CRA indicates that the continued-control test in s. 84.1(2.31)(f)(i) or (2.32)(g)(i) does not require that each member of the purchaser corp control group remain a child of the taxpayer

The intergenerational transfer rules include (in s. 84.1(2.31)(b)(ii) or s. 84.1(2.32)(b)(ii)) a requirement that one or more children of the taxpayer control the purchaser corporation at the time of the disposition; and (in in s. 84.1(2.31)(f)(i) or s. 84.1(2.32)(g)(i)) a requirement (the “continued-control test”) that during a specified time period following the disposition (e.g., 36 months under s. 84.1(2.31)(f)), the child or group of children continued to control the purchaser corporation.

CRA indicated that the continued-control test only requires that such control group have been children of taxpayer at the time of the taxpayer’s disposition, so that it would not matter if a member of such control group ceased to be a child of the taxpayer during the specified period, for example, because of divorce. For instance, if at the disposition time the purchaser corporation was owned equally by the taxpayer’s daughter and by her spouse, it would not matter if that couple divorced during the following specified period (assuming that they continued as the control group).

Neal Armstrong. Summary of 2 December 2025 CTF Roundtable, Q.5 under s. 84.1(2.31)(f)(i).