Section 251

Table of Contents

Subsection 251(1) - Arm’s length

Paragraph 251(1)(a)

See Also

Kiperchuk v. The Queen, 2013 DTC 1088 [at 486], 2013 TCC 60

The taxpayer was the designated beneficiary of her husband's RRSP, and received the RRSP proceeds upon his death, and was assessed for his unpaid...

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Hickman v. The Queen, 2000 DTC 2584 (TCC)

The taxpayer disposed of shares of a corporation to another corporation (“CSC”) all of whose shares were held by a family trust whose trustees...

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Wright Estate v. The Queen, 96 DTC 1509 (TCC)

The taxpayer was an estate whose executors and trustees were the son (John) and accountant (Gordon) of the deceased. Gordon had married the widow...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) testamentary trust dealt at arm's lenght with three beneficiaries (2 of them, administrators) who did not get along 97

Administrative Policy

Paragraph 251(1)(b)

See Also

Kiperchuk v. The Queen, 2013 DTC 1088 [at 486], 2013 TCC 60

The taxpayer was the designated beneficiary of her husband's RRSP, and received the RRSP proceeds upon his death, and was assessed for his unpaid...

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Articles

Jeffrey T. Love, Kenneth R. Hauser, "How Various Aggregation Rules Apply to Trusts", 2018 Conference Report (Canadian Tax Foundation), 28: 1-79

CRA application of s. 251(1)(b) (p. 28:52)

The CRA considered the application of paragraph 251(1)(b) to a situation in which a person was a...

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Paragraph 251(1)(c)

Cases

Keybrand Foods Inc. v. Canada, 2020 FCA 201

The taxpayer (“Keybrand”), its wholly-owning parent (BWS), and another Strassburger-family company were guarantors of loans made to a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) interest was non-deductible on loan made to company that had no reasonable prospects of recovery 335
Tax Topics - General Concepts - Purpose/Intention regard can be had to subsequent steps as confirmatory of the intent at the relevant time 187

Louie v. Canada, 2019 FCA 255

From May 15 to October 17, 2009, the taxpayer directed 71 “swaps” under which TSX-listed shares were transferred between her self-directed...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 207.01 - Subsection 207.01(1) - Advantage - Paragraph (b) - Subparagraph (b)(i) advantages generated in Year 1 from swap transactions continued to produce indirect advantages thereafter 547
Tax Topics - Income Tax Act - Section 207.06 - Subsection 207.06(2) concerns about future value increases are intended to be addressed by relief provisions 384
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) no necessity for predetermined endpoint or advance determination of price 211

Aeronautic Development Corporation v. Canada, 2018 FCA 67

A Canadian corporation (ADC), which had issued voting common shares (representing voting control) for a modest amount to three Canadian employees,...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) non-resident exercised de facto control of mooted CCPC under a development agreement 646

Canada v. 9101-2310 Québec Inc., 2013 DTC 5172 [at 6455], 2013 FCA 241

In order to defeat a claim of a bank, a tax debtor ("Garneau") deposited $305,000 with a corporation ("2310") (whose shareholder, Mr. Pratte, was...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) transfer only of legal title may engage s. 160 200

Labow v. Canada, 2012 DTC 5001 [at 6501], 2011 FCA 305

In finding that the taxpayer, who employed his wife in his medical practice, did not deal at arm's length with an employee health trust which he...

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Canada v. Remai, 2009 DTC 5188 [at 6257], 2009 FCA 340

In order to make promissory notes that he had donated to a charitable foundation cease to be non-qualifying securities, the taxpayer arranged for...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) no abuse in controlling funds established 159
Tax Topics - Statutory Interpretation - Redundancy/reading in words provision not to be interpreted such that it can never apply 40

Canada v. McLarty, 2008 DTC 6354, 2008 SCC 26, [2008] 2 S.C.R. 79

In finding that an acquisition of seismic data by the taxpayer, acting through the vendor ("Compton") as his agent, was an arm's length...

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Canada v. Livingston, 2008 DTC 6233, 2008 FCA 89

In order to help her friend (Davies) defeat efforts of CRA to collect unpaid taxes from Davies, the taxpayer opened up a bank account in the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) transfer to an accommodation party was caught 166

Petro-Canada v. Canada, 2004 DTC 6329, 2004 FCA 158

Joint exploration corporations (the "JECs") acquired seismic data from one of the two shareholders of each JEC at a purchase price substantially...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 66.1 - Subsection 66.1(6) - Canadian exploration expense - Paragraph (a) no plan to use purchased seismic data 144
Tax Topics - Income Tax Act - Section 67 paying more than FMV may not engage s. 67 109
Tax Topics - General Concepts - Purpose/Intention purpose test satisfied even if multiple purposes 77

Deptuck v. Canada, 2003 DTC 5273, 2003 FCA 177

S.69(1)(a) applied to reduce the capital cost to a partnership of depreciable property purchased by it to the property's fair market value rather...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) s. 69(1)(a) applies to a purchasing partnership as if it were a person 156
Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(c) 115

Brown v. Canada, 2003 DTC 5298, 2003 FCA 192 (FCA)

At the time a partnership, of which the taxpayer subsequently became a partner, negotiated an agreement for the acquisition of software, the same...

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Dixon v. Deputy Attorney General of Canada, 91 DTC 5584 (Ont HCJ.)

An alleged transaction in which a corporation sold land at a substantial undervalue to another corporation in which its president ("Dixon") had a...

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Peter Cundill & Associates Ltd. v. The Queen, 91 DTC 5085 (FCTD), aff'd 91 DTC 5543 (FCA)

The taxpayer, which was the portfolio manager for the Cundill Value Fund and the Cundill Security Fund was dependent upon Mr. F. Peter Cundill,...

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Millward v. The Queen, 86 DTC 6538, [1986] 2 CTC 423 (FCTD)

A company owned by the taxpayer mortgaged land in favour of an RRSP of the taxpayer's partner ("Coates") in his law firm and a company owned by...

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Beaumont v. The Queen, 86 DTC 6264, [1986] 1 CTC 507 (FCTD), aff'd 88 DTC 6522, [1988] 2 CTC 365 (FCA)

Since the taxpayer was held to be dealing at arm's length with a corporation ("Clarebeau") 1/2 of whose shares were owned by the taxpayer's family...

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Special Risks Holdings Inc. v. The Queen, 86 DTC 6035, [1986] 1 CTC 201 (FCA)

Before finding that a corporation in which the taxpayer held 50% of the voting shares was subject to de facto control by the taxpayer in light of...

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Windsor Plastic Products Ltd. v. The Queen, 86 DTC 6171, [1986] 1 CTC 331 (FCTD)

The three shareholders of the taxpayer, each of whom was a minority shareholder and one of whom was related to a non-resident corporation...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212 - Subsection 212(4) - Paragraph 212(4)(a) shareholders acting in concert 139

Robson Leather Co. Ltd. v. MNR, 74 DTC 6666, [1974] CTC 872 (FCTD), aff'd 77 DTC 5106, [1977] CTC 132 (FCA)

1/2 the shares of a company ("Appel Process") were held by a second company ("Robson Leather") 75% of whose shares were held by a trust whose...

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Oryx Realty Corp. v. MNR, 74 DTC 6352, [1974] CTC 430 (FCA), aff'd in another respect in sub nom. MNR v. Shofar Investment Corp., 79 DTC 5347, [1979] CTC 433, [1980] 1 S.C.R. 350

On April 20, 1959, the taxpayer purchased land inventory, from a company ("Lanber") which was owned in the same proportions as itself, on...

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Swiss Bank Corp. et al. v. Minister of National Revenue, 72 DTC 6470, [1972] CTC 614, [1974] S.C.R. 1144

The manager ("SIP") of a Swiss fund incorporated an Ontario company ("City Park") to serve as a vehicle for the investment of monies of the Fund...

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Pender Enterprises Ltd. v. MNR, 65 DTC 5202, [1965] CTC 343 (Ex Ct)

The sale by an individual of his business to a corporation owned equally by his brother-in-law and cousin (who also were senior employees of his...

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Rolka v. MNR, 62 DTC 1394, [1962] CTC 637 (Ex Ct)

The taxpayer was found to indirectly control, and therefore not to be dealing at arm's length with, a corporation ("Nelmar") for purposes of what...

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Golden Arrow Sprayers Ltd. v. MNR, 61 DTC 1185 (Ex Ct)

The transfer of patent rights by an individual to a newly-incorporated corporation of which he was to be the controlling shareholder and the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 14 patents were Classs 14 property 51

Ancaster Development Co. Ltd. v. MNR, 61 DTC 1046, [1961] CTC 91 (Ex Ct)

The taxpayer, whose three shareholders were Rolka, Young and Atkinson each holding 45%, 45% and 10% of its shares, respectively, sold land at its...

