An April 16, 2024 French Court of Quebec case considered whether the shareholder of a corporation derived taxable benefits from residing in a corporate property for the 2014 to 2016 years and from allowing his ex-spouse to reside in a second corporate property. The taxpayer was assessed with a benefit of $142,000 per year.
Taxpayer loses
Although the taxpayer argued that any benefits received were offset by the expenditures he made on the properties, he could not demonstrate that the expenditures actually occurred and that he was the one who paid them. The taxpayer argued that he could not support these expenditures due to the loss of documents in a flood; however, the Court noted that some evidence conflicted with these claims.
The taxpayer provided the alternative argument in respect of one property that if there was a benefit, it did not exceed $5,500/month as supported by evaluations done by two different real estate agents. However, the Court found that the more robust assessments completed by Revenu Québec, which suggested a rental value of approximately double, were more representative of the reality. This was supported by the fact that the over five thousand square foot property was listed for sale in 2017 for $4,800,000. The Court upheld the assessment.
ACTION: Be cautious about using corporate assets personally without providing compensation for such use.
