Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Extended meaning of child

• 252 (1) In this Act, words referring to a child of a taxpayer include

  • (a) a person of whom the taxpayer is the legal parent;

  • (b) a person who is wholly dependent on the taxpayer for support and of whom the taxpayer has, or immediately before the person attained the age of 19 years had, in law or in fact, the custody and control;

  • (c) a child of the taxpayer’s spouse or common-law partner; and

  • (d) [Repealed, 2005, c. 33, s. 12]

  • (e) a spouse or common-law partner of a child of the taxpayer.

• Marginal note:Relationships

  (2) In this Act, words referring to

  • (a) a parent of a taxpayer include a person

    • (i) whose child the taxpayer is,

    • (ii) whose child the taxpayer had previously been within the meaning of paragraph 252(1)(b), or

    • (iii) who is a parent of the taxpayer’s spouse or common-law partner;

  • (b) a brother of a taxpayer include a person who is

    • (i) the brother of the taxpayer’s spouse or common-law partner, or

    • (ii) the spouse or common-law partner of the taxpayer’s sister;

  • (c) a sister of a taxpayer include a person who is

    • (i) the sister of the taxpayer’s spouse or common-law partner, or

    • (ii) the spouse or common-law partner of the taxpayer’s brother;

  • (d) a grandparent of a taxpayer include a person who is

    • (i) the grandfather or grandmother of the taxpayer’s spouse or common-law partner, or

    • (ii) the spouse or common-law partner of the taxpayer’s grandfather or grandmother;

  • (e) an aunt or uncle of a taxpayer include the spouse or common-law partner of the taxpayer’s aunt or uncle, as the case may be;

  • (f) a great-aunt or great-uncle of a taxpayer include the spouse or common-law partner of the taxpayer’s great-aunt or great-uncle, as the case may be; and

  • (g) a niece or nephew of a taxpayer include the niece or nephew, as the case may be, of the taxpayer’s spouse or common-law partner.

• Marginal note:Extended meaning of spouse and former spouse

  (3) For the purposes of paragraph 56(1)(b), section 56.1, paragraphs 60(b) and (j), section 60.1, subsections 70(6) and (6.1), 73(1) and (5) and 104(4) and (5.1), the definition pre-1972 spousal trust in subsection 108(1), subsection 146(16), the definition survivor in subsection 146.2(1), subparagraph 146.3(2)(f)(iv), subsection 146.3(14), section 146.5, subsections 147(19) and 147.3(5) and (7), section 147.5, subsections 148(8.1) and (8.2), the definition qualifying transfer in subsection 207.01(1), and subsections 210(1) and 248(22) and (23), spouse and former spouse of a particular individual include another individual who is a party to a void or voidable marriage with the particular individual.

• (4) [Repealed, 2000, c. 12, s. 141(2)]

Marginal note:Union employer

252.1 All the structural units of a trade union, including each local, branch, national and international unit, shall be deemed to be a single employer and a single entity for the purposes of the provisions of this Act and the regulations relating to

• (a) pension adjustments and past service pension adjustments for years after 1994;

• (b) the determination of whether a pension plan is, in a year after 1994, a multi-employer plan or a specified multi-employer plan (within the meanings assigned by subsection 147.1(1));

• (c) the determination of whether a contribution made under a plan or arrangement is a resident’s contribution (within the meaning assigned by subsection 207.6(5.1)); and

• (d) the deduction or withholding and the remittance of any amount as required by subsection 153(1) in respect of a contribution made after 1991 under a retirement compensation arrangement.

Extended meaning of carrying on business

253 For the purposes of this Act, where in a taxation year a person who is a non-resident person or a trust to which Part XII.2 applies

• (a) produces, grows, mines, creates, manufactures, fabricates, improves, packs, preserves or constructs, in whole or in part, anything in Canada whether or not the person exports that thing without selling it before exportation,

• (b) solicits orders or offers anything for sale in Canada through an agent or servant, whether the contract or transaction is to be completed inside or outside Canada or partly in and partly outside Canada, or

• (c) disposes of

  • (i) Canadian resource property, except where an amount in respect of the disposition is included under paragraph 66.2(1)(a) or 66.4(1)(a),

  • (ii) property (other than depreciable property) that is a timber resource property, an option in respect of a timber resource property or an interest in, or for civil law a right in, a timber resource property, or

  • (iii) property (other than capital property) that is real or immovable property situated in Canada, including an option in respect of such property or an interest in, or for civil law a real right in, such property, whether or not the property is in existence,

the person shall be deemed, in respect of the activity or disposition, to have been carrying on business in Canada in the year.