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MNR v. Kirby Maurice Co. Ltd., 58 DTC 1033, [1958] CTC 41 (Ex Ct)

A proprietor of a business who wished to incorporate it, directed his solicitors to incorporate a corporation, and instructed them as to the terms...

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MNR v. Granite Bay Timber Co. Ltd., 58 DTC 1066 (Ex Ct), briefly aff'd 59 DTC 1262 (SCC)

The liquidator of a company, who was one of its three shareholders, distributed all the property of the company to the shareholders subject to the...

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Minister of National Revenue v. Sheldon's Engineering Ltd., 55 DTC 1110, [1955] CTC 174, [1955] S.C.R. 637

When the minority shareholders of a company (the "Old Company") learned that the majority shareholders were going to sell their shares of the Old...

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See Also

Godcharles v. Agence du revenu du Québec, 2021 QCCA 1843

A group of unrelated individuals were the co-owners of a seniors’ residence (“SR”), which was leased by them to the corporate operator of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 68 - Paragraph 68(a) s. 68 reallocated between a retirement home’s business operations sold by one vendor and the home sold by the other vendors 424
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) - Subparagraph 69(1)(b)(i) s. 69 cannot reduce inflated proceeds to vendor 435
Tax Topics - General Concepts - Fair Market Value - Land goodwill portion of retirement residences business determined as the residual from valuing the residence using the cost method 272

Godcharles v. Agence du revenu du Québec, 2020 QCCQ 2219, aff'd 2021 QCCA 1843

The taxpayers were a corporation (“9118”) and its eight individual shareholders who co-owned a fully-occupied retirement residence whose...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Fair Market Value - Land retirement home valued using cost method with residual to goodwill 127
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) transaction between parties acting in concert required increased allocation to the real estate sold at shareholder level 318

Keybrand Foods Inc. v. The Queen, 2019 TCC 161, aff'd 2020 FCA 201

The taxpayer (“Keybrand”), its wholly-owning parent (“BWS”), and another Strassburger-family company were guarantors of loans made to a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) interest was deductible on money borrowed to be lent at interest to company in default cf. money borrowed to acquire its shares when its collapse was imminent 346
Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(c) - Subparagraph 39(1)(c)(ii) right of parent of taxpayer to elect majority of board of investee of X through chair’s casting vote entailed de facto control by taxpayer of X 227

HLB Smith Holdings Limited v. The Queen, 2018 TCC 83

A company (“PES,” or the “Operating Company”) providing electricians’ services initially was owned on a 50-50 basis by two individuals...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) s. 160 liability flowed through with dividends paid to 50-50 unrelated shareholders 154

Poulin v. The Queen, 2016 TCC 154, briefly aff’d sub nomine Turgeon v. The Queen, 2017 FCA 103

In the fall of 2007, the two equal individual shareholders (“Poulin” and “Turgeon”) of a Quebec construction corporation (“Amiante”)...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) sale to employee's Holdco with not upside and no risk for employee was non-arm's length 261

Kiperchuk v. The Queen, 2013 DTC 1088 [at 486], 2013 TCC 60

The taxpayer was the designated beneficiary of her husband's RRSP, and received the RRSP proceeds upon his death, and was assessed for his unpaid...

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Wagner v. The Queen, 2012 DTC 1234 [at 3645], 2012 TCC 8

An agreement between the taxpayers and an unrelated purchaser of their shares to allocate a portion of the amounts paid by the purchaser to the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 68 329

Alberta Printed Circuits Ltd. v. The Queen, 2011 DTC 1177 [at 967], 2011 TCC 232

The taxpayer was a Canadian-controlled private corporation in the business of printing customized circuits, held 75% by a holding company for Mr....

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The Queen v. Yelle, 2010 DTC 5128 [at 7083], 2010 ABPC 94

The taxpayer, who was a member of a partnership, was accused of tax evasion under s. 239(1)(a) in connection with capital cost allowance claims...

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Brownco Inc. v. The Queen, 2008 DTC 2591, 2008 TCC 58

The taxpayer and its 50% shareholder were found not to be dealing with each other at arm's-length in light of the fact that the taxpayer agreed to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) 50% shareholder was entitled to one of two directors with tie-breaking vote 196

McMullen v. The Queen, 2007 DTC 286, 2007 TCC 16

The taxpayer and an unrelated individual ("DeBruyn") accomplished a split-up of the business of a corporation ("DEL") of which they were equal...

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Baxter v. The Queen, 2006 DTC 2642, 2006 TCC 230

Before going on to find that the taxpayer had purchased a sublicence of software from a person with whom he was dealing at arm's length (and...

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Brouillette v. The Queen, 2005 DTC 1004, 2005 TCC 203

The taxpayer facilitated a leveraged buy-out of him and his co-shareholder of a company ("Brouillette Automobiles") by incorporating a corporation...

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McLarty v. The Queen, 2005 DTC 217, 2005 TCC 55, rev'd 2006 DTC 6340, 2006 FCA 152, aff'd supra.

The purchase by the taxpayer of an undivided interest in seismic data in a transaction whose terms were set by a promoter nonetheless was an...

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Morley v. The Queen, 2004 DTC 2604, 2004 TCC 280, briefly aff'd 2006 DTC 6351, 2006 FCA 171

An acquisition of software by a tax-shelter partnership was found not be an arm's length transaction in light of the very non-commercial nature of...

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Siracusa v. The Queen, 2003 DTC 2106, 2003 TCC 941

The taxpayer, who owned one-third of the shares of a corporation that paid a dividend to its shareholders, and was a director and bookkeeper of...

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Martel v. The Queen, 2003 DTC 1187 (TCC)

The assets of a Canadian-controlled private corporation ("Gestion") consisted of the shares of two companies, the first of which ("2321") was...

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Lanester Sales Ltd. v. The Queen, 2003 DTC 997 (TCC), aff'd 2004 DTC 6461, 2004 FCA 217

After finding that the taxpayer (a franchisee) and the franchisor were dealing with each other at arm's length, Bowman A.C.J. stated (at p....

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) no de facto control by franchisor 130

Petro-Canada v. The Queen, 2003 DTC 94 (TCC), aff'd supra.

In order that Canadian exploration expenses of another oil and gas company ("Phillips" could be transferred to the taxpayer for purposes of the...

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Joncas v. The Queen, 2002 DTC 1813 (TCC), aff'd 2002 DTC 7060, 2002 FCA 234 (French)

A sale by the taxpayer of his shares of a company (Trans Côte) to a corporation (LBS) whose voting shares were equally owned by the taxpayer and...

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Brown v. The Queen, 2001 DTC 1094 (TCC), aff'd supra 2003 DTC 5298 (FCA)

The purchase by a partnership of software from an American company ("ASC") was found to be a transaction between persons not dealing with each...

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Campbell v. The Queen, 99 DTC 1073 (TCC)

A Bahamian company ("Helvetia") distributed all the shares of its Canadian subsidiary ("Quamco") equally to three trusts each of which owned...

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MFC Bancorp Ltd. v. The Queen, 99 DTC 905 (TCC)

A transfer by the taxpayer of its interest as lessor in mining concessions and railway rights-of-way to a corporation ("CJC") in which a...

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Christensen v. The Queen, 98 DTC 1893, [1998] 4 CTC 2198 (TCC)

The transfer to the taxpayer of a property in which she had been living with a married man who controlled the corporate transferor was found to be...

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H.T. Hoy Holdings Ltd. v. The Queen, 97 DTC 1180, [1997] 2 CTC 2874 (TCC)

The taxpayer and an unrelated individual (Cloutier) were found to be dealing at arm's length in transactions through which the taxpayer indirectly...

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Lixo Investments Ltd. v. The Queen, 97 DTC 1030, [1997] 2 CTC 2772 (TCC)

The corporate taxpayer was found to be dealing in arm's length with a non-resident corporation ("Slupy") which had provided most of the taxpayer's...

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Robertson v. The Queen, 97 DTC 449, [1996] 2 CTC 2269 (TCC)

The taxpayer, who was the deputy chairman and a director of a public corporation ("Central Capital"), was found to be dealing at arm's length with...

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RMM Canadian Enterprises Inc. v. The Queen, 97 DTC 302, [1998] 1 C.T.C. 2300 (TCC)

A non-resident corporation ("EC") approached a business associate who, along with two other individuals, formed a Canadian corporation ("RMM") to...

