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.
CCPC Status - Ownership by a Trust
Question 50
Assume all of the common shares of a private corporation which is incorporated and carries on business in Canada are owned by a trust. This trust has three trustees who are all resident in Canada for income tax purposes. All issues are decided by a simple majority of the trustees. The beneficiaries of the trust, however, are all non-residents for income tax purposes.
On the assumption that the beneficiaries of the trust do not have direct or indirect influence that, if exercised, would result in control in fact of the corporation, pursuant to subsection 256(5.1), would the Department consider the corporation to be a Canadian-controlled private corporation as defined in subsection 125(7) of the Act where
- (a) the trustees have full discretion as to the allocation of income and capital among the beneficiaries?
- (b) the trustees have no discretion as to the allocation of income and capital among the beneficiaries?
Department's Position
The fact that the non-resident beneficiaries of the trust do not have direct or indirect influence that, if exercised, would result in control in fact of the corporation pursuant to subsection 256(5.1) is inconclusive for purposes of determining whether the corporation is a Canadian-controlled private corporation. It must also be determined whether any other non-resident person, including the settlor of the trust, has such influence.
Provided that the trustees, in fact, control the private corporation then the Department would consider the corporation to be a Canadian-controlled private corporation as defined in paragraph 125(7)(b) of the Act. The fact that the trustees have or do not have full discretion as to the allocation of income and capital of the trust among the beneficiaries would not, in and by itself, preclude the corporation from qualifying as a Canadian-controlled private corporation.
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