With higher interests, corporate attribution (ITA 74.4(2)) becomes more of a concern. The rule doesn’t apply to a small business corporation, however. The attributed amount is also reduced by dividends or interest paid to the transferor in respect of the transferred property. Finally, if a designated person receives a dividend that is subject to TOSI, the taxable amount of the dividend will reduce the attributed amount (if the dividend is part of the benefit sought to be conferred). (The CRA has stated that the purpose test in ITA 74.4(2) is not affected by whether TOSI applies in respect of the benefit.)
Jeanne Cheng and Sienna Lee “Managing the Application of Corporate Attribution” Canadian Tax Focus 16:2 (May 2026)