Marginal note:Investments in limited partnerships

• 253.1 (1) For the purposes of subparagraph 108(2)(b)(ii), paragraphs 130.1(6)(b), 131(8)(b), 132(6)(b) and 146.1(2.1)(c), subsection 146.2(6), paragraph 146.4(5)(b), subsections 146.6(3) and 147.5(8), paragraph 149(1)(o.2), the definition private holding corporation in subsection 191(1), the definition investment fund in subsection 251.2(1) and regulations made for the purposes of paragraphs 149(1)(o.3) and (o.4), if a trust or corporation holds an interest as a member of a partnership and, by operation of any law governing the arrangement in respect of the partnership, the liability of the member as a member of the partnership is limited, the member shall not, solely because of its acquisition and holding of that interest, be considered to carry on any business or other activity of the partnership.

• Marginal note:Investments in limited partnerships

  (2) For the purposes of section 149.1 and subsections 188.1(1) and (2), if a registered charity, a registered Canadian amateur athletic association or a registered journalism organization holds an interest as a member of a partnership, the member shall not, solely because of its acquisition and holding of that interest, be considered to carry on any business of the partnership if

  • (a) by operation of any law governing the arrangement in respect of the partnership, the liability of the member as a member of the partnership is limited;

  • (b) the member deals at arm’s length with each general partner of the partnership; and

  • (c) the member, or the member together with persons and partnerships with which it does not deal at arm’s length, holds interests in the partnership that have a fair market value of not more than 20% of the fair market value of the interests of all members in the partnership.

Marginal note:Contract under pension plan

254 Where a document has been issued or a contract has been entered into before July 31, 1997 purporting to create, to establish, to extinguish or to be in substitution for, a taxpayer’s right to an amount or amounts, immediately or in the future, out of or under a superannuation or pension fund or plan,

• (a) if the rights provided for in the document or contract are rights provided for by the superannuation or pension plan or are rights to a payment or payments out of the superannuation or pension fund, and the taxpayer acquired an interest under the document or in the contract before that day, any payment under the document or contract is deemed to be a payment out of or under the superannuation or pension fund or plan and the taxpayer is deemed not to have received, by the issuance of the document or entering into the contract, an amount out of or under the superannuation or pension fund or plan; and

• (b) if the rights created or established by the document or contract are not rights provided for by the superannuation or pension plan or a right to payments out of the superannuation or pension fund, an amount equal to the value of the rights created or established by the document or contract shall be deemed to have been received by the taxpayer out of or under the superannuation or pension fund or plan when the document was issued or the contract was entered into.

Canada

255 For the purposes of this Act, Canada is hereby declared to include and to have always included

• (a) the sea bed and subsoil of the submarine areas adjacent to the coasts of Canada in respect of which the Government of Canada or of a province grants a right, licence or privilege to explore for, drill for or take any minerals, petroleum, natural gas or any related hydrocarbons; and

• (b) the seas and airspace above the submarine areas referred to in paragraph 255(a) in respect of any activities carried on in connection with the exploration for or exploitation of the minerals, petroleum, natural gas or hydrocarbons referred to in that paragraph.

Marginal note:Associated corporations

• 256 (1) For the purposes of this Act, one corporation is associated with another in a taxation year if, at any time in the year,

  • (a) one of the corporations controlled, directly or indirectly in any manner whatever, the other;

  • (b) both of the corporations were controlled, directly or indirectly in any manner whatever, by the same person or group of persons;

  • (c) each of the corporations was controlled, directly or indirectly in any manner whatever, by a person and the person who so controlled one of the corporations was related to the person who so controlled the other, and either of those persons owned, in respect of each corporation, not less than 25% of the issued shares of any class, other than a specified class, of the capital stock thereof;

  • (d) one of the corporations was controlled, directly or indirectly in any manner whatever, by a person and that person was related to each member of a group of persons that so controlled the other corporation, and that person owned, in respect of the other corporation, not less than 25% of the issued shares of any class, other than a specified class, of the capital stock thereof; or

  • (e) each of the corporations was controlled, directly or indirectly in any manner whatever, by a related group and each of the members of one of the related groups was related to all of the members of the other related group, and one or more persons who were members of both related groups, either alone or together, owned, in respect of each corporation, not less than 25% of the issued shares of any class, other than a specified class, of the capital stock thereof.

• Definition of specified class

  (1.1) For the purposes of subsection 256(1), specified class means a class of shares of the capital stock of a corporation where, under the terms or conditions of the shares or any agreement in respect thereof,

  • (a) the shares are not convertible or exchangeable;

  • (b) the shares are non-voting;

  • (c) the amount of each dividend payable on the shares is calculated as a fixed amount or by reference to a fixed percentage of an amount equal to the fair market value of the consideration for which the shares were issued;

  • (d) the annual rate of the dividend on the shares, expressed as a percentage of an amount equal to the fair market value of the consideration for which the shares were issued, cannot in any event exceed,

    • (i) where the shares were issued before 1984, the rate of interest prescribed for the purposes of subsection 161(1) at the time the shares were issued, and

    • (ii) where the shares were issued after 1983, the prescribed rate of interest at the time the shares were issued; and

  • (e) the amount that any holder of the shares is entitled to receive on the redemption, cancellation or acquisition of the shares by the corporation or by any person with whom the corporation does not deal at arm’s length cannot exceed the total of an amount equal to the fair market value of the consideration for which the shares were issued and the amount of any unpaid dividends thereon.