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McNichol et al. v. The Queen, 97 DTC 111, [1997] 2 CTC 2088 (TCC)

In order to effectively receive the cash held by a corporation ("Bec") owned by them, the taxpayers found a corporate purchaser to purchase their...

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Davidson Estate v. The Queen, 96 DTC 1652, [1996] 3 CTC 2900 (TCC)

The estate of a deceased taxpayer (which was deemed by s.248 to be a person) was found to be dealing at arm's length with the taxpayer's surviving...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Application Rules - Subsection 26(5) 98

Wright Estate v. The Queen, 96 DTC 1509 (TCC)

A testamentary trust was found to be dealing at arm's length with the three shareholders of a family corporation (the son and daughter of the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(a) a trust is a person which is related to no one 327

Freedman Holdings Inc. v. The Queen, 96 DTC 1447 (TCC)

Pursuant to a separation agreement between Mr. and Mrs. Freedman, Mr. Freedman agreed to pay Mrs. Freedman the sum of $950,000 in full...

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Whitehouse v. Ellam, [1995] BTC 284 (Ch. D.)

The written assignment by the Netherlands judgment creditor of an insolvent company of debt for a nominal amount to the taxpayer and the other...

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Husky Oil Ltd. v. The Queen, 95 DTC 316, [1995] 1 CTC 2184 (TCC), aff'd 95 DTC 5244 (FCA)

The taxpayer purchased the shares of a holding company whose assets consisted of shares of operating companies whose adjusted cost base...

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Bowens v. The Queen, 94 DTC 1863 (TCC), aff'd 96 DTC 6128 (FCA)

When a corporation ("Trilogy") made an offer to acquire all the shares of a corporation ("DEB"), including any outstanding stock options, the...

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Del Grande v. The Queen, 93 DTC 133 (TCC)

The taxpayer, who was a 25% shareholder in a private company, was found to be dealing at arm's length with the company given that the other...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) not a shareholder benefit if option exercisable only while officer; obligation v. conferral 197
Tax Topics - Income Tax Act - Section 7 - Subsection 7(5) 114
Tax Topics - Statutory Interpretation - Specific v. General Provisions 81

Martin Feed Mills Ltd. v. MNR, 91 DTC 1069, [1991] 2 CTC 2052 (TCC)

A third party ("Grundy") purchased shares of a corporation indirectly controlled by an individual ("Martin") only to accommodate Martin as his...

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Francois Fournier v. Minister of National Revenue, 91 DTC 746, [1991] 1 CTC 2699 (TCC)

The taxpayer, who had a 45% shareholding in a private company, agreed with the other principal shareholder and director and on the advice of the...

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International Aviation Terminals (Calgary) Ltd. v. MNR, 89 DTC 671, [1990] 1 CTC 2017 (TCC)

A transaction whereby the three indirect individual shareholders of the Appellant "acted in concert to cause the Appellant to distribute $715,000...

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Grant v. MNR, 89 DTC 16 (TCC)

Two couples each owned 50% of the voting shares of a private corporation, either directly or through holding companies. A declaration of a...

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Roxon Property Management Ltd. v. MNR, 88 DTC 1306, [1988] 1 CTC 2512 (TCC)

In order for the taxpayer to realize an allowable business investment loss with respect to a debt owing to it by its subsidiary (MIL) the two...

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May Estate v. MNR, 88 DTC 1189, [1988] 1 CTC 2303 (TCC)

The acquisition of shares by an estate by virtue of the death of the deceased was not an arm's length transaction because "the trust created by...

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Noranda Mines Ltd. v. MNR, 87 DTC 379, [1987] 2 CTC 2089 (TCC)

45.3% of the common shares of Orchan Mines Limited ("Orchan") were owned by Noranda Mines Limited ("Noranda"), and 5.53% of the common shares of...

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Re Tremblay (1980), 36 C.B.R. (N.S.) 111 (Q.S.C.)

It was stated, in the context of the Bankruptcy Act, that a transaction is not at arm's length "where one of the co-contracting parties is, by...

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MNR v. Merritt Estate, 69 DTC 5159, [1969] CTC 207 (Ex Ct)

The deceased, in one of his sober moments, agreed with his son's professional adviser that in order to protect his investments from further...

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Gatineau Westgate Inc. v. MNR, 66 DTC 560 (TCC)

The two principal shareholders and directors of the taxpayer, who also carried on a real estate business in partnership, sold real estate to the...

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Sheldons Engineering Ltd. v. MNR, 53 DTC 11 (TAB), aff'd 54 DTC 1106 (Ex Ct) and at 55 DTC 1110, [1955] S.C.R. 637 (supra).

Before going on to find that a transaction was an arm's length one, Mr. Fisher noted (at p. 22) that "the expression 'to deal at arm's length' is...

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Administrative Policy

7 October 2021 APFF Roundtable Q. 7, 2021-0900971C6 F - Economic dependence

Is financial dependence of one party on another sufficient in itself to create a non-arm’s length relationship?

CRA stated:

As noted … in

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Words and Phrases
financial dependence

1 June 2021 External T.I. 2020-0865201E5 F - Sale of property for POD less than FMV

Messrs. X and Y (unrelated individuals), who each wholly-owned operating corporations ("ACo" and "BCo"), also equally owned XYZCo, which built 12...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) sale of 2 properties by 50-50 corp at a knowing undervalue to the respective shareholders’ own corporations could engage s. 56(2) 163

23 February 2021 External T.I. 2018-0769891E5 F - 125(7) "revenu de société déterminé"

Opco A (wholly-owned by Mr. A) and Opco B (wholly-owned by Mr. B, who deals at arm’s length with Mr. A) each hold 50% of the shares in Opco D. ...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Corporate Income - Paragraph (a) - Subparagraph (a)(i) - Clause (a)(i)(B) - Subclause (a)(i)(B)(I) services income from multiple private corporations referenced in s. (a)(i)(A) can be bad income for purposes of the substantially all test 477
Tax Topics - Income Tax Act - Section 125 - Subsection 125(1) - Paragraph 125(1)(a) - Subparagraph 125(1)(a)(i) - Clause 125(1)(a)(i)(B) services income from multiple investee private corporations can be bad income for purposes of the specified corporate income - s. (a)(i)(B) safe harbour 385

2021 Ruling 2020-0868661R3 F - Section 84.1 – Leveraged Buyout

The shares of Holdco - which holds real estate that it leases to Opco (carrying on a Canadian active business) – are held by three unrelated...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) s. 84.1 did not apply to a leveraged buyout financed by the target 203

11 October 2019 APFF Roundtable Q. 12, 2019-0812711C6 - Part IV

The common shares of X Corp. and Y Corp are held equally by two unrelated corporations. Whether Y Corp. was connected to X Corp. - so that a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 186 - Subsection 186(2) two 50% shareholders of two corporations likely acting in concert to produce connectedness 246

7 September 2016 External T.I. 2014-0563781E5 - Articles 10 and 11 of Canada-UK Treaty

An issue arising under the Canada-UK Treaty was whether the 99% share of the limited partners of a UK LP in interest paid by a Canadian subsidiary...

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Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 11 limited partners of an LP can deal at arm’s length with a Canadian subsidiary of the LP 452
Tax Topics - Treaties - Income Tax Conventions - Article 10 limited partners generally do not have control over a company’s voting power/an over-10% limited partner is considered to “indirectly” own over 10% of an LP subsidiary 471

19 January 2017 External T.I. 2015-0576751E5 F - Trust, Disposition of depreciable property, Assumption

CRA agreed that the ½ step-up rule in s. 13(7)(e) does not apply to a deemed disposition under s. 104(5) given that the trust is not related to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 13 - Subsection 13(7) - Paragraph 13(7)(e) s. 13(7)(e) applicable to s. 107(2.1) distribution but not s. 104(5) deemed disposition 300
Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2) s. 107(2) generally available where beneficiary assumes trust debt 168
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Personal Trust non-commital as to whether assumption of debt could constitute tainting consideration 183
Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.1) s. 13(7)(e) applicable to depreciable property distribution 123

29 November 2016 CTF Roundtable Q. 6, 2016-0669661C6 - 84.1 and the Poulin/Turgeon Case

Does the Poulin decision affect CRA’s view of employee buyco arrangements? CRA responded that it could be established that the...

