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.
MEMO TO FILE:
DRAFT RESPONSE FOR 1992 CTF CONFERENCE
QUESTION 53
In paragraph (d) of the definition of "designated shareholder" in subsection 4901(2) of the Income Tax Regulations, what is the meaning of the expression "group of employees" and what characteristics must a "group" have? For example, if a company has 1,000 employees working in three locations, are they all a "group" merely by reason of their working for the same company?
RESPONSE
The relevant wording in paragraph (d) of the definition of "designated shareholder" in subsection 4901(2) of the Regulations reads:
"......where any group of employees of the corporation or of a corporation related thereto controls the corporation"......
The Department's position in this regard is that where shares held by the employees of the corporation are sufficient in number to have control, those employees represent a group of employees that controls the corporation. The position that the employee holds or his work location is irrelevant. The result is that the shares of the corporation would not represent a qualified investment for a registered retirement savings plan or registered retirement income fund of the employee or a person related to the employee.
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© Her Majesty the Queen in Right of Canada, 1992
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© Sa Majesté la Reine du Chef du Canada, 1992
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