• Marginal note:Control, etc.

  (1.2) For the purposes of this subsection and subsections 256(1), 256(1.1) and 256(1.3) to 256(5),

  • (a) a group of persons in respect of a corporation means any two or more persons each of whom owns shares of the capital stock of the corporation;

  • (b) for greater certainty,

    • (i) a corporation that is controlled by one or more members of a particular group of persons in respect of that corporation shall be considered to be controlled by that group of persons, and

    • (ii) a corporation may be controlled by a person or a particular group of persons notwithstanding that the corporation is also controlled or deemed to be controlled by another person or group of persons;

  • (c) a corporation shall be deemed to be controlled by another corporation, a person or a group of persons at any time where

    • (i) shares of the capital stock of the corporation having a fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the capital stock of the corporation, or

    • (ii) common shares of the capital stock of the corporation having a fair market value of more than 50% of the fair market value of all the issued and outstanding common shares of the capital stock of the corporation

    are owned at that time by the other corporation, the person or the group of persons, as the case may be;

  • (d) where shares of the capital stock of a corporation are owned, or deemed by this subsection to be owned, at any time by another corporation (in this paragraph referred to as the “holding corporation”), those shares shall be deemed to be owned at that time by any shareholder of the holding corporation in a proportion equal to the proportion of all those shares that

    • (i) the fair market value of the shares of the capital stock of the holding corporation owned at that time by the shareholder

    is of

    • (ii) the fair market value of all the issued shares of the capital stock of the holding corporation outstanding at that time;

  • (e) where, at any time, shares of the capital stock of a corporation are property of a partnership, or are deemed by this subsection to be owned by the partnership, those shares shall be deemed to be owned at that time by each member of the partnership in a proportion equal to the proportion of all those shares that

    • (i) the member’s share of the income or loss of the partnership for its fiscal period that includes that time

    is of

    • (ii) the income or loss of the partnership for its fiscal period that includes that time

    and for this purpose, where the income and loss of the partnership for its fiscal period that includes that time are nil, that proportion shall be computed as if the partnership had had income for that period in the amount of $1,000,000;

  • (f) where shares of the capital stock of a corporation are owned, or deemed by this subsection to be owned, at any time by a trust,

    • (i) [Repealed, 2014, c. 39, s. 76]

    • (ii) where a beneficiary’s share of the accumulating income or capital therefrom depends on the exercise by any person of, or the failure by any person to exercise, any discretionary power, those shares are deemed to be owned at that time by the beneficiary,

    • (iii) in any case where subparagraph (ii) does not apply, a beneficiary is deemed at that time to own the proportion of those shares that the fair market value of the beneficial interest in the trust of the beneficiary is of the fair market value of all beneficial interests in the trust, and

    • (iv) in the case of a trust referred to in subsection 75(2), the person referred to in that subsection from whom property of the trust or property for which it was substituted was directly or indirectly received shall be deemed to own those shares at that time; and

  • (g) in determining the fair market value of a share of the capital stock of a corporation, all issued and outstanding shares of the capital stock of the corporation shall be deemed to be non-voting.

• Marginal note:Parent deemed to own shares

  (1.3) Where at any time shares of the capital stock of a corporation are owned by a child who is under 18 years of age, for the purpose of determining whether the corporation is associated at that time with any other corporation that is controlled, directly or indirectly in any manner whatever, by a parent of the child or by a group of persons of which the parent is a member, the shares shall be deemed to be owned at that time by the parent unless, having regard to all the circumstances, it can reasonably be considered that the child manages the business and affairs of the corporation and does so without a significant degree of influence by the parent.

• Marginal note:Options and rights

  (1.4) For the purpose of determining whether a corporation is associated with another corporation with which it is not otherwise associated, where a person or any partnership in which the person has an interest has a right at any time under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently,

  • (a) to, or to acquire, shares of the capital stock of a corporation, or to control the voting rights of shares of the capital stock of a corporation, the person or partnership shall, except where the right is not exercisable at that time because the exercise thereof is contingent on the death, bankruptcy or permanent disability of an individual, be deemed to own the shares at that time, and the shares shall be deemed to be issued and outstanding at that time; or

  • (b) to cause a corporation to redeem, acquire or cancel any shares of its capital stock owned by other shareholders of a corporation, the person or partnership shall, except where the right is not exercisable at that time because the exercise thereof is contingent on the death, bankruptcy or permanent disability of an individual, be deemed at that time to have the same position in relation to control of the corporation and ownership of shares of its capital stock as if the shares were redeemed, acquired or cancelled by the corporation.

