Principal Issues: Is it required that the 25% test and the 50% test used in the definition of taxable Canadian property that is applicable to shares of a corporation listed on a designated stock exchange, be satisfied at the same time in order for shares of a corporation to be considered to be taxable Canadian property?
Position: Yes
Reasons: The legislation establishes that both the 25% test and the 50% test must be met at a particular point in time during the 60-month period.
2011 CTF - Question 20
Please confirm that the 25% test and the 50% test used in the definition of taxable Canadian property (TCP) that is applicable to shares of a corporation listed on a designated stock exchange must be satisfied at the same time in order for shares of a corporation to be considered to be TCP.
Response 20.
The definition of "taxable Canadian property" in subsection 248(1) of the Income Tax Act includes at paragraph (e) of the definition a share of a corporation listed on a designated stock exchange if, at any particular time during the 60-month period that ends at that time:
(i) 25% or more of the issued shares of any class of the capital stock of the corporation were owned by or belonged to the taxpayer and/or persons with whom the taxpayer did not deal at arm's length, and
(ii) more than 50% of the fair market value of the share was derived directly or indirectly from real or immovable property situated in Canada and/or Canadian resource property and/or timber resource property and/or options or rights in such property.
Therefore, when determining whether a share listed on a designated stock exchange is TCP at "any particular time" during a 60 month period both of the tests at subparagraphs (e)(i) and (ii) of the definition must be satisfied at the same time.
2011-042593
Wayne Doiron
November 27-29, 2011