Paul is one of six shareholders, but not an employee, of a Canadian controlled private cor- poration that manufactures doors.The corporation has a large amount of cash on hand and the other shareholders have agreed that the corporation can lend him $200,000 for a few years.To avoid having the principal included in his Taxable Income, the loan must meet which of the following conditions?
A)It must be made at the interest rate prescribed by the Regulations to the Income Tax
Act)
B)It must be for the purchase of the company's shares.
C)It must be repaid within one year of the end of the fiscal year in which it was made.
D)It must have a specific repayment date.

Question

Quizplus · Accepted Answer

The loan must be repaid within one year of the end of the fiscal year in which it was made to avoid being included in Paul's taxable income.

Paul Is One of Six Shareholders, but Not an Employee