Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Is it required that the 25% test and the 50% test used in the definition of taxable Canadian property that is applicable to shares of a corporation listed on a designated stock exchange, be satisfied at the same time in order for shares of a corporation to be considered to be taxable Canadian property?
Position: Yes
Reasons: The legislation establishes that both the 25% test and the 50% test must be met at a particular point in time during the 60-month period.
2011 CTF - Question 20
Please confirm that the 25% test and the 50% test used in the definition of taxable Canadian property (TCP) that is applicable to shares of a corporation listed on a designated stock exchange must be satisfied at the same time in order for shares of a corporation to be considered to be TCP.
Response 20.
The definition of "taxable Canadian property" in subsection 248(1) of the Income Tax Act includes at paragraph (e) of the definition a share of a corporation listed on a designated stock exchange if, at any particular time during the 60-month period that ends at that time:
(i) 25% or more of the issued shares of any class of the capital stock of the corporation were owned by or belonged to the taxpayer and/or persons with whom the taxpayer did not deal at arm's length, and
(ii) more than 50% of the fair market value of the share was derived directly or indirectly from real or immovable property situated in Canada and/or Canadian resource property and/or timber resource property and/or options or rights in such property.
Therefore, when determining whether a share listed on a designated stock exchange is TCP at "any particular time" during a 60 month period both of the tests at subparagraphs (e)(i) and (ii) of the definition must be satisfied at the same time.
2011-042593
Wayne Doiron
November 27-29, 2011
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