Income Tax Act — I-3.3 256
gnificant degree of influence by the parent. Options and rights (1.4) For the purpose of determining whether a corporation is associated with another corporation with which it is not otherwise associated, where a person or any partnership in which the person has an interest has a right at any time under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently, (a) to, or to acquire, shares of the capital stock of a corporation, or to control the voting rights of shares of the capital stock of a corporation, the person or partnership shall, except where the right is not exercisable at that time because the exercise thereof is contingent on the death, bankruptcy or permanent disability of an individual, be deemed to own the shares at that time, and the shares shall be deemed to be issued and outstanding at that time; or (b) to cause a corporation to redeem, acquire or cancel any shares of its capital stock owned by other shareholders of a corporation, the person or partnership shall, except where the right is not exercisable at that time because the exercise thereof is contingent on the death, bankruptcy or permanent disability of an individual, be deemed at that time to have the same position in relation to control of the corporation and ownership of shares of its capital stock as if the shares were redeemed, acquired or cancelled by the corporation. Person related to himself, herself or itself (1.5) For the purposes of subsections 256(1) to 256(1.4) and 256(1.6) to 256(5), where a person owns shares in two or more corporations, the person shall as shareholder of one of the corporations be deemed to be related to himself, herself or itself as shareholder of each of the other corporations. Exception (1.6) For the purposes of subsection 256(1.2) and notwithstanding subsection 256(1.4), any share that is (a) described in paragraph (e) of the definition term preferred share in subsection 248(1) during the applicable time referred to in that paragraph, or (b) a share of a specified class within the meaning of subsection 256(1.1) shall be deemed not to have been issued and outstanding and not to be owned by any shareholder and an amount equal to the greater of the paid-up capital of the share and the amount, if any, that any holder of the share is entitled to receive on the redemption, cancellation or acquisition of the share by the corporation shall be deemed to be a liability of the corporation. Corporations associated through a third corporation (2) For the purposes of (a) this Act, subject to paragraph (b), two corporations are deemed to be associated with each other at a particular time if (i) they would, but for this subsection, not be associated with each other at the particular time, and (ii) each corporation is associated with, or is deemed by this subsection to be associated with, the same corporation (in this subsection referred to as the third corporation ) at the particular time; and (b) section 125, (i) if the third corporation is not a Canadian-controlled private corporation at the particular time, the two corporations are deemed not to be associated with each other at the particular time, and (ii) if the third corporation is a Canadian-controlled private corporation that elects in prescribed form to apply this subparagraph in its taxation year that includes the particular time, the two corporations are deemed not to be associated with each other at the particular time and the business limit of the third corporation for its taxation year that includes the particular time is deemed to be nil. Anti-avoidance (2.1) For the purposes of this Act, where, in the case of two or more corporations, it may reasonably be considered that one of the main reasons for the separate existence of those corporations in a taxation year is to reduce the amount of taxes that would otherwise be payable under this Act or to increase the amount of refundable investment tax credit under sectio