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.
Associated Corporations
Subsection 256(1.4) of the Act expands the scope of association where the parties are given particular options or rights. This provision does not apply to particular options or rights which become exercisable upon the death, bankruptcy or permanent disability of an individual. "Death" and "bankruptcy" are terms having clear legal definitions. By contrast, "permanent disability" has no clear legal meaning.
Does Revenue Canada have a position on what it will accept as a meaning for "permanent disability" for purposes of this exception to subsection 256(1.4)?
Department's Position
The Department's position is that the question of whether a permanent disability exists is one of fact which must be determined in each case, keeping in mind that existing caselaw supports the view that "permanent" is the antithesis of "temporary" and means more than "prolonged". Considering the words "permanent disability" in subsection 256(1.4) in their context, it is also the Department's position that not every permanent disability will qualify as a permanent disability for the purpose of this subsection. Nevertheless, where the parties to a shareholder's agreement have made a bona fide attempt to define "permanent disability" in their agreement, that fact will be viewed as significant by the Department in determining whether a permanent disability exists.
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1991
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1991
Email this Content