In Nicole L. Tiessen Interior Design Ltd. v R, 2021 TCC 29, the court considered the following circumstances. A firm of architects carried on business through a single corporation. In 2010 and 2011, the firm undertook a reorganization that saw a partnership continue to carry on the firm’s business. 15 corporations, each owned by a principal of the firm, were the partners of the partnership. Each of the principals incorporated a serviceco that provided services to the principal’s partnership corporation. The taxpayers took the position that each pair of corporations owned by a principal was entitled to its own small business deduction limit, but the CRA reassessed on the basis that all of the corporations in the structure were associated with each other under subsection 256(2.1). The Tax Court dismissed the taxpayers’ appeals. Apparently, the taxpayers have appealed the decision.
Ponath and Singh “TCC Takes Expansive View of Subsection 256(2.1)” 21:3 Tax for the Owner-Manager (July 2021)