• Marginal note:Person related to himself, herself or itself

  (1.5) For the purposes of subsections 256(1) to 256(1.4) and 256(1.6) to 256(5), where a person owns shares in two or more corporations, the person shall as shareholder of one of the corporations be deemed to be related to himself, herself or itself as shareholder of each of the other corporations.

• Marginal note:Exception

  (1.6) For the purposes of subsection 256(1.2) and notwithstanding subsection 256(1.4), any share that is

  • (a) described in paragraph (e) of the definition term preferred share in subsection 248(1) during the applicable time referred to in that paragraph, or

  • (b) a share of a specified class within the meaning of subsection 256(1.1)

  shall be deemed not to have been issued and outstanding and not to be owned by any shareholder and an amount equal to the greater of the paid-up capital of the share and the amount, if any, that any holder of the share is entitled to receive on the redemption, cancellation or acquisition of the share by the corporation shall be deemed to be a liability of the corporation.

• Marginal note:Corporations associated through a third corporation

  (2) For the purposes of

  • (a) this Act, subject to paragraph (b), two corporations are deemed to be associated with each other at a particular time if

    • (i) they would, but for this subsection, not be associated with each other at the particular time, and

    • (ii) each corporation is associated with, or is deemed by this subsection to be associated with, the same corporation (in this subsection referred to as the third corporation) at the particular time; and

  • (b) section 125,

    • (i) if the third corporation is not a Canadian-controlled private corporation at the particular time, the two corporations are deemed not to be associated with each other at the particular time, and

    • (ii) if the third corporation is a Canadian-controlled private corporation that elects in prescribed form to apply this subparagraph in its taxation year that includes the particular time, the two corporations are deemed not to be associated with each other at the particular time and the business limit of the third corporation for its taxation year that includes the particular time is deemed to be nil.

• Marginal note:Anti-avoidance

  (2.1) For the purposes of this Act, where, in the case of two or more corporations, it may reasonably be considered that one of the main reasons for the separate existence of those corporations in a taxation year is to reduce the amount of taxes that would otherwise be payable under this Act or to increase the amount of refundable investment tax credit under section 127.1, the two or more corporations shall be deemed to be associated with each other in the year.

• Marginal note:Saving provision

  (3) Where one corporation (in this subsection referred to as the “controlled corporation”) would, but for this subsection, be associated with another corporation in a taxation year by reason of being controlled, directly or indirectly in any manner whatever, by the other corporation or by reason of both of the corporations being controlled, directly or indirectly in any manner whatever, by the same person at a particular time in the year (which corporation or person so controlling the controlled corporation is in this subsection referred to as the “controller”) and it is established to the satisfaction of the Minister that

  • (a) there was in effect at the particular time an agreement or arrangement enforceable according to the terms thereof, under which, on the satisfaction of a condition or the happening of an event that it is reasonable to expect will be satisfied or happen, the controlled corporation will

    • (i) cease to be controlled, directly or indirectly in any manner whatever, by the controller, and

    • (ii) be or become controlled, directly or indirectly in any manner whatever, by a person or group of persons, with whom or with each of the members of which, as the case may be, the controller was at the particular time dealing at arm’s length, and

  • (b) the purpose for which the controlled corporation was at the particular time so controlled was the safeguarding of rights or interests of the controller in respect of

    • (i) any indebtedness owing to the controller the whole or any part of the principal amount of which was outstanding at the particular time, or

    • (ii) any shares of the capital stock of the controlled corporation that were owned by the controller at the particular time and that were, under the agreement or arrangement, to be redeemed by the controlled corporation or purchased by the person or group of persons referred to in subparagraph 256(3)(a)(ii),

  the controlled corporation and the other corporation with which it would otherwise be so associated in the year shall be deemed, for the purpose of this Act, not to be associated with each other in the year.

• Marginal note:Saving provision

  (4) Where one corporation would, but for this subsection, be associated with another corporation in a taxation year by reason of both of the corporations being controlled by the same executor, liquidator of a succession or trustee and it is established to the satisfaction of the Minister

  • (a) that the executor, liquidator or trustee did not acquire control of the corporations as a result of one or more estates or trusts created by the same individual or two or more individuals not dealing with each other at arm’s length, and

  • (b) that the estate or trust under which the executor, liquidator or trustee acquired control of each of the corporations arose only on the death of the individual creating the estate or trust,

  the two corporations are deemed, for the purposes of this Act, not to be associated with each other in the year.

