Section 249

Subsection 249(1)

Cases

Katz Estate v. The Queen, 76 DTC 6377, [1976] CTC 633 (FCTD)

Addy, J. stated, obiter, that "where section 249 refers to an individual, it must be taken to refer to an individual who is alive and ... [a] deceased taxpayer's taxation year would end at the date of his death although it obviously would not be a twelve-month period."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 70 - Subsection 70(6) 53

Administrative Policy

7 November 2012 External T.I. 2012-0468101E5 - Year End of Inter Vivos Trust on Wind Up

The taxation year of an inter vivo trust that has distributed all its property in the year to its beneficiary and, therefore, has effectively been wound-up in the year, is the calendar year. Accordingly the return filing deadline under Reg. 204(2) and s. 150(1)(c) is 90 days after the calendar year end. CRA stated:

We note that paragraph 104(23)(a) supports a conclusion that the tax year of a testamentary trust ends on the date of final distribution of its assets, however, the law does not support a similar conclusion in respect of an inter vivos trust.

17 July 2000 Internal T.I. 2000-0012557 -

"The taxation year of an inter vivos trust is December 31, regardless of when it is wound up....[T]he trust could not avoid the application of paragraph 94(1)(c) by winding up in that year."

28 February 1998 T.I. 9714685

"It is our view that by virtue of subsection 104(2) and 249(1) of the Act, the last taxation year of an inter-vivos trust ends on December 31 of that year, even if the assets of the trust have been distributed at an earlier date."

94 C.P.T.J. - Q.22

"A predetermined agreement which sets out how the group is to act in certain situations would normally constitute acting in concert ... . Furthermore, in cases where the voting power in a corporation is equally divided between two shareholders, it is the Department's view that, in almost all such cases, the corporation will be controlled by the group consisting of the two shareholders."

4 October 89 Memorandum (March 1990 Access Letter, ¶1155)

The taxation year of a deceased taxpayer ends on the date of his death.

89 C.M.TC - Q.4

The RCT policy to permit a joint venture to establish its own fiscal period is intended to apply primarily to the situation where the participants in a joint venture have different fiscal periods, or the same fiscal period but valid business reasons for a different joint venture fiscal period.

The joint venture fiscal period will end at the time of disposition of all its property.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(9) 44

88 C.R. - Q.79

An election pursuant to s. 195 of S.C. 1988, C.55 will be accepted if made in a late-filed return, but not if in an amended return.

Subsection 249(3) - Fiscal period exceeding 365 days

Administrative Policy

28 April 2015 External T.I. 2014-0560131E5 - Subsection 249(3) - fiscal period exceeds 365 days

application to subsequent floating year less than 365 days

A taxpayer changes from a calendar to a floating fiscal period, with the first such period beginning on January 1, 2014, and ending on January 3, 2015. Would s. 249(3) apply to the subsequent fiscal period, beginning on January 4, 2015 and ending on January 1, 2016? CRA responded:

As a result of [2012] changes to subsection 249(3)… our views in document 5-933096 with respect to the application of 249(3) to the second fiscal period are no longer valid. …[A]ccording to paragraph 249(3)(b), the first fiscal period is deemed to end on December 31, 2014 and the next fiscal period is deemed to commence on January 1, 2015. In addition, paragraph 249(3)(a) would apply to deem the corporation's second taxation year to commence on the first day of the immediately following calendar year, January 1, 2015.

17 October 2014 Internal T.I. 2014-0535561I7 F - Application du paragraphe 249(3)

subsequent stub period income is excluded

A corporation has a financial year commencing 31 December 2009 and ending 3 January 2011. The Directorate stated (TaxInterpretations translation):

[B]y the operation of paragraphs 249(3)(a) and (b), the corporation will have a deemed taxation year end as well as a deemed fiscal period end of 31 December 2010. Consequently…the corporation must make an adjustment on Schedule 1 of the … T2 in order not to include the results of the business attributable to the period of three days in the calculation of its income for the taxation year deemed to end on 31 December 2010.

