whether shareholder loans were used to acquire the assets subject to personal use

In an October 5, 2018 French Technical Interpretation (2018-0768851C6, Dagenais, Anne), CRA confirmed their position that a taxable benefit for personal use of corporate assets could be reduced where the asset was financed by interest-free loans from the shareholder (Paragraph 11 of Interpretation Bulletin IT-432R2). CRA opined that the same concept could apply to the computation of a taxable benefit arising from the personal use of a corporate aircraft. CRA finally noted that the principle, as set out in the Youngman (Federal Court Trial Division, November 5, 1986, 86 DTC 6584) case, must be respected.

 The question was posed as a recent CRA communication (see VTN 441(2)) indicated that the benefit for an aircraft used primarily for personal use should be computed as the original cost multiplied by the prescribed interest rate, with no mention of possible financing by the shareholder.