• Marginal note:Idem

  (5) Where one corporation would, but for this subsection, be associated with another corporation in a taxation year, by reason only that the other corporation is a trustee under a trust pursuant to which the corporation is controlled, the two corporations shall be deemed, for the purposes of this Act, not to be associated with each other in the year unless, at any time in the year, a settlor of the trust controlled or is a member of a related group that controlled the other corporation that is the trustee under the trust.

• Marginal note:Control in fact

  (5.1) For the purposes of this Act, where the expression “controlled, directly or indirectly in any manner whatever,” is used, a corporation shall be considered to be so controlled by another corporation, person or group of persons (in this subsection referred to as the “controller”) at any time where, at that time, the controller has any direct or indirect influence that, if exercised, would result in control in fact of the corporation, except that, where the corporation and the controller are dealing with each other at arm’s length and the influence is derived from a franchise, licence, lease, distribution, supply or management agreement or other similar agreement or arrangement, the main purpose of which is to govern the relationship between the corporation and the controller regarding the manner in which a business carried on by the corporation is to be conducted, the corporation shall not be considered to be controlled, directly or indirectly in any manner whatever, by the controller by reason only of that agreement or arrangement.

• Marginal note:Factual control — interpretation

  (5.11) For the purposes of the Act, the determination of whether a taxpayer has, in respect of a corporation, any direct or indirect influence that, if exercised, would result in control in fact of the corporation, shall

  • (a) take into consideration all factors that are relevant in the circumstances; and

  • (b) not be limited to, and the relevant factors need not include, whether the taxpayer has a legally enforceable right or ability to effect a change in the board of directors of the corporation, or its powers, or to exercise influence over the shareholder or shareholders who have that right or ability.

• Marginal note:Idem

  (6) For the purposes of this Act, where a corporation (in this subsection referred to as the “controlled corporation”) would, but for this subsection, be regarded as having been controlled or controlled, directly or indirectly in any manner whatever, by a person or partnership (in this subsection referred to as the “controller”) at a particular time and it is established that

  • (a) there was in effect at the particular time an agreement or arrangement enforceable according to the terms thereof, under which, on the satisfaction of a condition or the happening of an event that it is reasonable to expect will be satisfied or happen, the controlled corporation will

    • (i) cease to be controlled, or controlled, directly or indirectly in any manner whatever, as the case may be, by the controller, and

    • (ii) be or become controlled, or controlled, directly or indirectly in any manner whatever, as the case may be, by a person or group of persons, with whom or with each of the members of which, as the case may be, the controller was at the particular time dealing at arm’s length, and

  • (b) the purpose for which the controlled corporation was at the particular time so controlled, or controlled, directly or indirectly in any manner whatever, as the case may be, was the safeguarding of rights or interests of the controller in respect of

    • (i) any indebtedness owing to the controller the whole or any part of the principal amount of which was outstanding at the particular time, or

    • (ii) any shares of the capital stock of the controlled corporation that were owned by the controller at the particular time and that were, under the agreement or arrangement, to be redeemed by the controlled corporation or purchased by the person or group of persons referred to in subparagraph 256(6)(a)(ii),

  the controlled corporation is deemed not to have been controlled by the controller at the particular time.

• Marginal note:Simultaneous control

  (6.1) For the purposes of this Act and for greater certainty,

  • (a) where a corporation (in this paragraph referred to as the “subsidiary”) would be controlled by another corporation (in this paragraph referred to as the “parent”) if the parent were not controlled by any person or group of persons, the subsidiary is controlled by

    • (i) the parent, and

    • (ii) any person or group of persons by whom the parent is controlled; and

  • (b) where a corporation (in this paragraph referred to as the “subject corporation”) would be controlled by a group of persons (in this paragraph referred to as the “first-tier group”) if no corporation that is a member of the first-tier group were controlled by any person or group of persons, the subject corporation is controlled by

    • (i) the first-tier group, and

    • (ii) any group of one or more persons comprised of, in respect of every member of the first-tier group, either the member, or a person or group of persons by whom the member is controlled.

• Marginal note:Application to control in fact

  (6.2) In its application to subsection (5.1), subsection (6.1) shall be read as if the references in subsection (6.1) to “controlled” were references to “controlled, directly or indirectly in any manner whatever,”.