18 January 1994 External T.I. 5-933096 -

Where a corporation has a fiscal year commencing on December 29, 1991 and ending on January 2, 1993 and its subsequent fiscal period commences on January 3, 1993 and ends on January 1, 1994, s. 249(3) will deem the first taxation year to end on December 31, 1992 so that a shareholder loan made on January 2, 1993 will have to be repaid by December 31, 1993 rather than January 2, 1994, and an amount to which s. 78(4) otherwise would apply will have to be paid 180 days after December 31, 1992 rather than 180 days after January 2, 1993. Because the second fiscal period will not exceed 365 days, s. 249(3) will not apply to deem a year-end of December 31, 1993.

Subsection 249(3.1) - Year end on status change

Administrative Policy

22 October 2014 Internal T.I. 2014-0550191I7 - Subsections 89(11) and 249(3.1)

making s. 89(11) election does not engage s. 249(3.1)

Does s. 249(3.1) apply when a corporation files a s. 89(11) election, thereby triggering a deemed year-end - and does a revocation of the election trigger such a deemed year? CRA responded:

[T]he corporation becomes a non-CCPC at the beginning of this particular taxation year and after. Consequently, the fact that the corporation files a subsection 89(11) election will not, in and by itself, trigger a deemed year-end under subsection 249(3.1). …

[A] corporation that revokes its subsection 89(11) election will not be deemed not to be a CCPC at the beginning of the taxation year following the particular taxation year. Consequently, the revocation of the subsection 89(11) election under subsection 89(12) will not, in and by itself, trigger a deemed year-end under subsection 249(3.1).

27 March 2014 External T.I. 2014-0523171E5 - Deemed year-end pursuant to 249(3.1)

no application of s. 249(3.1) if s. 89(11) election)

A few years after the taxpayer (a Canadian-controlled private corporation) made the s. 89(11) election, two public corporations acquired more than 50% of its voting common shares. Did s. 249(3.1) apply to deem the taxpayer to have a taxation year ending immediately before the time of the share acquisition?

By virtue of the election, the taxpayer had ceased to be a CCPC under para. (d) of the definition. Accordingly, s. 249(3.1) did not apply at the time of the share acquisition. However, s. 249(4)(a) would apply if there was an acquisition of control at that time.

27 March 2014 External T.I. 2014-0524851E5 F - Deemed year-end and CPCC status

Ekamant: s. 251(5)(b) does not vitiate actual control by share owner

On December 1, B Corporation (a CCPC) makes a binding offer (to which s. 251(5)(b) applies) to purchase all the shares of A Corporation whose ultimate control is by a public corporation (Pubco) and whose taxation year end is December 31. Does A Corporation become a CCPC under s. 249(3.1) on December 1 at the moment of signature of the offer rather than at the time of the subsequent actual acquisition of control?

After noting the presumption in s. 251(5)(b), CRA stated (TaxInterpretations translation):

[E]ven if Corporation B is deemed to control Corporation A, the Act does not contain any provision providing that Pubco ceased to control Corporation A for purposes of determining if Corporation A was a CCPC, as defined in subsection 125(7).

That is what the Tax Court of Canada indicated in … Ekamant2009 TCC 408 … .

Thus … Corporation A did not become a CCPC at the time of the signing of the purchase offer made by Corporation B since it continued to be controlled by Pubco at that time. As Corporation A did not become or cease to be a CCPC at that time, the conditions for the application of subsection 249(3.1) were not satisfied at the time of the signing of the purchase offer on December 1.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(5) - Paragraph 251(5)(b) sub of public corporation does not become CCPC until time of its actual acquisition of control 222

28 November 2013 External T.I. 2013-0504221E5 F - Fin d'années réputées

Amalco not a continuation of predecessors for election puposes

Opco, a Canadian-controlled private corporation with a September 30 year end, amalgamates on October 1 with another CCPC so that the deemed year end arising from the amalgamation coincides with Opco's normal year end. At noon on October 1, Amalco ceases to be a CCPC by issuing an option to a non-resident. Can Amalco make the s. 249(3.1) election with a view to having only one year end arising out of the transactions (September 30 of that year)?

