Huntly Investments – Tax Court of Canada finds that associated-corp equivalent services can be added to the actual full time employees under the SIB definition
Paris J clarified that the over-five full time employee exclusion from a specified investment business involves a two-step test:
[I]t is first necessary to know how many full-time employees the [corporation] in fact employed in the years in issue.
The next step is to determine how many full-time employees would be required in respect of the services performed by … associated corporations [had those services not been provided].
A private corporation with a smallish portfolio of rental apartments in Vancouver fell well short of the mark. Under the first step, its building managers were mostly couples who split a full-time position, so that neither qualified as a full-time employee.
In the course of rejecting various taxpayer submissions on the second step relating to services provided by two associated corporations, he stated:
The Appellant’s contention that it would have required a full‑time CEO, executive assistant, accountant or CFO and accounting clerk is in large part predicated on the proposition that it was actively pursuing a redevelopment proposal in respect of its Stadacona site during its 2010 to 2012 taxation years. ...[T]he evidence does not support [such] a finding… .
Neal Armstrong. Summary of Huntly Investments Limited v. The Queen, 2017 TCC 255 under s. 125(7) – specified investment business.