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Words and Phrases
accommodation party
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts - Paragraph (c) - Subparagraph (c)(ii) right of GREs to carry forward donations for five years 109
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) Poulin is consistent with CRA's previous statements on employee buycos 148

7 October 2016 APFF Roundtable Q. 20, 2016-0655831C6 F - Employee Buycos and the Poulin Case

Following the Poulin decision, does CRA intend to modify its position respecting the potential application of s. 84.1 where a departing employee...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) Poulin accepted 134

2014 Ruling 2014-0539791R3 - Paragraph 212(1)(b)

CDS trust entered into credit default swaps with a counterparty (a non-resident Bank) desiring credit protection for its bond portfolios and...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(b) creditors' approval of CCAA plan of compromise for the debtor trust did not cause them to not deal at arm's length with trust 386
Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest interest paid on limited recourse debt to the extent of available debtor assets was not participating debt interest 248

25 November 2012 Roundtable, 2013-0479401C6 F - Employés et Achat Ltée – commentaires panel ARC

In order to facilitate the disposition of shares of departing employees who had purchased their shares under an employee share ownership plan...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) - Paragraph 84.1(1)(b) generally a deemed dividend on repurchase of departing employees’ shares by employer-funded Buyco 141

25 November 2012 CTF Roundtable, 2013-0479402C6 - Employee Buycos - comments from CRA Panel

Employees of Opco received Opco shares as incentives under an Opco employee share ownership plan ("ESOP"). Under the terms of the ESOP, on...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) stock option Buyco not at arm's length 194

19 April 2012 External T.I. 2012-0439781E5 - Specified employee for SRED credits

Corporation A and Corporation B have 60% and 40% interests in a partnership which employs Corporation A's sole shareholder (Mr A) to perform...

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10 April 2012 External T.I. 2011-0428701E5 F - Lien de dépendance - commanditaire et SEC

Two corporations (X and Y) each wholly own the two general partners (each with a 1% GP interest) of a limited partnership and also own (on a 50-50...

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8 October 2010 APFF Roundtable, 2010-0373181C6 F - Non-arm's length relationship

Respecting a transaction between a non-profit organization and a registered charity where both entities share certain board members, CRA stated...

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15 September 2010 Internal T.I. 2010-0371521I7 F - French Version of paragraph 23 in IT-419R

The French version of IT-419R2, para. 23, which rendered "not dealing at arm's length" as "sans lien de dépendance" will be promptly corrected.

22 May 2009 Internal T.I. 2009-0312791I7 F - Transfert de biens entre un rentier et son REÉR

Before finding that the purchase of RRRSP property (the “Co-op” shares) by the RRSP’s annuitant at cost was to be treated as the payment of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 146 - Subsection 146(1) - Premium purchase of RRRSP property at cost is viewed as premium to the extent of excess over FMV 166

5 October 2007 APFF Roundtable Q. 10, 2007-0243171C6 F - Surplus Stripping

CRA considered that where an individual (Mr. X) holding all the common shares of Opco exchanged all his common shares for retractable preferred...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) treatment of Employeeco purchase depends on whether it has a separate economic interest 360

IT-419R2

"Meaning of Arm's Length." At para. 29:

The following criteria have generally been used by the courts in determining whether parties to a...

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12 September 2005 External T.I. 2005-0134631E5 F - Superficial Loss - Realization of Latent Loss

Four unrelated individuals each holding 25% of the common shares of a small business corporation, transfer their shares to a corporation...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Superficial Loss loss could be realized by 4 unrelated individuals transferring their equal shareholdings of Opco to Newco 139

2005 Ruling 2005-0133041R3 - Investors not dealing non-arm's length

In the context of an issue as to whether shares of a non-resident corporation were taxable Canadian property, CRA ruled that the winding-up of the...

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28 March 2003 External T.I. 2002-016665

Two shareholders collectively holding 24% of the shares of Opco transfer their shares of Opco to a newly-incorporated holding company ("Xyco") and...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) 84.1 may apply to partial buyout by Holdco for independent employees 170

10 May 2001 External T.I. 2001-0075685 - EMPLOYEE STOCK OPTION IN A RRSP

An employee implicitly was treated as not dealing at arm's length with his RRSP.

29 March 2001 External T.I. 2001-0074145 - Affiliated persons & stop loss rules

Where the shares of a corporation are owned equally by four trusts having the same corporate trustee, s. 40(3.6) will apply to deny a capital loss...

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May 1998 Conference for Advanced Life Underwriting Round Table, Q. 1, No. 9807000

A donor and donee may be considered to have different interests and, therefore, to deal at arm's length notwithstanding that each party may have...

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Income Tax Technical News, No. 9, 10 February 1997

Where two unrelated shareholders each own 50% of the shares of a corporation, the fact that they used their own RRSPs to acquire shares of the...

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6 January 1997 External T.I. 9640845 - TRUST AND ARM'S LENGTH DEALINGS

In response to a query as to whether two trusts are considered to
be dealing at arm's length notwithstanding that they have the same public...

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23 May 1996 External T.I. 9604655 - DEEMED REACQUISITION - WHETHER NON-ARM'S LENGTH

Where there is a deemed dispostion and reacquisition of property under s. 149(10), the corporation in question will not be considered to be...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 13 - Subsection 13(7) - Paragraph 13(7)(e) person potentially may not deal at arm's length with itself 74

1995 Ontario Tax Conference Round Table, Q. 5 (No. 952503)

Where $500,000 of shares of Opco are sold by its individual shareholder to a corporate purchaser, following which the purchased shares are...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) 124

27 October 1994 External T.I. 9424545 - PROFIT SHARING PLAN FOR CORPORATE PARTNER

"Where a partnership owns more than 50% of the issued voting shares of a corporation and where a particular partner is entitled without...

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12 January 1993 T.I. (Tax Window, No. 28, p. 21, ¶2388)

Where a widow is the sole beneficiary of her husband's estate and all the shares of a corporation previously owned by her husband are held by an...

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21 August 1992 T.I. (Tax Window, No. 23, p. 1, ¶2141)

Discussion whether a transaction occurring pursuant to a buy-sell agreement entered into between a taxpayer and a company owned by her husband as...

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92 C.R. - Q.33

The acquisition of shares of a deceased by his estate is a transaction between persons not dealing at arm's length.

92 CPTJ - Q.14

Under normal circumstances, the general partner in a limited partnership will be considered to control the partnership and, therefore, will not be...

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18 December 1991 T.I. (Tax Window, No. 12, p. 23, ¶1572)

The Bank of Canada does not deal at arm's length with any federal department, agency or Crown corporation.

10 July 1991 T.I. 1991-111

Where two limited partnerships have the same general partner and none of the limited partners in either partnership are related to each other, the...

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9 May 1991 T.I. 5-7883 [GP control's LP's business]

CRA stated:

[I]n a limited partnership with only one general partner, that general partner will generally have control of the partnership's...

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8 March 1991 T.I. (Tax Window, No. 2, p. 23, ¶1190)

Even if the beneficiary of a trust is found not to deal at arm's length with the trust, he will not necessarily be considered not to deal at arm's...

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29 December 1989 T.I. (May 1990 Access Letter, ¶1223)

Whether a partnership and a corporation are dealing at arm's length with each other is a question of fact. A series of examples were given. For...

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September 1989 Revenue Canada Round Table (December 89 Access Letter, ¶1040.11)

If a person acquires a minority interest in a small private corporation, operating with a deficit, it is likely that this person has expressed...

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IT-140R3 "Buy-Sell Agreements"

Where the deceased and the survivor did not deal at arm's length at the time a buy-sell agreement was made, s. 69(1)(b) applies when the estate...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Fair Market Value - Shares 0

Articles

Matias Milet, Emily Gilmour, "A Discordant Jurisprudence: What does it Mean to be ‘Acting In Concert’?", International Tax (Wolters Kluwer CCH), No. 118, June 2021, pp. 1-7

Swiss Bank (p. 4)

[A]lthough it did not expressly reject the Exchequer Court decision, the SCC [in Swiss Bank] did not refer to the "acting in...

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Sandra Mah, Mark Meredith, "Factual Non-Arm's Length Relationships", 2014 Conference Report, (Canadian Tax Foundation), 16:1-24

Kirby-Maurice (16.3)

Kirby-Maurice…formulates in different terms the concept that was expressed by the Supreme Court in Sheldon's Engineering as...

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Flannigan, "The Legal Construction of Rights of First Refusal", The Canadian Bar Review, Vol. 76, Nos. 1 & 2, March - June 1997, p. 1.

Owen, "Acting in Concert: Fact or Fiction?", 1992 Canadian Tax Journal, No. 4, p. 829.

Subsection 251(2)

Paragraph 251(2)(a)

See Also

Mathieu v. The Queen, 2014 TCC 207

Through a holding company, the taxpayer held 37.5% of the shares of a corporation which granted him employee stock options ("Forages Garant"). A...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(a) non-arm's length option surrender proceeds were exempted by s. 7(3)(a) 150
Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(2) may look at subsequent amendment to determine whether it changed the law 132
Tax Topics - Statutory Interpretation - Specific v. General Provisions stock option rules more specific than employee benefits 55

May Estate v. MNR, 88 DTC 1189, [1988] 1 CTC 2303 (TCC)

An individual is not related to the relatives of his deceased wife.

