Principal Issues: The simple existence of influence may be sufficient to result in de facto control. Can the CRA indicate to what extent the existence of such influence, even if not exercised, can confer control in fact? Can the CRA provide examples of circumstances which would permit one to conclude that sufficient influence exists, resulting in control in fact?
Position: The CRA mentions in paragraph 21 of Interpretation Bulletin IT-64R4 (Consolidated), "Corporations: Association and Control", that with respect to subsection 256(5.1) of the ITA, the existence of the influence of the "controller" would be sufficient to result in de facto control, even if this influence is not actually exercised. This position is based on the wording of subsection 256(5.1) of the ITA and is supported by case law. Up to the present, jurisprudence has established that control in fact of a corporation could generally result from three major types of influence, which is moral influence, economic influence and contractual influence. Furthermore, the CRA has formulated general comments in paragraphs 19 to 23 of Interpretation Bulletin IT-64R4 on the notion of control in fact which is mentioned in subsection 256(5.1) of the ITA. Particularly, paragraph 23 of Interpretation Bulletin IT-64R4, contains a non-exhaustive list of certain general factors that permits one to determine whether control in fact exists. Whether or not a "controller" has any direct or indirect influence that, if exercised, would result in control in fact of a corporation within the meaning of subsection 256(5.1) of the ITA, can be determined only after an analysis of all the facts and circumstances with respect to a given particular situation. Consequently, we do not believe that it is appropriate, under the circumstances, to formulate other general comments on the notion of control in fact.
Reasons: Wording of the Act and previous positions.