After noting that in the absence of the election, s. 249(3.1) deemed a year end of Amalco to occur at 11:59 a.m. on October 1, CRA responded negatively (TaxInterpretations translation):

[T]he first condition provided in s. 249(3.1)(c)(i) is not satisfied. As Amalco is a new corporation by virtue of paragraph 87(2)(a) and no provision provides for a continuation of the predecessor corporations for these purposes, Amalco does not have a taxation year which would have ended in the period of seven days that ended immediately before the moment when Amalco lost its CCPC status.

2 December 2011 External T.I. 2011-0424446E5 - Interaction of Subsections 249(3.1) and 249(4)

on November 30, a Canadian-controlled private corporation (Corp A) and a non-resident enter into a purchase agreement, with the non-resident closing the purchase of Corp A later in the day. No election is made under s. 256(9), so that the taxation year of Corp A which commenced on January 1 is deemed by s. 249(4) to end at the end of November 29.

By virtue of s. 249(3.1)(a) and s. 251(5)(b), Corp A would have a second taxation year commencing at the beginning of November 30 and ending immediately before the signing of the sale agreement. Accordingly, Corp A would continue to be a Canadian-controlled private corporation for such (second) taxation year.

Subsection 249(4) - Year end on change of control

Administrative Policy

15 October 2014 External T.I. 2014-0547551E5 F - Acquisition of Control

reduction in CCPC shareholders from 7 to 4 likely would result in AOC

The common shares of Opco are held as follows: A-20%; B-9%; C-10%; D-25%; E-10%; F-13%; G-13%. A, B and C are a related group as are E, F and G. D is unrelated to the others. All the shareholders act in concert to control Opco.

After noting that there would be an acquisition of control of Opco if A acquired the shares of E, F and G (given that “the jurisprudence recognizes that control by one person excludes simultaneous control by a group”), CRA went on to address whether there would be an acquisition of control if A, B, C and D acquired the shares of E, F and G in proportion to their respective existing percentage ownership, stating:

The described acquisition of the shares…of Opco by A, B and C and would establish respective interests of 31%, 14%, 16% and 39%. …[T]he related group comprising A, B and C would have an interest of 61%... .That could ["pourrait"] represent a sufficient common link to indicate that a new group controlled Opco. In such determination, it also is necessary to take into account that a significant number of the shareholders of Opco (three out of seven) would cease to be such and the total interest of the departing shareholders would represent a significant percentage (36%) of the totality of the shares of Opco. This situation differs significantly from the case of a departing shareholder with little or no common link or common interest with the other shareholders with which it did not act in concert, and thus did not form part of the control group. …[I]t is quite likely ["fort probable"] that there would be a resulting acquisition of control of Opco… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251.2 - Subsection 251.2(2) - Paragraph 251.2(2)(a) shrinking of CCPC control group likely was AOC if sufficiently material 348

15 April 2014 External T.I. 2014-0527231E5 F - Acquisition of control and amalgamation

key corporate transactions moments before acquisition of control and amalgamation result in such transactions falling in a stub year
2014-0523251E5 F is quite similar to this except that it deals with the situation where a s. 256(9) election is instead made

A plan of arrangement provided for the following transactions to occur on 18 January 20X1 and in the indicated order but without a particular hour for each transaction being specified:

  1. Sale of some assets of the corporation.
  2. Roll of its shares.
  3. Acquisition of its control (with no s. 256(9) election being made).
  4. Amalgamation with the acquirer.

After noting that s. 249(4)(a) deemed there to be a taxation year end immediately before the commencement of January 18 (i.e., at the end of January 17) and that the CRA policy (per 2014-0523251E5 F), was that the year end resulting from the amalgamation could not precede key corporate transactions occurring on the day of the amaglamation and which logically occurred before the amlgamation, CRA stated (TaxInterpretations translation):

The time of such taxation year end [from the amalgamation] thus could not be before the effective time of the transactions occurring before the amalgamation (taking the into account the logical order of the transactions).

...Therefore, the corporation must account for the tax consequences respecting the asset sale and share rollover transactions (which occurred before the acquisition of control and the amalgamation), in the taxation year of the corporation terminating immediately before the amalgamation.