Administrative Policy

12 July 2018 External T.I. 2018-0755471E5 - Half-brothers and related persons

The definition of blood relationship in s. 251(6)(a) includes two persons who are the “brother or sister of the other.” Following inter alia

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(6) - Paragraph 251(6)(a) half-brothers were connected by blood relationship 111

Paragraph 251(2)(b)

Subparagraph 251(2)(b)(i)

See Also

Kruger Wayagamack Inc. v. The Queen, 2015 DTC 1112 [at 667], 2015 TCC 90, aff'd 2016 FCA 192

Kruger Inc. was the 51% shareholder of the taxpayer and was entitled under the unanimous shareholders agreement between it and the other...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Fair Market Value - Shares non-assignable put right ignored 98
Tax Topics - Income Tax Act - Section 256 - Subsection 256(1) - Paragraph 256(1)(a) de jure or de facto control requires strategic control, not merely operational control 340
Tax Topics - Income Tax Act - Section 256 - Subsection 256(1.2) - Paragraph 256(1.2)(c) effect of s. 256(1.2)(g) is as if company were run by 3rd party 254
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) de facto control requires strategic control, not merely operational control 216

Ministic Air Ltd. v. The Queen, 2008 TCC 296

The appellant was denied a credit under ETA s. 231(1) in respect of an alleged bad debt, in part, on the basis that 1/3 of the appellant's...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 231 - Subsection 231(1) debt not written off a recipient not at arm's length 202

Administrative Policy

11 May 2017 Internal T.I. 2016-0665931I7 - Related to participating employer

Respecting where two unrelated individuals each held exactly 50% of the (voting common) shares of their employer corporation, the Directorate...

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Words and Phrases
de jure control
Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 8000 - Subsection 8300(1) - Individual Pension PLan two unrelated 50% shareholders potentially could both be related to the corporation based on Duha USA rights and s. 251(5)(b) rights 295
Tax Topics - Income Tax Act - Section 251 - Subsection 251(5) - Paragraph 251(5)(b) s. 251(5)(b) deemed control does not undercut actual de jure control 161

8 September 2017 External T.I. 2014-0549771E5 - Article XXIX-A:3

CRA found that in the situation where a U.S. parent was the trustee of a U.S. trust whose beneficiary was a U.S. Opco, that U.S. Opco qualified as...

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Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 29A a trust is related for purposes of Art. XXIX-A (3) of the Canada-U.S. Treaty to a corporation that is controlled by its corporate trustee 338
Tax Topics - Treaties - Income Tax Conventions - Article 3 "person related thereto" defined by ITA meaning of "related person" 39

5 November 2014 External T.I. 2014-0529991E5 F - Avantage pour automobile-personne liée

The board members of a Quebec non-share corporation that is exempt under s. 149(1) ("Entity") are appointed by "Municipality." During a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(2) standby charge computed based on cost to auto owner which is related to employer 187

10 October 2014 APFF Roundtable Q. 16, 2014-0538031C6 - APFF 2014 Q. 16 - Capital gain

In the course of considering the availability of the exception in s. 55(3)(a) for a spin-off, CRA stated (TaxInterpretations translation):...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) interposition of holdco to permit related-person spin-off compliant with s. 55(3)(a)(ii) and (v) 933
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.01) - Paragraph 55(3.01)(g) interposition of holdco to permit related-person spin-off compliant with s. 55(3)(a)(ii) and (v) 925

Example 7

Mr. A is the sole trustee of a particular trust that owns all of the issued shares in the capital of a corporation.

Both the particular trust and...

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1 May 2014 External T.I. 2013-0494981E5 F - De Jure Control

The sole beneficiary of a Quebec trust with two trustees who are unrelated to him has the power to dismiss them (Scenario 1), to dismiss and...

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2012 Ruling 2011-0402571R3 - De Jure Control - Debt Settlement

Parent owns the Class B common shares of Lossco and Mr. A, who deals at arm's length with Parent (and with Profitco, a subsidiary of Parent) holds...

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6 October 2000 External T.I. 2000-0038055 F - Contrôle par une société de personnes

Respecting the question whether two corporations are related persons if they are controlled by a limited partnership or a general partnership, the...

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9 August 1994 T.I. 933312 [control by partner with voting rights]

In a situation where a husband and wife each own a holding company (H Holdco and W Holdco), H Holdco has a controlling interest in a partnership...

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23 March 1992 T.I. (Tax Window, No. 18, p. 20, ¶1825) [control by trustee]

The sole individual trustee of the family trust controls the corporation whose shares are held by the trust, with the result that that corporation...

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90 C.R. - Q28

A partnership is considered to be a person when the computation of income at the partnership level is involved. For example, a partnership that...

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87 C.R. - Q.18

Where a subsequent employer purchases all the assets or shares of the former employer, the former employer will qualify as a "person related to...

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Subparagraph 251(2)(b)(ii)

Cases

Miron and Frères Ltd. v. Minister of National Revenue, 55 DTC 1109, [1955] CTC 182, [1955] S.C.R. 679

997 out of the outstanding common shares of a corporation were owned as to 400 shares by an individual and his brother (200 shares each) and, as...

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See Also

Côté-Létourneau v. The Queen, 2010 DTC 1116 [at 3092], 2007 TCC 91

A sale by the taxpayers (a husband and wife) of their shares of a controlled corporation to another corporation ("9061") all of whose shares were...

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Subparagraph 251(2)(b)(iii)

Administrative Policy

22 August 2014 External T.I. 2014-0540751E5 F - Acquisition of control

Two brothers (A and B) own 100% of the shares of Holdco A and Holdco B, respectively, which, each in turn, owns 50% of the shares of Opco. A sells...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(7) - Paragraph 256(7)(a) addition of cousin to control group would taint it/cousins part of related control group while fathers alive 529

30 January 2013 External T.I. 2012-0470931E5 - Related corporations

Suppose parents Mr. and Mrs. X hold ParentCo, and their children ("Son and Daughter") hold KidsCo. Then:

Mr. X and Mrs. X are related to...

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Paragraph 251(2)(c)

Subparagraph 251(2)(c)(i)

Cases

Chutka v. Canada, 2001 DTC 5093 (FCA)

A sale of equipment by a corporation to a partnership whose general partner was wholly-owned by the same individual who owned the vendor...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) partnership looked through in applying s. 69(1)(a) to equipment purchase 148
Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(g) sale to partnership with non-arm's length general partner was non-arm's length transaction 138

Duha Printers (Western) Ltd. v. Canada, [1998] 1 S.C.R. 795, 98 DTC 6334, [1998] 3 CTC 303

A corporation ("Marr's") controlled by Mr. Marr paid $2,000 to subscribe for redeemable preferred shares representing a majority of the voting...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Tax Avoidance no business purpose test 79

Zeal and Gold Ltd. v. MNR, 73 DTC 5116, [1973] CTC 129 (FCTD)

As part of a series of transactions wherein one company ("Mercantile") would become owned solely by two of its three shareholders ("Zeal" and...

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International Fruit Distributors Ltd. v. MNR, 53 DTC 1222 (Ex Ct), aff'd without reasons 55 DTC 1186 (SCC)

The taxpayer, which along with another Canadian corporation was controlled by a U.S. parent, was unsuccessful in a submission that it was related...

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Army & Navy Department Stores Ltd. v. Minister of National Revenue, 53 DTC 1185, [1953] CTC 293, [1953] 2 S.C.R. 496

S.36(4)(b)(iii) of the 1948 Act, which deemed one corporation to be related to another where "70% or more of all the issued common shares of the...

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Administrative Policy

3 April 2019 Internal T.I. 2018-0787561I7 - Partnership and the Meaning of "Related"

After indicating that a corporation that was wholly-owned by a partnership was related to the corporation which, along with its wholly-owned...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251.2 - Subsection 251.2(2) - Paragraph 251.2(2)(a) partnership agreement illuminates which partners control a corporation held by the partnership 89

6 October 2000 External T.I. 2000-0038055 F - Contrôle par une société de personnes

Respecting the question whether two corporations are related persons if they are contolled by a limited partnership or a general partnership, the...

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8 October 2010 Roundtable, 2010-0373141C6 F - Related corporations

Individuals W, X, Y and Z hold 40%, 20%, 20% and 20% of the voting shares of both Opco A and Opco B. There is no relationship or common interest...

