Transfer of Property to Shareholder: Tax Consequences

Posted on October 2nd, 2025 in Domestic Tax

Close up of the corner of a glass windowed building.

In a May 1, 2025, French Federal Court of Appeal (FCA) case, the Court considered whether a taxable benefit was conferred on the transfer of real property from a corporation to its shareholder.

In 2013, a corporation owned equally (50/50) by the taxpayer and her spouse transferred a building worth $430,000 to them. CRA reassessed the taxpayer to include a taxable benefit for her portion of the building’s value ($215,000).

Taxpayer loses

Although the taxpayer argued that she had provided consideration by assuming three mortgages on the building, the Tax Court of Canada (TCC) found that she had not assumed the obligations personally. The taxpayer also argued that the benefit should be negated because she resold the building to the corporation for $1 in 2017. The FCA noted that no provision in the Income Tax Act retroactively nullifies a taxable benefit due to a subsequent transaction. As such, the FCA upheld the TCC decision that there was a taxable benefit.

If transferring assets out of the corporation, talk to a professional to determine the tax consequences and what supporting documents should be retained.

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Article originally published in: Tax Tips & Traps 2025 Third Quarter – Issue 151.