• Marginal note:Acquiring control

  (7) For the purposes of this subsection, of section 55, subsections 66(11), 66.5(3), 66.7(10) and (11), 85(1.2), 88(1.1) and (1.2), 110.1(1.2) and 111(5.4) and paragraph 251.2(2)(a) and of subsection 5905(5.2) of the Income Tax Regulations,

  • (a) control of a particular corporation shall be deemed not to have been acquired solely because of

    • (i) the acquisition at any time of shares of any corporation by

      • (A) a particular person who acquired the shares from a person to whom the particular person was related (otherwise than because of a right referred to in paragraph 251(5)(b)) immediately before that time,

      • (B) a particular person who was related to the particular corporation (otherwise than because of a right referred to in paragraph 251(5)(b)) immediately before that time,

      • (C) an estate that acquired the shares because of the death of a person,

      • (D) a particular person who acquired the shares from an estate that arose on and as a consequence of the death of an individual, if the estate acquired the shares from the individual as a consequence of the death and the individual was related to the particular person immediately before the death,

      • (E) a corporation on a distribution (within the meaning assigned by subsection 55(1)) by a specified corporation (within the meaning assigned by that subsection) if a dividend, to which subsection 55(2) does not apply because of paragraph 55(3)(b), is received in the course of the reorganization in which the distribution occurs,

    • (ii) the redemption or cancellation at any particular time of, or a change at any particular time in the rights, privileges, restrictions or conditions attaching to, shares of the particular corporation or of a corporation controlling the particular corporation, where each person and each member of each group of persons that controls the particular corporation immediately after the particular time was related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the corporation

      • (A) immediately before the particular time, or

      • (B) immediately before the death of a person, where the shares were held immediately before the particular time by an estate that acquired the shares because of the person’s death, or

    • (iii) the acquisition at any time of shares of the particular corporation if

      • (A) the acquisition of those shares would otherwise result in the acquisition of control of the particular corporation at that time by a related group of persons, and

      • (B) each member of each group of persons that controls the particular corporation at that time was related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the particular corporation immediately before that time;

  • (b) where at any time 2 or more corporations (each of which is referred to in this paragraph as a “predecessor corporation”) have amalgamated to form one corporate entity (in this paragraph referred to as the “new corporation”),

    • (i) control of a corporation is deemed not to have been acquired by any person or group of persons solely because of the amalgamation unless it is deemed by subparagraph 256(7)(b)(ii) or 256(7)(b)(iii) to have been so acquired,

    • (ii) a person or group of persons that controls the new corporation immediately after the amalgamation and did not control a predecessor corporation immediately before the amalgamation is deemed to have acquired immediately before the amalgamation control of the predecessor corporation and of each corporation it controlled immediately before the amalgamation (unless the person or group of persons would not have acquired control of the predecessor corporation if the person or group of persons had acquired all the shares of the predecessor corporation immediately before the amalgamation), and

    • (iii) control of a predecessor corporation and of each corporation it controlled immediately before the amalgamation is deemed to have been acquired immediately before the amalgamation by a person or group of persons

      • (A) unless the predecessor corporation was related (otherwise than because of a right referred to in paragraph 251(5)(b)) immediately before the amalgamation to each other predecessor corporation,

      • (B) unless, if one person had immediately after the amalgamation acquired all the shares of the new corporation’s capital stock that the shareholders of the predecessor corporation, or of another predecessor corporation that controlled the predecessor corporation, acquired on the amalgamation in consideration for their shares of the predecessor corporation or of the other predecessor corporation, as the case may be, the person would have acquired control of the new corporation as a result of the acquisition of those shares, or

      • (C) unless this subparagraph would, but for this clause, deem control of each predecessor corporation to have been acquired on the amalgamation where the amalgamation is an amalgamation of

        • (I) two corporations, or

        • (II) two corporations (in this subclause referred to as the “parents”) and one or more other corporations (each of which is in this subclause referred to as a “subsidiary”) that would, if all the shares of each subsidiary’s capital stock that were held immediately before the amalgamation by the parents had been held by one person, have been controlled by that person;

  • (c) subject to paragraph 256(7)(a), where 2 or more persons (in this paragraph referred to as the “transferors”) dispose of shares of the capital stock of a particular corporation in exchange for shares of the capital stock of another corporation (in this paragraph referred to as the “acquiring corporation”), control of the acquiring corporation and of each corporation controlled by it immediately before the exchange is deemed to have been acquired at the time of the exchange by a person or group of persons unless

    • (i) the particular corporation and the acquiring corporation were related (otherwise than because of a right referred to in paragraph 251(5)(b)) to each other immediately before the exchange, or

    • (ii) if all the shares of the acquiring corporation’s capital stock that were acquired by the transferors on the exchange were acquired at the time of the exchange by one person, the person would not control the acquiring corporation;

  • (c.1) subject to paragraph (a), if, at any particular time, as part of a series of transactions or events, two or more persons acquire shares of a corporation (in this paragraph referred to as the “acquiring corporation”) in exchange for or upon a redemption or surrender of interests in, or as a consequence of a distribution from, a SIFT trust (determined without reference to subsection 122.1(2)), SIFT partnership (determined without reference to subsection 197(8)) or real estate investment trust (as defined in subsection 122.1(1)), control of the acquiring corporation and of each corporation controlled by it immediately before the particular time is deemed to have been acquired by a person or group of persons at the particular time unless