The corporation thus technically has two taxation years, one which is deemed to terminate at the end of January 17, 20x1, and the other which would end during January 18, 20X1. The corporation’s second taxation year would be very short.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(a) same day amalgamation following control acquisition gives rise to two taxation year ends if out-of-normal course transactions occur on day of closing 303

26 March 2013 External T.I. 2014-0523251E5 F - Acquisition of control and amalgamation

double taxation year ends where transactions occur on the closing date before acquisition and amalgamation
2014-0527231E5 F is quite similar to this except that it deals with the situation where a s. 256(9) election is not made

Following a sale of assets of a corporation and a rollover of its shares on 18 January 20X1, an acquisition of control of the corporation occurs at 18:00 hours and it then is amalgamated with the acquirer. The plan of arrangement or closing agenda, as the case may be, does not specify particular times at which these transactions occur and the corporation elects under s. 256(9) for the acquisition of control to occur at 18:00 hours. Will multiple year ends occur as a result and, if so, in which taxation year will the preliminary transactions be considered to occur?

CRA stated (TaxInterpretations translation):

Where a corporation does not effect transactions outside the ordinary course of business on the day of an amalgamation for which the certificate of amalgamation does not specify the time of the amalgamation, we consider that the amalgamation generally will occur at the beginning of the day… . In contrast, our position is different where a plan of arrangement or a closing agenda provides for various transactions out of the ordinary course of business to occur on the day of the amalgamation in addition to the acquisition of control and the amalgamation… If the transactions are effected...in a logical order...[CRA] will consider that the amalgamation occurs at the time established by the logical order of the transactions. ...[Here] this time is after the effective time of the acquisition of control. at a time determined in accordance with the logic of the transactions. …

[B]y reason of the subsection 256(9) election, a deemed taxation year end occurs…at the time immediately before 18:00 hours… .The corporation must take into account the taxation consequences of the sale transactions…and the share rollover …in the taxation year…which terminated immediately before the effective time of the acquisition of control. …

Furthermore, given that the amalgamation occurs after all the transactions of January 18…including the acquisition of control…at 18:00 hours, the second taxation year of the corporation terminates immediately before the amalgamation by virtue of paragraph 87(2)(a). … The corporation would therefore technically have two taxation years that would be deemed to end during January 18, 20X1. The second ... would be very short.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(a) double taxation year ends where transactions occur on the closing date before acquisition and amalgamation 351

18 December 2013 External T.I. 2013-0511101E5 F - Substantial interest - Part VI.1

voting rights shifted to 2nd trust with same trustees: no control change

An inter vivos trust (Trust), with three individual trustees holds Class A non-voting common shares and C special voting shares of Corporation. An estate, whose three executors are the same individuals, holds non-voting Class B preferred shares. In order to convert the estate's interest into a substantial interest for Part VI.1 purposes, they cause Corporation to redeem the Class C voting shares which, in turn, causes the Class B preferred shares to become voting pursuant to s. 48(2) of the Quebec Business Corporations Act (a provision which effectively deems all shares to become voting whenever none is voting).

The redemption of the Class C shares did not result in an acquisition of control of the Corporation (TaxInterpretations translation):

[T]he same persons (D, F and G) controlled Corporation before and after the redemption of the Class C shares of the capital stock of Corporation because the trustees of Trust who controlled Corporation before the redemption were the same persons as the executors of Succession that controlled Corporation after the redemption.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 191 - Subsection 191(3) creation of substantial interest through redemption of special voting shares 398
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition no disposition of shares that became voting by operation of law (due to cancellation of voting shares) 165
Tax Topics - Income Tax Act - Section 251.2 - Subsection 251.2(2) - Paragraph 251.2(2)(a) no acquisition of control where votes pass from trust to an estate with the same individuals as executors 177

5 October 2012 APFF Roundtable, 2012-0454111C6 F - Power of attorney and acquisition of control

power of attorney

Mr. X, who is the sole shareholder of XYZ Inc., signs a mandate (power of attorney) in favour of his accountant (with whom he deals at arm's length) to become effective in the event of his incapacity.

In stating that there is no acquisition of control when the power of attorney is homologated (becomes effective following such incapacity), CRA stated (Tax Interpretations translation), after referring to Duha:

In effect, notwithstanding the homologation of this mandate governed by the Quebec Civil Code, the ownership of that number of shares conferring a majority of the votes for the election of the board of directors is part of the patrimony of Mr. X. Furthermore, we are of the view that a mandate granted with a view to incapacity should be considered to be an "external document" (in relation to the constating documents of the corporation) in the determination of the de jure control of a corporation.

