Subsection 127.1(2) - Definitions
Excluded Corporation
See Also
HSC Research Development Corp. v. The Queen, 95 DTC 225, [1995] 1 CTC 2283 (TCC)
The taxpayer was a non-share corporation that initially had been established to commercially exploit technology developed by the Hospital for Sick Children (the "Hospital"). O'Connor TCJ. found (at p. 233) that "the persons who control the non-share corporation are the members who in turn appoint the directors." Since, in this case, a majority of the members were not appointed by, associated with or connected with the Hospital (which was a tax-exempt person), the Hospital did not have de jure control of the taxpayer, which was the test contemplated by the phrase "controlled directly or indirectly, in any manner whatever" before the enactment of s. 256(5.1). Any control by the Hospital would have to be classified as de facto control, which would not be sufficient for these purposes.
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Qualifying Corporation
Administrative Policy
24 March 1994 External T.I. 9336195 - INVESTMENT TAX CREDIT
Re interaction between ss.127.1(2) and 256(2).
26 February 1990 T.I. (July 1990 Access Letter, ΒΆ1334)
Where the corporation initially had a taxable income of $500,000 in 1988 which was then reduced to nil as a result of a non-capital loss incurred in 1989, the corporation will meet the definition of "qualifying corporation" for 1989.