Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether paragraph 251(5)(b) will deny a Canadian private corporation's CCPC status if non-residents hold a sufficient number of options to have de jure control if only those options are exercised, notwithstanding that a sufficient number of options to preserve the corporation's CCPC status might also be held by Canadian residents?
Position: Yes
Reasons: The CRA's position, as stated at the 2007 CTF CRA Roundtable, that paragraph 251(5)(b) should be applied on a "holder-by-holder basis," remains unchanged
QUESTIONS PRESENTED AT THE 2011 CTF CRA ROUNDTABLE
November 2011
Question # 11
Is the CRA continuing to maintain its position that paragraph 251(5)(b) denies a Canadian private corporation's Canadian-controlled private corporation ("CCPC") status if non-residents hold a sufficient number of options to have de jure control if only those options are exercised, notwithstanding that a sufficient number of options to preserve the corporation's CCPC status might also be held by Canadian residents?
CRA Response
At the 2007 CTF CRA Roundtable (see 2007 CR 4:6), the CRA stated that, for the purpose of determining a corporation's CCPC status, the Federal Court of Appeal decision in Sedona Networks Corporation v. The Queen, 2007 DTC 5359 (FCA) did not explicitly preclude it from applying paragraph 251(5)(b) on a "holder-by-holder basis" to paragraph (b) of the CCPC definition in subsection 125(7), where such an interpretation could be supported having regard to the context and purpose of the provisions in question. The CRA confirms that this remains its position.
Daniel Wong
2011-042641
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