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20 February 2008 External T.I. 2007-0246721E5 F - Related Corporations

Two unrelated individuals (X and Z) are the trustees of two trusts for the families of X or of Z, and of asset protection trusts for X or Z. All...

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21 June 2004 External T.I. 2004-0074851E5 F - Allocation de retraite

Whether severance that became payable to the taxpayer was a retiring allowance turned on whether the municipality who terminated her was related...

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Words and Phrases
Crown agent
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Retiring Allowance severance was a retiring allowance even though the employee was hired by another municipality that had agreed to take over the municipal functions of her first employer 366
Tax Topics - Income Tax Act - Section 60 - Paragraph 60(j.1) - Subparagraph 60(j.1)(ii) - Clause 60(j.1)(ii)(C) unrelated person who has assumed a severance payment obligation is treated as paying the severance on behalf of the “employer” who terminated 180

27 October 1994 External T.I. 9424545 - PROFIT SHARING PLAN FOR CORPORATE PARTNER

The concept of indirect control includes the situation where the intermediate entity is a partnership rather than a corporation. For this purpose...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) controlling partner controls partnership subs 55

9 August 1994 External T.I. 9333125 - CAPITAL GAINS EXEMPTION

The respective corporations of a husband and wife together hold 100% and 40%, respectively, of Opco 1 and Opco 2 "through" a general partnership...

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8 January 1992 Memorandum (Tax Window, No. 15, p. 9, ¶1685)

Where a court-appointed receiver takes control of the assets of A Co. and transfers those assets to a wholly-owned subsidiary (B Co.) before a...

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23 April 1991 T.I. (Tax Window, No. 2, p. 28, ¶1214)

Two wholly-owned subsidiaries of a U.S. corporation are related to each other because a foreign corporation is both a "person" and a "corporation".

Articles

Jeffrey T. Love, Kenneth R. Hauser, "How Various Aggregation Rules Apply to Trusts", 2018 Conference Report (Canadian Tax Foundation), 28: 1-79

Example of issue of whether s. 104(1) embodies a trust in its trustee for related person purposes (pp. 28:40-41)

The interpretive issue is whether...

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Subparagraph 251(2)(c)(ii)

See Also

Re A. Zimet Ltd. (1982), 44 C.B.R. (N.S.) 136 (S.C.O.)

Two bankrupt corporations were related to a third corporation notwithstanding that two trusts were interposed as majority shareholders of the...

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Subparagraph 251(2)(c)(vi)

Subsection 251(3) - Corporations related through a third corporation

Administrative Policy

10 October 2014 October APFF Roundtable Q. 17, 2014-0538071C6 F - 2014 APFF Roundtable, Q. 17 - Related Group

Mr. A and Mr. C are both related to Mr. B, but Mr. A is not related to Mr. C. Each of Mr. A, Mr. B and Mr. C wholly-owns Aco, Bco and Cco,...

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13 March 1990 T.I. (August 1990 Access Letter, ¶1394)

Where two brothers (A and B) each have a son (C and D), and each of the foregoing owns all the shares of A Ltd., B Ltd., C Ltd. and D Ltd.,...

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Articles

Marc N. Ton-That, "Deemed Relationships: A More Restrictive View", Corporate Structures and Groups, Vol. IX, No. 4, 1997, p. 237

Discussion of whether s.251(3) applies for purposes of the Act.

Subsection 251(3.1) - Relation where amalgamation or merger

See Also

Dow Chemical Canada Inc. v. The Queen, 2007 DTC 1701, 2007 TCC 668

The taxpayer was formed on the amalgamation of two corporations, one of which ("UCCI") had previously incurred interest-bearing indebtedness to a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 78 - Subsection 78(1) 128

Administrative Policy

S4-F7-C1 - Amalgamations of Canadian Corporations

1.32 …[S]ubsection 251(3.1) deems the new corporation formed on an amalgamation to be related to (and, therefore, not deal at arm's length...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 100 - Subsection 100(2.1) s. 100(2.1) applies to non-qualifying amalgamation 64
Tax Topics - Income Tax Act - Section 111 - Subsection 111(12) application following amalgamation 113
Tax Topics - Income Tax Act - Section 116 - Subsection 116(1) deemed tcp following amalgamation 167
Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.1) continuity of s. 13(5.1) on amalgamation 132
Tax Topics - Income Tax Act - Section 165 - Subsection 165(1) Amalco can continue objection and receive refunds 157
Tax Topics - Income Tax Act - Section 169 Amalco can continue objection 103
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(n) reserve after amalgamation 62
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Shareholder shareholder need not hold shares 88
Tax Topics - Income Tax Act - Section 256 - Subsection 256(7) - Paragraph 256(7)(b) related party, majority and 50% group exceptions 495
Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(iii) reserve after amalgamation 62
Tax Topics - Income Tax Act - Section 66.7 - Subsection 66.7(7) successoring where non-wholly owned amalgamation 109
Tax Topics - Income Tax Act - Section 69 - Subsection 69(13) no disposition of predecessor property on general principles 113
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.4) s. 87(5) not applicable 112
Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(3) non-87 amalgamation/no FX gain 165
Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) no deemed dividend to dissenter on amalgamation 87
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) election filing by Amalco 109
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1.1) s. 87(1.1) qualifies for all s. 87 purposes 66
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1.2) successoring where non-wholly owned amalgamation 109
Tax Topics - Income Tax Act - Section 87 - Subsection 87(10) deemed listing of temporary Amalco shares 120
Tax Topics - Income Tax Act - Section 87 - Subsection 87(11) gain if high PUC is sub shares 55
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1) presumptive satisfaction of s. 87(1)(a)/dissent and squeeze-outs onside 297
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(a) new corp/deemed year end coinciding or not with acquisition of control 758
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(b) Amalco must follow predecessor's valuation method subject to truer picture doctrine 64
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(c) reserve after amalgamation 113
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(d) cost amount carryover 149
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(e.1) s. 100(2.1) applies to non-qualifying amalgamation 64
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(o) no continuity rule for non-security options 139
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(q) pre-amalgamation services 106
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2.11) loss-carry back to parent 169
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2.1) dovetailing with s. 88(1.1) 44
Tax Topics - Income Tax Act - Section 87 - Subsection 87(3.1) 346
Tax Topics - Income Tax Act - Section 87 - Subsection 87(3) PUC shifts 189
Tax Topics - Income Tax Act - Section 87 - Subsection 87(4) fractional share cash/ACB or value shift/implied non-recognition for predecessor shares 281
Tax Topics - Income Tax Act - Section 87 - Subsection 87(7) dovetailing with s. 78 and 112(12) 191
Tax Topics - Income Tax Act - Section 87 - Subsection 87(9) allocation of s. 87(9)(c)(ii) excess as parent chooses 230
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d) late designation 122
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.1) dovetailing with s. 87(2.1) 62
Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) partnership dissolution on amalgamation 137
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2.2) deemed non-arm's length relationship on amalgamation 467
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2) deemed non-arm's length relationship on amalgamation 371
Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(14) class continuity on non-arm's length amalgamation 327
Tax Topics - Income Tax Regulations - Regulation 8503 - Subsection 8503(3) - Paragraph 8503(3)(b) pre-amalgamation services 106
Tax Topics - Income Tax Act - Section 249 - Subsection 249(3) 136
Tax Topics - Income Tax Act - Section 22 - Subsection 22(1) 179

11 November 1993 Memorandum (Tax Window, No. 30, p. 3, ¶2482)

Where a corporation (A) is owned equally by three other corporations (X, Y and Z) who do not deal with one another at arm's length and do not act...

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Subsection 251(4) - Definitions concerning groups

Related Group

Cases

Atomic Truck Cartage Ltd. v. The Queen, [1985] 2 CTC 21, 86 DTC 6032 (FCTD)

The phrase "group of persons" in s.251(4)(a) refers to a group of two or more persons.

Words and Phrases
group

Subsection 251(5) - Control by related groups, options, etc.

Paragraph 251(5)(a)

Administrative Policy

26 October 2010 External T.I. 2010-0363341E5 - Related corporations

Grandfather has 42% of the voting rights for Aco and his son has the balance of 58% of the voting rights. Grandchildren (who thus are related to...

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Paragraph 251(5)(b)

Cases

Durocher v. Canada, 2016 CAF 299

A holding company (“RJCG”) held by the taxpayers through family trusts was the sole common shareholder of “Gestion Lagarde,” which was a...

