-party review, Burnaby, British Columbia
The structure now matches the business. Annual saving of $16,500, and the reorganisation itself was tax-neutral.
Case Study 4 · Objection and relief
$57,000 Of Penalties And Interest Cancelled On Relief — Taxpayer Facing Collections, Moncton
Client: A taxpayer with frozen bank accounts · Where: Moncton, New Brunswick · Engagement: 5 weeks, fixed fee
Penalties and interest cancelled$57,000
Relief groundsAccepted
AssessmentAdjusted to filed position
The situation — A taxpayer with frozen bank accounts, Moncton, New Brunswick
An assessment of $57,000 landed at a taxpayer with frozen bank accounts in Moncton, New Brunswick following a desk review. It turned on a net-worth assessment built on unexplained deposits that were actually loan proceeds. The auditor had not seen the records behind it.
What we did for A taxpayer with frozen bank accounts, Moncton, New Brunswick
We brought every outstanding return current, then negotiated a payment arrangement that stopped the collections action. We then set out the legislative basis for the position alongside the documents supporting it.
The result — A taxpayer with frozen bank accounts, Moncton, New Brunswick
$57,000 of penalties and interest was cancelled under the taxpayer relief provisions, and the underlying assessment was adjusted to match the filed position.
Case Study 5 · Deadline rescue
9-Week Turnaround Beat The Deadline And Saved $123,000 — Employer Under Payroll Review, Vancouver
Client: A company facing a payroll trust examination · Where: Vancouver, British Columbia · Engagement: 9 weeks, fixed fee
Late-filing penalty avoided$123,000
Filed with24 days to spare
Next yearPapers ready
The situation — A company facing a payroll trust examination, Vancouver, British Columbia
A company facing a payroll trust examination in Vancouver, British Columbia was weeks away from the deadline for shareholder loan audit support. Behind that sat a waiver signed at the counter that kept an otherwise closed year open with no end date. The exposure if the date slipped was around $123,000.
What we did for A company facing a payroll trust examination, Vancouver, British Columbia
We filed the Tax Court appeal inside the window and resolved the remaining adjustments before a hearing date was needed. The filing went in complete rather than provisional, so there was no amended return to follow.
The result — A company facing a payroll trust examination, Vancouver, British Columbia
Filed with 24 days to spare. $123,000 in late-filing penalties avoided, and the working papers are ready for the following year.
Case Study 6 · Records and systems rebuilt
Books Rebuilt From Source, $20,000 In Unclaimed Input Tax Found — Professional Under Lifestyle Audit, Halifax
Client: A professional under a lifestyle audit · Where: Halifax, Nova Scotia · Engagement: 3 weeks, fixed fee
Unclaimed tax found$20,000
Records rebuilt13 months
ProcessDocumented
The situation — A professional under a lifestyle audit, Halifax, Nova Scotia
A professional under a lifestyle audit in Halifax, Nova Scotia could not answer basic questions about its own numbers. A confirmation letter left in a drawer until the appeal window had closed sat between the bank statements and the ledger.
What we did for A professional under a lifestyle audit, Halifax, Nova Scotia
We traced each unexplained deposit to its source — loans, transfers between accounts, an insurance settlement — and reduced the net-worth assessment accordingly. We then documented the process so the work does not depend on any one person remembering how it was done.
The result — A professional under a lifestyle audit, Halifax, Nova Scotia
Records rebuilt and reconciled, $20,000 recovered in input tax credits that the old file could not support, and a documented monthly process now in place.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. These case studies are illustrative worked examples composed from the CRA rules that apply to this type of work, not specific client files; figures are representative and outcomes depend on your own facts.
