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A time delay and dead-time compensating strategy is presented for a current controlled four-leg voltage source inverter utilized as a shunt active filter. An accurate dynamic model is developed in the dq0 space, which takes the effects of the neutral inductor into consideration. Based on this dynamic model a time delay compensating strategy is proposed. Additionally a dead-time compensating strategy is proposed to increase the performance of the system. The discussed theory is implemented in a shunt active power filter application to realize an effective method to compensate for harmonics and reactive power generated by unbalanced, non-linear loads. Finally the discussed theory is verified through simulation and experimental results.