{"id":2121,"date":"2017-04-01T15:14:17","date_gmt":"2017-04-01T15:14:17","guid":{"rendered":"https:\/\/calu.com\/?p=2121"},"modified":"2023-09-21T13:10:43","modified_gmt":"2023-09-21T17:10:43","slug":"calu-special-report-new-back-to-back-shareholder-loan-rules-impact-on-collateral-insurance-arrangements","status":"publish","type":"post","link":"https:\/\/calu.com\/2017\/04\/01\/calu-special-report-new-back-to-back-shareholder-loan-rules-impact-on-collateral-insurance-arrangements\/","title":{"rendered":"CALU Special Report – New Back-to-Back Shareholder Loan Rules – Impact on Collateral Insurance Arrangements"},"content":{"rendered":"

The rules in subsection 15(2) of the Income Tax Act operate to preclude the use of loans to shareholders to distribute corporate capital on a tax-free basis, by including the amount of the loan in the shareholder’s income. However, it may have been possible to avoid the application of subsection 15(2) to a particular loan where the corporation provides debt funding to a shareholder through one or more intermediaries to which the rules in subsection 15(2) do not apply. The 2016 federal budget introduced “back to-back” shareholder loan rules to ensure the application of subsection 15(2) in certain situations involving third-party loans. This article by Angela Ross, Ken Griffin and Jonathan Bright reviews these new rules in section 15 and in particular discusses their possible application to arrangements whereby a shareholder borrows money from a financial institution which is supported by the collateral assignment of a corporate owned insurance policy. This article is a must read for CALU members and other professional advisors who work with shareholders of private corporations in the implementation of leveraging strategies.<\/p>\n

Topics covered in this report include:<\/strong><\/p>\n