Case study 1
A shareholder loan account that had grown across several years
Drawings had been posted to a loan account and cleared irregularly, sometimes by a bonus, sometimes by a year-end journal. Nobody had tested the balance against the period the rule allows. We reconstructed the account transaction by transaction, identified which advances had remained outstanding past that point, and separated the amounts a repayment had genuinely cleared from those cleared by borrowing again. The engagement produced a computed inclusion for the affected years, amended returns, and a drawings process with a date attached to each advance, so the test can be applied while something can still be done about it.
Case study 2
The secondary consequence of a transfer pricing settlement
A group had settled a pricing adjustment on its intercompany charges and closed the file. The adjustment left an amount in the hands of the overseas affiliate that the assessing country characterised as a distribution, carrying withholding and a filing obligation that had not been dealt with. We computed the secondary amount from the settled adjustment, established the rate the treaty supported and the documentation needed for it, and prepared the disclosure. The engagement produced the withholding computed and remitted with an explanation of how it arose, and a checklist tying the secondary step to any future pricing adjustment.
Case study 3
Company funds spent on a shareholder's personal costs
An examination of a closely held company's expenses showed property costs, travel and professional fees that belonged to its principal shareholder rather than to the business. Some had been posted to expenses and some to a suspense account. The question was not how they were recorded but who received the benefit. We worked through the records to quantify the benefit conferred in each year, distinguished the items with a genuine business purpose, and reported the remainder. The engagement produced a quantified inclusion for the shareholder, corrected company computations, and a coding policy so that the two are separated as they arise.
Case study 4
An assessment on an amount the shareholder never received as income
A non-resident shareholder was assessed withholding on a sum the company's records described as a loan. Nothing had been declared, and the shareholder's own adviser abroad had treated the balance as a debt. We examined what the company had actually advanced and when, tested it against the deeming rule, and found the treatment correct on part of the amount and not on the rest, where the advances had been made to an unconnected party. The engagement produced a response reducing the assessment to the supportable portion, with a schedule of the advances, and a settled treatment for the balance.
Case study 5
An interest free advance on terms the rule would not accept
A company had advanced funds to a shareholder's other business on no stated terms and with no interest. Because the advance sat outside the terms the rule accepts, a benefit arose in each year it was outstanding even though the principal was eventually repaid in full, and the repayment did not touch the earlier years. We established the periods involved, computed the benefit on the basis the rule prescribes, and set out what terms would have kept the advance outside the provision. The engagement produced computed inclusions for the open years, a disclosure, and a loan agreement for future advances.
Case study 6
A credit refused abroad because no distribution existed there
Tax had been withheld here on an amount deemed to be a distribution, and the shareholder's own country refused relief because its law saw a loan and no income at all. The amount was taxed in one system and relieved in neither. We compared the two characterisations against the underlying facts and the instrument, identified what each system needed in order to see the same thing, and set out the options, including what the treaty's mutual agreement route would involve. The engagement produced a documented position, a corrected structure for later years, and a decision taken with both treatments known.
Case study 7
Canadian Dividends and Interest Paid to a Non-Resident
Flat withholding applies at source whether or not a return would produce the same figure. The engagement establishes treaty entitlement, files what is needed to claim the reduced rate, and recovers what went out at the domestic rate.
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Case study 8
One Salary, Two Countries Claiming It
A US citizen resident in Canada, taxed in full on both sides because each return was prepared without the other in view. Deciding which country has the first right to the income, then claiming relief on the second return in the right order, is what stops the same dollar being taxed twice.
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