{"id":744,"date":"2013-06-17T15:32:45","date_gmt":"2013-06-17T15:32:45","guid":{"rendered":"https:\/\/thor.ca\/\/blog\/?p=744"},"modified":"2025-02-12T13:29:31","modified_gmt":"2025-02-12T21:29:31","slug":"tcc-finds-that-pubco-had-de-facto-control-of-rd-company","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2013\/06\/tcc-finds-that-pubco-had-de-facto-control-of-rd-company\/","title":{"rendered":"TCC finds that Pubco had de facto<\/em> control of R&D company"},"content":{"rendered":"

In Lyrtech RD Inc. v. The Queen<\/em><\/a>, 2013 TCC 12, the Tax Court of Canada (TCC) held that a public company (Pubco) had de facto<\/em> control of a Canadian research and development company (R&D Co); as such, the enhanced refundable research and development tax credits were not available to R&D Co because R&D Co was not a Canadian-controlled private corporation (CCPC). R&D Co was owned by a discretionary trust (Trust) the beneficiaries of which were direct and indirect subsidiaries of Pubco (Pubco Subs). The TCC held that although the Trust and not Pubco had de jure<\/em> (legal) control of R&D Co, Pubco held de facto<\/em> (factual) control of R&D Co. The latter existed because Pubco held \u201ca dominant economic influence over\u201d R&D Co, such that R&D Co \u201ccould not survive or continue its activities\u201d without the support of Pubco (paragraph 32). Accordingly, Pubco controlled R&D Co \u201cdirectly or indirectly in any manner whatever\u201d (s. 256(5.1) and s. 125(7)). The TCC also addressed the Crown\u2019s alternate argument that the Pubco Subs had contingent de jure<\/em> control of R&D Co under s. 251(5)(b), as beneficiaries of the Trust. The TCC rejected this argument. The beneficial interest of the Pubco Subs in the Trust was too uncertain or indirect to be a right under s. 251(5)(b) (paragraph 55). Further, if Parliament had intended such a result, it would have clearly expressed this intent \u2013 as it did for the associated-corporation rules in s. 256(1.2)(f).<\/p>\n","protected":false},"excerpt":{"rendered":"

In Lyrtech RD Inc. v. The Queen<\/em><\/a>, 2013 TCC 12, the Tax Court of Canada (TCC) held that a public company (Pubco) had de facto<\/em> control of a Canadian research and development company (R&D Co); as such, the enhanced…<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-744","post","type-post","status-publish","format-standard","hentry","category-corporate-tax"],"_links":{"self":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/744","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/comments?post=744"}],"version-history":[{"count":1,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/744\/revisions"}],"predecessor-version":[{"id":2763,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/744\/revisions\/2763"}],"wp:attachment":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/media?parent=744"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/categories?post=744"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/tags?post=744"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}