CRA indicates that the granting of power of attorney over shares would not change the shares’ ownership for purposes of the s. 120.4 – excluded share definition

An adult child, who was over 24 and a “specified individual,” received a distribution of 10% of the common shares of a CCPC from a family trust, of which his father (a “source individual”) was one of the two trustees, then he granted his father a power of attorney (POA) regarding those common shares, pursuant to which his father could exercise all rights attached to those shares except as expressly excepted. CRA stated:

Although Father may exercise the rights attached to the shares, it is our understanding that the POA would not involve a transfer of the legal or beneficial ownership of such shares to Father.

Accordingly, CRA concluded that the grant of the POA would not detract from the child satisfying the 10% of votes and value test under para. (b) of the excluded share definition in the TOSI provisions.

Neal Armstrong. Summary of 12 March 2025 External T.I. 2025-1053231E5 under s. 120.4(1) – excluded share – (b).