CRA indicates that the children receiving an intergenerational transfer may control the purchaser corporation indirectly or as trustees of a trust

Our 2025 STEP Roundtable page - which provides the questions posed, and summaries of the preliminary oral responses given, at the 2025 STEP CRA Roundtable held on Tuesday – is now available.

Q.1 concerned the requirement in the intergenerational transfer rules in ss. 84.1(2.31) and (2.32) regarding continued control by the child group of the purchaser corporation. CRA indicated that the child group may own the purchaser corporation through one or more holding companies owned by them, noting that it was not required that they own shares directly in the purchaser corporation and that the concept of control included indirect control.

Regarding whether shares of the purchaser corporation could be held in a trust under which the only beneficiaries were members of the child group, CRA noted that the focus should instead be on who the trustees of the trust were, as it was the trustees who would control the purchaser corporation. In this regard, CRA noted its position that, in the absence of evidence to the contrary, it considered there to be a presumption that all the trustees would constitute a group, so that generally all such trustees would need to be members of the child group.

Neal Armstrong. Summary of 17 June 2025 STEP Roundtable, Q.1 under s. 84.1(2.31)(b)(ii).