CRA finds that “holding” does not include indirect holding

The definition of a mutual holding corporation in s. 139.1 (a provision which most of us are equally familiar with) requires that the corporation "hold" shares of an insurance corporation. Per CRA, "holding" does not include indirect holding.

This corroborates the proposition that provisions, such as the portfolio investment entity definition in s. 122.1 (now used in the draft s. 251.2 investment fund definition), which refer to holding specified property, do not include property which is beneficially owned by a subsidiary or other investment.  In contrast, s. 88(1)(c.2)(iii)(A) refers to a direct "or indirect" interest.

Neal Armstrong. Summary of 25 September 2014 T.I. 2012-0451411E5 F under s. 139.1(1) – mutual holding corporation.