Question: K is employed by X Ltd . , a Canadian private corporation, and also owns 6 % of X s common shares. In 2 0

K is employed by X Ltd

.,

a Canadian private corporation, and also owns

6 %

of X

s common shares. In

2023,

K borrowed $

30, 000

from X and used the loan to acquire a home. The loan agreement states that K must pay annual interest equal to the bank prime rate in effect in

2023

and regular principal instalments over five years. Other employees have received similar loans in past years. K makes all payments on time and the loan is repaid after

5

years. K has no taxable income resulting from the loan. Is this statement true or false?

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