It is emphasized however that the rights of a mandatary pursuant to a mandate in contemplation of incapacity could, in certain circumstances, engage paragraph 251(5)(b) ITA and subsection 256(1) ITA.

17 February 2011 External T.I. 2010-0388081E5 - Clarification STEP Roundtable Q3 - Deemed Year End

2010 STEP Roundtable Q. 3 clarification - no double acquisition

It is generally CRA's position that a target corporation will only have one deemed year end where an acquisition of control of the target is followed on the same date by its amalgamation with the acquirer. "Furthermore...it would appear to be appropriate generally that the transactions which are legally effected by the predecessor corporation should be reported by that same predecessor corporation for tax purposes, rather than by the amalgamated entity."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(7) - Paragraph 256(7)(b) double year ends where acquisition of control under s. 256(7)(b)(ii) 156
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(a) double year ends where acquisition of control under s. 256(7)(b)(ii) 159

Income Tax Technical News, No. 34, 27 April 2006 under "Change in Trustees and Control".

Income Tax Technical News, No. 7, 21 February 1996 (cancelled)

Discussion of when shareholders of a closely-held corporation are considered to be acting in concert or otherwise to represent a group.

1994 A.P.F.F. Round Table, Q. 48

"In general, the Department's position is that an agreement signed between shareholders has no influence whatever on determining de jure control of a corporation for purposes of the Act, regardless of the type or nature of the agreement among shareholders."

18 May 1993 T.I. (Tax Window, No. 31, p. 4, ¶2511)

Where a widely-held public corporation (A) issues treasury shares pursuant to a takeover bid to the shareholders of B (another widely-held public corporation) in exchange for their shares of B, and the exchange ratio is such that the former shareholders of B thereby acquire a majority of the issued shares of A, there will be an acquisition of control of B by A. Although, collectively, the former shareholders of B hold a majority of the shares of A, they would not control A unless there is a common link between them beyond their status as shareholders.

25 August 1992 External T.I. 5-921586 -

Where an individual (or group of persons) transfers a controlling interest in one corporation to a second corporation in exchange for a controlling interest in the second corporation, there will not be an acquisition of control of the first corporation, but there will be an acquisition of control of the second corporation, where the transfers were not related to the second corporation immediately before the acquisition. Unrelated persons will be considered to be a group where there is evidence that they have a common link or interest or that they act together (i.e., without independent interests) to control the corporation.

Where there is no change in the control of a parent corporation, there has been no change in control of its subsidiaries.

29 July 1992 Memorandum (Tax Window, No. 21, p. 4, ¶2037)

Two unrelated individuals each holding ½ of the shares of a corporation will not be considered to act in concert simply because the consent of both is required before the corporation can undertake any action. In order to act in concert, there must be some arrangement where they have agreed to vote their shares in the same manner or have their nominees to the board vote together on most matters. Alternatively, they have common interests such that it would be reasonable to conclude that they will vote their shares together.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) 27

29 June 1992 Internal T.I. 7-920444 -

Discussion of what constitutes a "group of persons".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) 32

28 May 1992 T.I. 920817 (December 1992 Access Letter, p. 38, ¶C248-120)

Where trustees of a trust control the voting rights of shares of a corporation prior to the distribution of the shares to unrelated beneficiaries, there will be a change of control on the distribution.

14 May 1992 External T.I. 5-920356 -

It is RC's position that a shareholders' agreement, regardless of whether or not it is pursuant to a specific statute or includes the corporation as a party, does not affect the determination of control for the purposes of the Act. Accordingly, where two shareholders, who deal at arms's length with each other and own 75% and 25%, respectively, of the shares of a corporation, enter into a unanimous shareholder agreement which provides that the two directors of the corporation shall be elected with the unanimous consent of the shareholders, the control of the corporation will not be affected, although the agreement may be relevant to the question de jure control for purposes of s. 256(5.1).