    • (i) in respect of each of the corporations, a person (in this subparagraph referred to as a “relevant person”) affiliated (within the meaning assigned by section 251.1 read without reference to the definition controlled in subsection 251.1(3)) with the SIFT trust, SIFT partnership or real estate investment trust owned shares of the particular corporation having a total fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the particular corporation at all times during the period that

      • (A) begins on the latest of July 14, 2008, the date the particular corporation came into existence and the time of the last acquisition of control, if any, of the particular corporation by a relevant person, and

      • (B) ends immediately before the particular time,

    • (ii) if all the securities (in this subparagraph as defined in subsection 122.1(1)) of the acquiring corporation that were acquired as part of the series of transactions or events at or before the particular time were acquired by one person, the person would

      • (A) not at the particular time control the acquiring corporation, and

      • (B) have at the particular time acquired securities of the acquiring corporation having a fair market value of not more than 50% of the fair market value of all the issued and outstanding shares of the acquiring corporation, or

    • (iii) this paragraph previously applied to deem an acquisition of control of the acquiring corporation upon an acquisition of shares that was part of the same series of transactions or events;

  • (c.2) subject to paragraph (a), if, at any particular time, as part of a series of transactions or events, two or more persons acquire shares of a corporation (in this paragraph referred to as the “acquiring corporation”) in exchange for or upon a redemption or surrender of interests in, or as a consequence of a distribution from, a partnership or trust, control of the acquiring corporation and of each corporation controlled by it immediately before the particular time is deemed to have been acquired by a person or group of persons at the particular time unless

    • (i) in respect of each of the corporations, a person affiliated with the partnership or trust owned immediately before the particular time shares of the particular corporation having a total fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the particular corporation immediately before the particular time,

    • (ii) if all the securities (in this subparagraph as defined in subsection 122.1(1)) of the acquiring corporation that were acquired at or before the particular time as part of the series were acquired by one person, the person would

      • (A) not at the particular time control the acquiring corporation, and

      • (B) have at the particular time acquired securities of the acquiring corporation having a fair market value of not more than 50% of the fair market value of all the issued and outstanding shares of the acquiring corporation, or

    • (iii) paragraph (c.1) applies, or this paragraph or paragraph (c.1) previously applied, to deem an acquisition of control of the acquiring corporation upon an acquisition of shares that was part of the same series of transactions or events;

  • (d) where at any time shares of the capital stock of a particular corporation are disposed of to another corporation (in this paragraph referred to as the “acquiring corporation”) for consideration that includes shares of the acquiring corporation’s capital stock and, immediately after that time, the acquiring corporation and the particular corporation are controlled by a person or group of persons who

    • (i) controlled the particular corporation immediately before that time, and

    • (ii) did not, as part of the series of transactions or events that includes the disposition, cease to control the acquiring corporation,

    control of the particular corporation and of each corporation controlled by it immediately before that time is deemed not to have been acquired by the acquiring corporation solely because of the disposition;

  • (e) control of a particular corporation and of each corporation controlled by it immediately before a particular time is deemed not to have been acquired at the particular time by a corporation (in this paragraph referred to as the “acquiring corporation”) if at the particular time, the acquiring corporation acquires shares of the particular corporation’s capital stock for consideration that consists solely of shares of the acquiring corporation’s capital stock, and if

    • (i) immediately after the particular time

      • (A) the acquiring corporation owns all the shares of each class of the particular corporation’s capital stock (determined without reference to shares of a specified class, within the meaning assigned by paragraph 88(1)(c.8)),

      • (B) the acquiring corporation is not controlled by any person or group of persons, and

      • (C) the fair market value of the shares of the particular corporation’s capital stock that are owned by the acquiring corporation is not less than 95% of the fair market value of all of the assets of the acquiring corporation, or

    • (ii) any of clauses (i)(A) to (C) do not apply and the acquisition occurs as part of a plan of arrangement that, on completion, results in

      • (A) the acquiring corporation (or a new corporation that is formed on an amalgamation of the acquiring corporation and a subsidiary wholly-owned corporation of the acquiring corporation) owning all the shares of each class of the particular corporation’s capital stock (determined without reference to shares of a specified class, within the meaning assigned by paragraph 88(1)(c.8)),

      • (B) the acquiring corporation (or the new corporation) not being controlled by any person or group of persons, and

      • (C) the fair market value of the shares of the particular corporation’s capital stock that are owned by the acquiring corporation (or the new corporation) being not less than 95% of the fair market value of all of the assets of the acquiring corporation (or the new corporation);

  • (f) if a particular trust is the only beneficiary of another trust, the particular trust is described in paragraph (c) of the definition SIFT trust wind-up event, the particular trust would, in the absence of this paragraph, acquire control of a corporation solely because of a SIFT trust wind-up event that is a distribution of shares of the capital stock of the corporation by the other trust, and the other trust controlled the corporation immediately before the distribution, the particular trust is deemed not to acquire control of the corporation because of the distribution;

