CRA confirms that too many stacked corporations may prevent access to the ETA s. 156 election

When it drafted its definition of closely related corporations, Finance quickly ran out of fingers. For instance, the “qualifying subsidiary” concept includes a child or grandchild but not a great-grandchild. As a result, sufficient stacking of corporations can result in an inability of all group members to make the ETA s. 156 nil consideration election. For example if, in a wholly-owned group, there are two stacks of four corporations beneath a common Holdco, the two bottom corporations will not be able to elect with each other as they are two remote from the Holdco to be closely related to each other.

Neal Armstrong. Summary of 19 June 2015 Interpretation 167422 under ETA s. 128(2).