Mr. A and Mr. C are both related to Mr. B, but Mr. A is not related to Mr. C. Each of Mr. A, Mr. B and Mr. C wholly-owns Aco, Bco and Cco, respectively, which, in turn, each holds 1/3 of the shares of Dco. Aco and Cco are both related to Bco. Thus, Aco and Cco are related under s. 251(3). Aco also holds all of the shares of Eco. (a) Are Aco, Bco and Cco a related group? (b) Are Aco and Dco related? (c) Are Eco and Dco related? CRA responded (TaxInterpretations translation):
…(a) Aco, Bco and Cco are a "related group" as per ITA subsection 251(4) taking into account that these corporations are related with each other by virtue of ITA subsection 251(3). Consistently with ITA paragraph 251(5)(a), since the related group comprising Aco, Bco and Cco is in a position to control Dco, this related group is deemed to be a related group that controls Dco for purposes of the application of ITA subsection 251(2).
…(b) In light of the above, Dco would also be related to Aco by virtue of ITA subparagraph 251(2)(b)(ii) given that Aco is a member of a related group controlling Dco. Furthermore, Aco and Dco would also be related with each other by virtue of ITA subparagraph 251(2)(c)(iii) by reason of the fact that Aco is controlled by a person (Mr. A) who inter alia is related with a person (Aco) which is a member of the related group controlling Dco.
…(c) In light of the above, Dco and Eco would be related with each other by virtue of ITA subparagraph 251(2)(c)(iii) by reason of the fact that Eco is controlled by a person (Aco) who is related inter alia with a person (Bco) which is a member of the related group controlling Dco.