Jo Beth Williams works for the Royal Bank and is also a shareholder of the company. The bank has extended her a $25,000 interest free loan that she can use for any purposes she chooses. Because she is a shareholder, she will have to include the $25,000 principal of the loan in her Net Income For Tax Purposes.

Question

Quizplus · Accepted Answer

The requirement to include the $25,000 principal of the loan in her Net Income for Tax Purposes would not be directly because she is a shareholder, but rather if the loan is considered a shareholder benefit or if it is deemed income under specific tax rules. The principal of a loan itself is not typically considered income for tax purposes; however, the benefit derived from an interest-free loan could be considered a taxable benefit.

Jo Beth Williams Works for the Royal Bank and Is