Core Marker’s Comment Sheet
Course Name: Advanced Personal & Corporate Taxation (TX2)
Assignment:
1
Modules:
1 and 2
General Comments
Core Marker’s Comments are not full solution sets to the questions. Rather, they are intended to provide students with guidance in responding to each of the assignment questions by providing direction as to where the questions’ responses can be found within the readings/textbook (i.e. topic location); clarification/direction on complex readings; layout and format suggestions; and from time to time, segments of the solutions sets.
Question 1 Multiple choice (20 marks - 2 marks each)
a. 1) There should be no tax consequences. The loan was repaid by the end of the next taxation year (December 31, 2014) as required by subsection 15(2.6). The fact that the loan bears interest at the market rate means there should be no imputed interest benefits to
Marc.
b. 1) If the shares issued to Sophie-Anne are not in a separate class, the PUC of the shares held by her will be less than the $25 per share that she paid to the corporation. The other shareholders contributed $10 per share, and under the definition of paid-up capital in subsection 89(1), the PUC of a share of a class is equal to the total PUC of the class, divided by the number of issued shares of that class.
Incorrect answers:
2) The ACB of the shares of a given shareholder is not affected by the ACB of the shares for the other shareholders.
3) In order for a taxable benefit to be conferred, the price of $25 per share would have had to be less than the FMV of the shares of the corporation. Having a separate class does not affect the determination of a taxable benefit.
4) The fact that the PUC of Sophie-Anne’s shares is less than the amount that she contributes does not constitute a reduction of paid-up capital to which subsection 84(4) applies. c. 4) See