Regarding de facto control, proposed subsection 256(5.11) overturns McGillivray Restaurant Ltd. (2016 FCA 99). The proposed subsection reads as follows:
(5.11) Factual control—Interpretation. For the purposes of this Act, the determination of whether a taxpayer has, in respect of a corporation, any direct or indirect influence that, if exercised, would result in control in fact of the corporation
(a) shall take into consideration all factors that are relevant in the circumstances; and
(b) shall not be limited to, and the relevant factors to be considered in making the determination need not include, whether the taxpayer has a legally enforceable right or ability to effect a change in the board of directors of the corporation, or the board’s powers, or to exercise influence over the shareholder or shareholders who have that right or ability.
For more commentary, see Philip Friedlan and Adam Friedlan, “Aeronautic Development Corporation and De Facto Control”, Tax for the Owner-Manager 17:3 (July 2017).
