P Ltd. is a Canadian Controlled Private Corporation (CCPC) and has fiscal year end of December 31. Peter Smith is an individual and a sole shareholder of the P Ltd.

Required:

Provide response for the following 2 independent questions:

a) Explain the 2 ways that Peter can realize a return on his share investment in the P Ltd.

b) Peter would like to take a significant amount of cash from the corporate (P Ltd's) bank account in the year 2021 as an interest free loan from the P Ltd. Such loan is not available to employees in the P. Ltd. Peter will use the loan to purchase a boat that he always wanted. This boat will be used solely for his personal pleasure. Peter approached you for tax advice. He would like to know the tax implications on the loan. Explain the tax implications of the loan to Peter (No tax calculations required using the tax rates).