| Chapter 13, AP 5 Kristie and BCD Inc. |
| Shareholder Loans |
| Benefits on share purchase loan: |
| Bonafide arrangment have been outlined , repayment of loan terms are reasonable,this is an exception under 15(2) |
| Interest Benefit under ITA 80.4 should be calculated as follows: | | Page 358 edition 141 |
| YEAR 1 |
| Total benefit ((150000*0.3)*275/365)) | 3390 | Prescribed rate |
| Less: Actual interest paid | 2260 | Loan rate |
| Tax benefit | 1130 | T4 Slip |
| YEAR 2 |
| Total benefit (125000*0.3) | 3750 |
| Less: Actual interest paid | 2500 |
| Tax benefit | 1250 | T4 Slip |
| YEAR 3 |
| Total benefit (10000*0.3) | 3000 |
| Less: Actual interest paid | 2000 |
| Tax benefit | 1000 | T4 Slip |
| *The loan was made for investment purposes therfore… the actual interest is deductible | | | t1sch4 |
| Benefits on the other loan: |
| loan on personal items is not an exception under 15(2) |
| the full amount will be included in income after it has been outstanding for 1 year |
| In year 3, she will be able to deduct the amount she is pay which 25,000 she repaid under ITA(1)(j) |
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