91 C.R. - Q.12

The existence of a shareholder agreement between two 50% shareholders will not always be prima facie evidence that they constitute a group.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) 28

15 November 1991 T.I. (Tax Window, No. 11, p. 10, ¶1535)

A corporation ("Holdco") which held less than 50% of the shares of another corporation ("Opco") and which dealt at arm's length with the other shareholders of Opco did not control Opco notwithstanding that pursuant to a voting agreement with another corporation ("Exco"), whose shares were sufficient to result in their combined holding exceeding 50%, Exco agreed to vote its shares of Opco in the same way as Holdco. Accordingly, a further acquisition of shares by Holdco resulting in its own shareholding exceeding 50% entailed an acquisition of control of Opco.

90 C.R. - Q43

In the absence of the application of s. 256(8), control of a corporation normally will be considered to be acquired on the date of closing.

90 C.R. - Q39

Where corporations A and B are amalgamated on the same day on which control of corporation B was acquired by corporation A, corporation B will have only one year-end as a result of the acquisition of control on the amalgamation.

11 June 1990 T.I. (November 1990 Access Letter, ¶1537)

Where 50% of the shares of Corporation C are each owned by Corporation A and Corporation B and an individual (who previously owned 1/2 of the shares of Corporation A) acquired the balance of the shares of Corporation A from his father and all the shares of Corporation B from his uncle, there will be an acquisition of control of Corporation C because the individual will be considered to have acquired control of Corporation B which, prior to the acquisition, was a member of an unrelated group which controlled Corporation C.

June 1990 Meeting with Alberta Institute of Chartered Accountants (November 1990 Access Letter, ¶1499, Q. 1)

Where a wholly-owned subsidiary of a corporation sells 60% of its common shares in a public offering, there has been no change of control if there is no identifiable person or group of persons who have acquired control.

19 March 1990 T.I. (August 1990 Access Letter, ¶1393)

Where one of the two 50% shareholders of a company sells his shares to an arm's length purchaser, a group of persons will be considered to have acquired control of the corporation where there is evidence that they have a common link or interest or that they act together to control the corporation. Because the word "control" in ss.111(5) and 249(4) refers to the right of control that rests in the ownership of a majority of the voting rights, the terms of a shareholders' agreement would not by themselves result in de jure control of the company having been acquired.

8 March 1990 T.I. (August 1990 Access Letter, ¶1393)

S.249(4) would apply to the Canadian branch of a U.K. company when control of the U.K. has been acquired.

16 January 1990 T.I. (June 1990 Access Letter, ¶1284)

The voting rights of a public corporation held by a Canadian-controlled private corporation increases from 45% to 55% as a result of the conversion of multiple-voting shares held by members of the public into non-multiple voting shares. If the holding company did not have control over the public corporation prior to the conversion, but had control after the conversion, there would have been an acquisition of control of the public corporation by the holding company. In determining whether a transaction amounts to an acquisition of control one must examine not only the share conditions but also the by-laws as well as any written agreement between the shareholders which may affect the share conditions.

24 November 89 T.I. (April 90 Access Letter, ¶1188)

Where Mr. A is a sole shareholder of company A and Mr. A transfers all the shares of company A to company X in exchange for 55% of the voting shares of company X, there would be no acquisition of control of company A.

18 October 89 Meeting with Quebec Accountants, Q.2 (April 90 Access Letter, ¶1166)

In the situation where A owns all the shares of a corporation and sells half of those shares to B, there would be an acquisition of control by a group made up of A and B if they act together to control the corporation. The fact that B is not related to A is one element that could lead to the conclusion that there is no acquisition of control. However, in a small private corporation, it must be presumed that a person acquiring a non-majority interest is induced to do so for reasons that suggest that he acts in concert with the other shareholder.

The situation where A sells all his shares to B and C also is discussed.

89 C.R. - Q.16

Where Mr. A, who owns 100% of the voting shares of Opco, sells 10% of the shares to Mr. B who deal at arm's length with Mr. A, there will not be an acquisition of control provided Mr. A controls Opco before and after the sale of the shares of Opco. If Mr. A instead sells 50% of the shares of Opco to Mr. B, the group comprised of Mr. A and B will be considered to have acquired control of Opco if A and B have sufficient common connections or business interest to make it reasonable to assume that they will act either in concert or with a common interest to control Opco.

