A corporation (Brother-Portfolioco) owned by an individual (Brother) sells a 50% shareholding in Opco to a corporation (Sister-Holdco) owned by Brother’s sister (Sister) – but with a capital gains reserve being claimed because most of the sales proceeds are deferred. After noting that, under s. 40(1)(a)(ii), the availability of the reserve turned on Brother-Portfolioco and Brother not having de facto control of Sister-Holdco and on Sister-Holdco not having de facto control of Brother-Portfolioco, CRA commented on the expansion of de facto control under s. 256(5.11) stating:
As provided for in subsection 256(5.11) and the applicable jurisprudence, any factor, whether contractual, commercial, economic, moral or familial, may be taken into consideration in order to determine whether a person or group of persons has influence, direct or indirect, the exercise of which would result in de facto control of a corporation ("Influence"). In this regard, only a complete review of all relevant facts, actions, circumstances and documents surrounding a particular situation can enable us to determine whether a person has Influence over a Corporation.