A shareholder benefit arises under subsection 15(1) of the Income Tax Act when a corporation confers a benefit on a shareholder. The value of the benefit is included in the shareholder's income. Common examples include the corporation paying a shareholder's personal expenses, providing property or services at less than fair market value, or allowing personal use of corporate property.
The rule is distinct from the employee-benefit rule in paragraph 6(1)(a), which applies to benefits received in the course of employment. An owner who is both a shareholder and an employee can be caught by either rule depending on the facts. A related anti-avoidance provision can capture benefits conferred indirectly through related parties or layered arrangements. Documenting the business purpose and fair value of corporate payments helps manage this exposure.