6 worked Shareholder Loan Tax Planning 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 tax planning work, not a specific client's file.
Case Study 1 · Missed incentive claimed
Incentive Review Recovered $60,000 Across 3 Open Years — Professional Corporation, Barrie
Client: A professional corporation · Where: Barrie, Ontario · Engagement: 11 weeks, fixed fee
Recovered$60,000
Open years claimed3
Ongoing trackingIn place
The situation — A professional corporation, Barrie, Ontario
An incentive review at a professional corporation in Barrie, Ontario started from a simple question: what has never been claimed? The answer ran to 3 years. It was driven by a distribution treated as tax-free capital dividend with no election ever filed.
What we did for A professional corporation, Barrie, Ontario
We rebuilt the instalment schedule off the current year rather than the prior year, ending the interest accrual. We documented eligibility to the standard a reviewer would apply rather than the standard a claim form requires.
The result — A professional corporation, Barrie, Ontario
The credits produced $60,000 across the open years. The tracking now in place means the following year's claim is documented as the work happens rather than reconstructed afterwards.
Case Study 2 · Backlog brought current
Collections Halted And $127,000 Cut From A 7-Year Backlog — Incorporated Trades Business, Calgary
Client: An incorporated trades business · Where: Calgary, Alberta · Engagement: 3 weeks, fixed fee
Balance reduced by$127,000
Backlog cleared7 years
CollectionsHalted
The situation — An incorporated trades business, Calgary, Alberta
By the time an incorporated trades business in Calgary, Alberta called, 7 years were outstanding. The CRA had assessed on estimates. Underneath it sat two corporations under common control filing as if each had its own $500,000 limit.
What we did for An incorporated trades business, Calgary, Alberta
We reconstructed the records year by year. We reconstructed the capital dividend account from the underlying transactions and filed the subsection 83(2) election before the next distribution left the company. Each filing replaced an arbitrary assessment with a real one.
The result — An incorporated trades business, Calgary, Alberta
The account is current. Filing on real numbers rather than CRA estimates reduced the balance by $127,000, and a relief application addressed part of the accumulated interest.
Case Study 3 · Objection and relief
$62,000 Of Penalties And Interest Cancelled On Relief — Two-Shareholder CCPC, Winnipeg
Client: A CCPC with two shareholders · Where: Winnipeg, Manitoba · Engagement: 8 weeks, fixed fee
Penalties and interest cancelled$62,000
Relief groundsAccepted
AssessmentAdjusted to filed position
The situation — A CCPC with two shareholders, Winnipeg, Manitoba
An assessment of $62,000 landed at a CCPC with two shareholders in Winnipeg, Manitoba following a desk review. It turned on retained earnings building in the operating company with no plan for extracting them. The auditor had not seen the records behind it.
What we did for A CCPC with two shareholders, Winnipeg, Manitoba
We mapped the association rules across the group, allocated the business limit deliberately on Schedule 23, and corrected the prior year by adjustment request. We then set out the legislative basis for the position alongside the documents supporting it.
The result — A CCPC with two shareholders, Winnipeg, Manitoba
$62,000 of penalties and interest was cancelled under the taxpayer relief provisions, and the underlying assessment was adjusted to match the filed position.
Case Study 4 · Records and systems rebuilt
Month-End Close Cut From 12 Weeks To 5 Days — Corporate Rental Portfolio, London
The situation — A corporately-owned rental portfolio, London, Ontario
The accounting file at a corporately-owned rental portfolio in London, Ontario had a weak foundation. It was built on a loss year carried forward by default when carrying it back would have produced a refund cheque. The year-end had taken 12 weeks each of the last three years.
What we did for A corporately-owned rental portfolio, London, Ontario
We modelled salary against dividends across both the corporation and the shareholder’s personal return, then set the remuneration mix for the year. We also moved the reconciliations into the monthly cycle, so the year-end stopped being a rebuild.
The result — A corporately-owned rental portfolio, London, Ontario
The file reconciles. Month-end closes in 5 days instead of 12 weeks, and the year-end is a review rather than a reconstruction.
Case Study 5 · Planning that cut the bill
Remuneration Review Saved $21,500 Across Corporate And Personal Returns — Instalment-Paying Corporation, Red Deer
Client: A corporation paying instalments on prior-year figures · Where: Red Deer, Alberta · Engagement: 9 weeks, fixed fee
Combined saving$21,500
ScopeCorporate + personal
Future yearsNo rework needed
The situation — A corporation paying instalments on prior-year figures, Red Deer, Alberta
Nothing was wrong at a corporation paying instalments on prior-year figures in Red Deer, Alberta. The filings were on time and accurate. What they were not was planned. A distribution treated as tax-free capital dividend with no election ever filed had never been reviewed.
What we did for A corporation paying instalments on prior-year figures, Red Deer, Alberta
We documented safe income before the inter-corporate dividend was paid, so subsection 55(2) had no room to recharacterise it as a gain. We ran the numbers across both the corporate and personal returns, so the saving was real rather than deferred into someone else's hands.
The result — A corporation paying instalments on prior-year figures, Red Deer, Alberta
$21,500 came off the combined corporate and personal tax bill, and the structure holds for future years without further work.
Case Study 6 · CRA review defended
$26,500 Reassessment Reduced To Nil On Review — Three-Location Franchisee, Kelowna
Client: A franchise operator with three locations · Where: Kelowna, British Columbia · Engagement: 8 weeks, fixed fee
Reassessment reduced toNil
Tax protected$26,500
Prior filingsUndisturbed
The situation — A franchise operator with three locations, Kelowna, British Columbia
A review notice arrived at a franchise operator with three locations in Kelowna, British Columbia, covering shareholder loan tax planning for two tax years. The auditor's working position was an adjustment of $26,500. It was driven by dividends moved up to a holding company year after year with no safe-income support on file.
What we did for A franchise operator with three locations, Kelowna, British Columbia
Rather than negotiate, we rebuilt the record. We moved passive holdings into a separate structure so the operating company’s small business limit stopped grinding down. We then submitted a point-by-point response that answered each proposed adjustment with the document behind it.
The result — A franchise operator with three locations, Kelowna, British Columbia
The auditor accepted the documented position and closed the review without adjustment, protecting $26,500 and leaving the prior filings undisturbed.
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.
