9181-4517 Québec – Quebec Court of Appeal finds that where X, Y and Z control Aco and Bco and X and Y control Bco and Cco, s. 256(2)(a) associates Aco with Cco
Unrelated individuals (X, Y and Z) constituted a group of persons controlling Aco and Bco under the Quebec equivalent of ITA s. 256(1)(b), so that Aco and Bco were associated. However, X and Y also indirectly controlled a bare majority of the common shares of Bco and also, through their holding companies, held 2/3 of the common shares of Cco. (Under the Quebec equivalent of ITA s. 256(1.2)(b), both a larger and a smaller control group can control a corporation.) Thus, Bco was also associated under the s. 256(1)(b) equivalent with Cco.
The Quebec Court of Appeal applied the rule under the Quebec equivalent of ITA s. 256(2)(a) to find that because both Aco and Cco were associated with the same corporation (Bco), Aco was associated with Cco.
Neal Armstrong. Summary of Agence du revenu du Québec v. 9181-4517 Québec Inc., 2021 QCCA 11 under s. 256(2)(a).