  • (g) a corporation (in this paragraph referred to as the “acquiring corporation”) that acquires shares of another corporation on a distribution that is a SIFT trust wind-up event of a SIFT wind-up entity is deemed not to acquire control of the other corporation because of that acquisition if the following conditions are met:

    • (i) the SIFT wind-up entity is a trust whose only beneficiary immediately before the distribution is the acquiring corporation,

    • (ii) the SIFT wind-up entity controlled the other corporation immediately before the distribution,

    • (iii) as part of a series of transactions or events under which the acquiring corporation became the only beneficiary under the trust, two or more persons acquired shares in the acquiring corporation in exchange for their interests as beneficiaries under the trust, and

    • (iv) if all the shares described in subparagraph (iii) had been acquired by one person, the person would

      • (A) control the acquiring corporation, and

      • (B) have acquired shares of the acquiring corporation having a fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the acquiring corporation;

  • (h) if at any time after September 12, 2013 a trust is subject to a loss restriction event and immediately before that time the trust, or a group of persons a member of which is the trust, controls a corporation, control of the corporation and of each corporation controlled by it immediately before that time is deemed to have been acquired at that time by a person or group of persons;

  • (i) if at any time after September 12, 2013 a trust controls a corporation, control of the corporation is deemed not to be acquired solely because of a change in the trustee or legal representative having ownership or control of the trust’s property if

    • (i) the change is not part of a series of transactions or events that includes a change in the beneficial ownership of the trust’s property, and

    • (ii) no amount of income or capital of the trust to be distributed, at any time at or after the change, in respect of any interest in the trust depends upon the exercise by any person or partnership, or the failure of any person or partnership, to exercise any discretionary power; and

  • (j) if an employee ownership trust controls a qualifying business, control of the qualifying business is deemed not to be acquired solely because of a change in the trustee having ownership or control of the trust’s property if the trust remains an employee ownership trust immediately after the change of trustee.

• Marginal note:Deemed exercise of right

  (8) Where at any time a taxpayer acquires a right referred to in paragraph 251(5)(b) in respect of a share and it can reasonably be concluded that one of the main purposes of the acquisition is

  • (a) to avoid any limitation on the deductibility of any non-capital loss, net capital loss, farm loss or any expense or other amount referred to in subsection 66(11), 66.5(3) or 66.7(10) or 66.7(11),

  • (b) to avoid the application of subsection 10(10) or 13(24), paragraph 37(1)(h) or subsection 55(2) or 66(11.4) or (11.5), paragraph 88(1)(c.3) or subsection 111(4), (5.1) or (5.3), 181.1(7), 190.1(6) or 251.2(2),

  • (c) to avoid the application of paragraph (j) or (k) of the definition investment tax credit in subsection 127(9),

  • (d) to avoid the application of section 251.1, or

  • (e) to affect the application of section 80,

  the taxpayer is deemed to be in the same position in relation to the control of the corporation as if the right were immediate and absolute and as if the taxpayer had exercised the right at that time for the purpose of determining whether control of a corporation has been acquired for the purposes of subsections 10(10) and 13(24), section 37, subsections 55(2), 66(11), (11.4) and (11.5), 66.5(3), 66.7(10) and (11), section 80, paragraph 80.04(4)(h), subparagraph 88(1)(c)(vi), paragraph 88(1)(c.3), subsections 88(1.1) and (1.2), sections 111 and 127, subsections 181.1(7), 190.1(6) and 249(4) and paragraph 251.2(2)(a) and in determining for the purposes of section 251.1, paragraph (b) of the definition investment fund in subsection 251.2(1) and paragraphs 251.2(3)(c) and (d) and 256(7)(i) whether a corporation is controlled by any other person or group of persons.

• Marginal note:Corporations without share capital

  (8.1) For the purposes of subsections 256(7) and 256(8),

  • (a) a corporation incorporated without share capital is deemed to have a capital stock of a single class;

  • (b) each member, policyholder and other participant in the corporation is deemed to be a shareholder of the corporation; and

  • (c) the membership, policy or other interest in the corporation of each of those participants is deemed to be the number of shares of the corporation’s capital stock that the Minister considers reasonable in the circumstances, having regard to the total number of participants in the corporation and the nature of their participation.

• Marginal note:Date of acquisition of control

  (9) For the purposes of this Act, other than for the purposes of determining if a corporation is, at any time, a small business corporation or a Canadian-controlled private corporation, where control of a corporation is acquired by a person or group of persons at a particular time on a day, control of the corporation shall be deemed to have been acquired by the person or group of persons, as the case may be, at the beginning of that day and not at the particular time unless the corporation elects in its return of income under Part I filed for its taxation year that ends immediately before the acquisition of control not to have this subsection apply.