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 between them that would demonstrate that these shareholders are acting together to exercise control over the corporation. Are Opco A and Opco B controlled by the same group of persons so that Opco A and Opco B are related?
After referencing both ss. 251(2)(c)(vi) and (i), and noting the statement in IT-419R2, para. 12 that “In the case of a closely-held corporation (i.e. where there are two or three unrelated shareholders, none of which individually controls the corporation) the CRA considers that there is a presumption that the shareholders of such a closely-held corporation will act together to control the corporation,” CRA stated:
[T]he CRA would question the appropriateness of the assumption that individuals do not have a common link and do not act in concert and would require that this assumption be demonstrated.