If Mr. A and Mr. B are brothers who each own 50% of the voting shares of Opco, then on the conversion of the shares of Opco owned by Mr. B into non-voting shares, Mr. A will be considered to have acquired control of Opco.

88 C.R. - Q.40

Where 1/2 of the shares of a corporation are owned by each of A and B, and B sells his shares to C, it will be a question of fact whether control of the corporation has been acquired by a group of persons. If C acts together with A to control the corporation, then control will have been acquired. [C.R.: 111(5)]

IT-64R2 "Corporations

Association and Control"

Articles

Gregory M. Johnson, Wesley R. Novotny, "An Update on Flow-through Shares in the Energy Sector", 2016 CTF Annual Conference draft paper

Loss restriction event should not create flow-through share timing issues (p. 15)

Fortunately, the operating FTS provisions [f.n. 64 For example, the definition of FTS in subsection 66(15), and subsections 66(12.6), (12.62) and (12.66)]. refer to time being determined by reference to "calendar years" and not taxation years.

Thus, the stub taxation year created on a LRE should not, in and of itself, create any timing issues for the issuance of FTS or the incurring and renouncing of qualifying expenditures.

Joel A. Nitikman, "Who Has De Jure Control of a Corporation When Its Shares Are Held by a Limited Partnership?", 2011 Canadian Tax Journal, Vol 59, p. 765

Argues that (at least where the shares of a subsidiary corporation held as partnership property are registered in the name of the limited partnership rather than the general partner), an acquisition of control of the general partner or of the limited partners will not result in an acquisition of control of the subsidiary corporation as it is owned by the limited partnership itself.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 111 - Subsection 111(5) 63

Jack Bernstein, "Corporate Control: An Evolving Canadian Concept", Tax Notes International, February 20, 2012, p. 597

Survey of jurisprudence on de jure control.

Robert Couzin, "Some Reflections on Corporate Control", 2005 Canadian Tax Journal, p. 305.

Ronit Florence, "Acquisition of Control of Canadian Resident Corporations: Checklist", Business Vehicles, Vol. V, No. 4, 1999, p. 262.

Ewens, "Acquisition of Control Issues and Secondary Offerings of Shares", Corporate Structures and Groups, Vol. IV, No. 1, 1996, p. 190.

Bernstein, "Canadian Implications of Control", Tax Profile, September 1995, Vol. 4, No. 27, p. 289.

Brown, "The Transfer of Property on Death: Ownership, Control and Vesting", 1994 Canadian Tax Journal, Vol. 42, No. 6, p. 1449.

"Group Control", 1992 Corporate Structures and Groups, Vol. 1, No. 1, p. 9.

Lahmer, "Acquisition-of-Control Rules", 1990 Corporate Management Tax Conference Report, c. 4

Contains checklist.

Tremblay, "Disposition of Foreign Affiliate: Year-end on Change of Control", Canadian Current Tax, February, 1990, page P3

It is not clear that s. 249(4) will apply to a disposition by one foreign affiliate of the shares of another foreign affiliate.

Harris, "Acquisition of Control", Practice Notes, Canadian Current Tax, February 1988, p. P11

General discussion of the consequences of an acquisition of control.

Subsection 249(4.1)

Administrative Policy

18 June 2015 STEP Roundtable Q. 1, 2015-0572131C6 - 2015 STEP Q1- Tax Year of Graduated Rate Estate

4th taxation year will also be short if executors adopt fore-shortened 1st estate year end

The executors adopt a first year-end for the estate of an individual who died on March 31, 2016, of September 30, 2016. The second and third year-ends are September 30, 2017 and 2018. Lastly, a year-end is deemed to arise on March 31, 2019 (36 months after death), which is the last taxation year during which the testamentary trust is a graduated rate estate. Thereafter, it is required to adopt a December 31 year-end. Does CRA agree?

CRA responded:

Assuming the estate otherwise meets all the conditions to be the deceased individual's GRE throughout the first 36 month period, where the executor chooses to have a short first taxation year end for the estate the 36 month period would span four taxation years.

In the scenario provided, the first and fourth taxation years are less than 12 months long, and the estate would be subject to tax based on the graduated tax rates for individuals for the first four taxation years as indicated.