CRA indicates that an undivided interest in a building can satisfy the asset use test in the SBC and QSBCS definitions

Holdco A held 60% of the shares of Opco, with the other 40% held by an unrelated corporation (Holdco B). Opco leased, for use in its Canadian active business, 60% of the space in a building which Holdco A held in equal co-ownership with Holdco B.

The CRA indicated that a co-owner's undivided interest in an immovable is included in the term "assets" for purposes of the requirement in para. (a) of the small business corporation definition that “all or substantially all of the fair market value of the assets [of the particular corporation] is attributable to assets that are … used principally in an active business carried on primarily in Canada by the particular corporation or a corporation related to it” and the similar test in subpara. (c)(i) of the QSBC definition.

Accordingly, the 60% co-ownership interest of Holdco A could satisfy this test if, as a factual matter, it was reasonable to consider that such interest in the building was used principally in the Canadian active business of the related corporation (Opco).

Neal Armstrong. Summary of 3 June 2025 External T.I. 2022-0925091E5 F under s. 248(1) – SBC – para. (a).