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Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Interpretation Act - Section 8.1 Tax Court can review validity of contract in reviewing assessment 137
Tax Topics - General Concepts - Illegality proper for the Tax Court to pass on the alleged nullity of a contract in the context of passing on the correctness of an assessment 251

The Queen v. Lusita Holdings, 84 D.T.C 6346, [1984] CTC 335 (FCA)

An individual ("Gustav") was one of two trustees in various trusts which held a majority of the voting shares of Lusita Holdings. Although Gustav...

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Rostal Sales Agency Ltd. v. The Queen, 83 DTC 5036, [1983] CTC 5 (FCTD)

The settlor of a trust did not have any right to control the voting rights of shares held by the trust because he did not have the power under the...

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Toric Optical Ltd. v. The Queen, 78 DTC 6310, [1978] CTC 436 (FCTD)

An individual agreed with a company ("Imperial") that in the event of the individual's prolonged illness, retirement or death, the individual...

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Viking Food Products Ltd. v. The MNR, 67 DTC 5067 (Ex Ct)

The taxpayer was controlled by an individual and the individual's father and a second corporation ("Empire") was controlled by the individual's...

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See Also

ARTV Inc. v. Agence du revenu du Québec, 2016 QCCQ 8757 (Cour du Québec)

The rate of health premium tax to which ARTV Inc. (“ARTV”) was subject (under the Loi sur la régie de l'assurance maladie du Québec) turned...

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Words and Phrases
right
Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Interpretation Act - Section 8.1 tax law superimposed on the general law 160

Lyrtech RD Inc. v. The Queen, 2013 DTC 1147 [at 820], 2013 TCC 12, aff'd 2014 FCA 267

In order to generate refundable investment tax credits for research and development expenditures, a Canadian public corporation ("Lyrtech")...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) de facto control by public company even though de jure control by trust 360

Ekamant Canada Inc. v. The Queen, 2010 DTC 1039 [at 2741], 2009 TCC 408

The taxpayer was held 25% by a Canadian individual ("Côté") and three US family members. The four acquired the taxpayer with the understanding...

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Sedona Networks Corporation v. The Queen, 2006 DTC 2486, 2006 TCC 80

Paragraph 251(5)(b), which deemed a shareholder to be in the same position in relation to control of a corporation as if the shareholder owned...

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H.T. Hoy Holdings Ltd. v. The Queen, 97 DTC 1180, [1997] 2 CTC 2874 (TCC)

An arrangement under which the majority of the voting shares of a company were not turned over to another corporation ("Cloutier") until all of...

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Hudson's Investment Co. (London) Ltd. v. MNR, 68 DTC 83 (TAB)

An individual (Shapiro) was the shareholder of all the shares of Richard Shapiro Limited ("RSL") and of one-half of the common shares of the...

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Words and Phrases
control

Administrative Policy

11 October 2019 APFF Roundtable Q. 11, 2019-0812701C6 F - Paragraph 251(5)(b) and convertible debenture

Opco, a mooted Canadian-controlled private corporation, is capitalized with 1 million common shares, with a fair market value (FMV) of $2 million,...

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11 May 2017 Internal T.I. 2016-0665931I7 - Related to participating employer

Respecting where two unrelated individuals each held exactly 50% of the (voting common) shares of the employer, CRA first noted that under Duha...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 8000 - Subsection 8300(1) - Individual Pension PLan two unrelated 50% shareholders potentially could both be related to the corporation based on Duha USA rights and s. 251(5)(b) rights 295
Tax Topics - Income Tax Act - Section 251 - Subsection 251(2) - Paragraph 251(2)(b) - Subparagraph 251(2)(b)(i) under Duha, a 50% shareholder potentially can have de jure control 247

7 July 2015 External T.I. 2014-0552711E5 - Application of paragraph 251(5)(b)

In a letter of intent ("LOI") for the purchase of shares provides, the seller and purchaser agree to enter into a purchase agreement following the...

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4 February 2015 External T.I. 2015-0565741E5 - Canadian-controlled private corporation

As a condition to distributing shares of Aco to the beneficiaries of a testamentary trust of which it was sole trustee, the trustee ("Pubco"),...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(11) - Investment Contract indemnity agreement was not "indebtedness" 47
Tax Topics - Income Tax Act - Section 256 - Subsection 256(6) s. 256(6) does not protect a company's CCPC status where its shares are pledged to a pubco to secure an indemnity, not debt 235

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

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...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 249 - Subsection 249(3.1) Ekamant: s. 251(5)(b) does not vitiate actual control by share owner 220

14 June 2010 Internal T.I. 2010-0366611I7 F - Determination of CCPC Status

CRA found that the sole beneficiary (the “Beneficiary”) of a resident trust holding Class A voting shares of a mooted Canadian-controlled...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Agency application of Kinguk Trawl test of agency 165
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Canadian-Controlled Private Corporation - Paragraph (b) agreement was not a USA since it did not contain an outright transfer of the powers of the directors to the shareholders 549
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) non-resident shareholder with 60%+ economic interest, extensive veto rights and responsibility for future funding of R&D work had de facto control 457

16 March 2006 External T.I. 2006-0167361E5 F - Options et droits - Alinéa 251(5)b)

CRA confirmed that the exceptions in s. 251(5)(b) do not apply where an individual is merely "insolvent" without being “bankrupt,” which...

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28 April 2005 External T.I. 2005-0121951E5 - Put Options and Call Options

As s.251(5)(b) can be applied even though the right to acquire shares may be dependent on multiple contingencies, a call option to acquire shares...

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29 April 2003 External T.I. 2003-0004255 - CALU Conference 2003 Meaning of Control

A owns 80% of the shares of Corporation A and B owns all of the shares of Corporation B and 20% of the shares of Corporation A. A and B enter into...

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7 January 2003 External T.I. 2002-0133675 - Cash Call Provisions & Contingent Rts

Ss.251(5)(b) and 256(1.4) applied to a shareholders agreement that provided that where one of the shareholders failed to advance money to the...

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1998 Strategy Institute Round Table, Q. 11, No. 8M17920

The position of RC respecting Alberta powers of attorney also applies to Ontario continuing powers of attorney for property, i.e., the attorney is...

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17 October 1996 External T.I. 9623675 - ENDURING POWER OF ATTORNEY

Where an enduring power of attorney becomes effective solely on the permanent disability of the donor, ss.251(5)(b) and 256(1.4)(a) do not apply...

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19 July 1996 External T.I. 9607465 - CANADIAN CONTROLLED PRIVATE CORPORATION

Discussion of various scenarios under which shares of what may be a CCPC are held indirectly by a public company through a partnership. The...

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8 February 1995 External T.I. 9421285 - CONTINGENT RIGHT TO ACQUIRE SHARES

Where two shareholders holding a minority of the Class A voting shares of a corporation, but all of the Class B non-voting shares representing...

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12 January 1993 T.I. (Tax Window, No. 28, p. 21, ¶2388)

Where a widow is the sole beneficiary of her husband's estate and all the shares of a corporation previously owned by her husband are held by an...

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Harris, "Insight into the 1991 Revenue Canada Round Table Discussion", 29 July 1992, Q. 24

"Where shares of a corporation are owned by a trust, the Department's general position is that paragraph 251(5)(b) will only apply where the...

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92 C.M.TC - Q.8

Although it is RC's position that s.251(5)(b) does not apply in the case of a right of first refusal and normally does not apply to a shotgun...

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19 March 1992 T.I. (Tax Window, No. 15, p. 15, ¶1705)

Where a shareholder agreement provides one shareholder with an option to acquire the shares of another shareholder on certain specified events of...

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18 October 1991 T.I. (Tax Window, No. 11, p. 19, ¶1529)

A corporation holding a large block of preferred shares which become voting in the event of default by the issuer corporation (e.g., the failure...

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8 January 1991 External T.I. 7-913477

By virtue of s.251(5)(b), a court-appointed receiver "may control the shares of [the corporation] as its position is somewhat akin to that of a...

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30 May 1990 T.I. (October 1990 Access Letter, ¶1493)

S.251(5)(b) will apply to a shareholders agreement governing the consequences of the withdrawal of a shareholder from a corporation where it is...

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30 April 1990 TI C-9132 (September 1990 Access Letter, ¶1438)

S.251(5)(b) does not apply to a "put" right.

21 February 1990 T.I. (July 1990 Access Letter, ¶1349)

"A permanent disability for purposes of paragraph 256(1.4)(a) and (b) and subparagraphs 251(5)(b)(i) and (ii), would involve a disability which...

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18 December 1989 Decision Summary (May 1990 Access Letter, ¶1220)

The acquisition of shares by an estate from a deceased person is a non-arm's length transaction.

88 C.R. - Q.42

Where an agreement to purchase the shares of a corporation is entered into well in advance of the actual closing, RC will apply s.251(5)(b) at the...

