Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether two corporations are related.
Position: Yes.
XXXXXXXXXX
2012-047093
Katie Campbell
(613) 957-2126
January 30, 2013
Dear XXXXXXXXXX:
We are writing in response to your email of November 23, 2012 wherein you requested a technical interpretation regarding whether two corporations are related for purposes of the Act (footnote 1). The relevant facts as provided in your email are as follows:
ParentCo is controlled by its two equal shareholders, Mr. X and Mrs. X.
KidsCo is controlled by its two equal shareholders, Son and Daughter, the children of Mr. and Mrs. X.
Mr. X, Mrs. X, Son and Daughter are all related individuals as defined in paragraph 251(2)(a).
You have asked whether ParentCo and KidsCo would be related corporations.
Our views
Mr. X and Mrs. X are related to ParentCo by virtue of subparagraph 251(2)(b)(ii) as they are each a member of a related group that controls ParentCo. Son and Daughter are also related to ParentCo by virtue of subparagraph 251(2)(b)(iii) as Son and Daughter are related to Mr. X and Mrs. X, each a person described in subparagraph 251(2)(b)(ii).
Son and Daughter are related to KidsCo by virtue of subparagraph 251(2)(b)(ii) as they are each a member of a related group that controls KidsCo. Mr. X and Mrs. X are related to KidsCo by virtue of subparagraph 251(2)(b)(iii) as Mr. X and Mrs. X are related to Son and Daughter, each a person described in subparagraph 251(2)(b)(ii).
Consequently, ParentCo is related to KidsCo by virtue of subparagraph 251(2)(b)(iii) as KidsCo is related to Mr. X and Mrs. X, each a person described in subparagraph 251(2)(b)(ii).
Our comments are provided in accordance with the practice outlined in paragraph 22 of IC 70-6R5, dated May 17, 2002. In particular, this position is not binding on the Canada Revenue Agency.
Yours truly,
David Palamar
Manager
Reorganizations Section I
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
FOOTNOTES
Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:
1 The Act means the Income Tax Act R.S.C. 1985 (5th Supp.) c.1 as amended from time to time and consolidated to the date of this letter and, unless otherwise expressly stated, every statutory reference herein is a reference to the relevant provision of the Act.
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