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79 C.R. - Q.38

RC does not apply s.251(5)(b) unless both parties clearly have either a right or an obligation to buy or sell.

IT-64R2 "Corporations: Association and Control" under "Options"

S.251(5)(b) does not apply to rights of first refusal and to shotgun arrangements.

Articles

Raj Juneja, Pierre Bourgeois, "International Tax Issues That Get in the Way of Doing Business", 2019 Conference Report (Canadian Tax Foundation), 36:1 – 42

Not engaged merely by support agreement or arrangement agreement

  • The entering into of a support agreement or an arrangement agreement prior to...

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Subparagraph 251(5)(b)(i)

See Also

CO2 Solution Technologies Inc. v. The Queen, 2019 TCC 286, aff'd sub nom. Bresse Syndics Inc. acting for the bankruptcy of CO2 Solution Technologies Inc. v. The Queen, 2021 FCA 115

A high-tech public company (CO2 Public) carried on its SR&ED through a private company (CO2 Technologies) that was held by a discretionary trust...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Canadian-Controlled Private Corporation - Paragraph (a) a declaration of trust’s requiring the trustees to be the Pubco directors gave Pubco de jure and de facto control of a trust investment 677
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) a declaration of trust requiring the trustees to be the Pubco directors gave Pubco de facto control of a trust sub 248

Deans Knight Income Corporation v. The Queen, 2019 TCC 76, rev'd 2021 FCA 160

The taxpayer, a public company which had largely ceased carrying on a drug research business, had “Tax Attributes,” including SR&ED credits...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) the absence of an acquisition of effective control of a Lossco also demonstrated an absence of s. 245(4) abuse 522
Tax Topics - Income Tax Act - Section 256 - Subsection 256(8) loss streaming rules are conditioned on an acquisition of effective control 132

Administrative Policy

18 March 2019 GST/HST Interpretation 186839 - Personnes morales étroitement liées

All the shareholders of a corporation entered into a unanimous shareholders agreement (USA) that stripped away all the management powers of the...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 128 - Subsection 128(4) USA of shareholders of parent corporation stripped it of its qualifying voting control of its subsidiaries 230

6 October 2017 APFF Roundtable Q. 17, 2017-0709171C6 F - Arm's length determination

X, who is the sole shareholder of a CCPC, sells 25% of his shares to Acquireco, whose two shareholders (both key employees) are his son (as to...

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24 March 2017 External T.I. 2016-0662381E5 F - Control - unanimous shareholders agreement

The only voting and participating shares of a Canadian corporation ("Opco") are held 50% by a non-resident, and 50% by three Canadian residents. ...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(5) - Paragraph 251(5)(b) - Subparagraph 251(5)(b)(ii) no application if non-resident under USA cannot control board decision to redeem residents’ shares – applies if automatic redemption requirement 470
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Canadian-Controlled Private Corporation non-resident would control notwithstanding USA board appointment right of residents due to its secondary call right on their shares or right to require corp to honour automatic redemption clause 305

7 October 2016 APFF Roundtable Q. 7, 2016-0652971C6 F - Paragraph 251(5)(b) and subsection 256(1.4)

CRA did not consider there to be a right (including a contingent right) to, or to acquire, shares where the shareholders’ agreement for a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(1.4) - Paragraph 256(1.4)(a) does not include right to find a 3rd party purchaser for another’s shares 129
Tax Topics - Income Tax Act - Section 251 - Subsection 251(5) - Paragraph 251(5)(b) - Subparagraph 251(5)(b)(ii) may include right arising after triggering of event over which no control 274

19 May 2010 Internal T.I. 2008-0279441I7 F - Canadian-controlled private corporation

During the relevant taxation years of Corporation A (which had claimed the small business deduction), its shares were held equally by Corporation...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Canadian-Controlled Private Corporation - Paragraph (a) future acquisition right under a USA of 50% Canadian shareholder gave its non-resident shareholder de jure control of underlying corporation 237

28 September 2006 External T.I. 2006-0197841E5 F - Shareholders agreement & 256(1.4)

Four unrelated individuals (A, B, C and D) each hold 25% of the shares (being common shares) of Opco through their respective wholly-owned holding...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(1.4) - Paragraph 256(1.4)(a) s. 256(1.4) technically applies where each 25% shareholder has an obligation to acquire shares of another shareholder offering its shares 287

10 November 2004 External T.I. 2004-0096991E5 F - Shareholders' agreement

CRA indicated that Aco, owned by X, was deemed by virtue of s. 256(1.4)(a) to be associated with Zco, owned equally by X and Y, where the Zco...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(1.4) - Paragraph 256(1.4)(a) Aco, owned by X, is associated with Zco, owned equally by X and Y, where the shareholders’ agreement provides that either can acquire the other’s shares on the latter’s disability 178

Articles

Jeffrey T. Love, Kenneth R. Hauser, "How Various Aggregation Rules Apply to Trusts", 2018 Conference Report (Canadian Tax Foundation), 28: 1-79

Whether s. 251(5)(b)(i) deems a beneficiary to own shares held by the trust (pp. 28:48-49)

An interpretive issue in the trust context is whether...

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Subparagraph 251(5)(b)(ii)

Administrative Policy

24 March 2017 External T.I. 2016-0662381E5 F - Control - unanimous shareholders agreement

The only voting and participating shares of a Canadian corporation ("Opco") are held 50% by a non-resident, and 50% by three Canadian residents. ...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(5) - Paragraph 251(5)(b) - Subparagraph 251(5)(b)(i) highly contingent secondary call right of a non-resident on shares of minority residents undercuts for CCPC purposes their USA right to appoint half the board 601
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Canadian-Controlled Private Corporation non-resident would control notwithstanding USA board appointment right of residents due to its secondary call right on their shares or right to require corp to honour automatic redemption clause 305

7 October 2016 APFF Roundtable Q. 7, 2016-0652971C6 F - Paragraph 251(5)(b) and subsection 256(1.4)

Franchisor and Manager each hold 50% of the shares (being common shares) of Franchisee. The shareholders’ agreement for Franchisee (a) provides,...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(1.4) - Paragraph 256(1.4)(a) does not include right to find a 3rd party purchaser for another’s shares 129
Tax Topics - Income Tax Act - Section 251 - Subsection 251(5) - Paragraph 251(5)(b) - Subparagraph 251(5)(b)(i) right to find 3rd party purchaser 72

16 March 2011 External T.I. 2010-0380571E5 F - Application de 251(5)b)(ii) et 256(1.4)b)

Does 9807875 E, wherein CRA indicated that s. 256(1.4)(b) would not generally apply where the triggering of the event is beyond the control of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(1.4) - Paragraph 256(1.4)(b) potential application even where no control over triggering of precondition 95

Paragraph 251(5)(c)

See Also

Côté-Létourneau v. The Queen, 2010 DTC 1116 [at 3092], 2007 TCC 91

The taxpayers (a husband and wife) were not dealing at arm's length with a corporation ("29061") whose shareholder was a trust of which they and...

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Naples v. Martin Estate, [1987] 1 WWR 52 (BCSC)

"Children" in the Wills Variation Act (B.C.) did not include stepchildren.

Subsection 251(6) - Blood relationship, etc.

Paragraph 251(6)(a)

See Also

Dreger v. The Queen, 2020 TCC 25

The taxpayers were the named beneficiaries of a life income fund held by their late father, who died on June 8, 2011, and with the distributions...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) a distribution from a deceased father’s fund to his surviving children was a related-person transfer 138

Diktakis v. The Queen, 2016 TCC 262 (Informal Procedure)

Smith J found that a taxpayer was related under s. 251(6)(a) to a two year old child who was the result of relations between the taxpayer’s...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 254 - Subsection 254(2) - Paragraph 254(2)(g) occupation of the new home could have been through a 2-year half sister and her mother 276

Administrative Policy

12 July 2018 External T.I. 2018-0755471E5 - Half-brothers and related persons

In finding that two half-brothers (with the same father and different mothers) were “related persons” as defined in s. 251(2)(a), CRA referred...

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Words and Phrases
brother sibling
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(2) - Paragraph 251(2)(a) half-siblings are related 59

13 April 1995 External T.I. 9429945 - RELATED AND ASSOCIATED

A half-brother and half-sister are connected by blood relationship.

However, the half-brother would not be connected by blood with his stepmother...

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Paragraph 251(6)(b)

See Also

May Estate v. MNR, 88 DTC 1189, [1988] 1 CTC 2303 (TCC)

A husband was not related to his deceased wife.

Administrative Policy

Paragraph 251(6)(c)