The CRA addressed AOCs in Question 17 of the 2024 APFF Round Table. 50/50 shareholders of Opco (A and B) are presumed to act in concert to control Opco. If they sell one-third of Opco’s shares to a third person (C), then no AOC occurs unless A, for example, ceases to act as a controlling shareholder so that B and C now control Opco, or unless A, B and C form a new group to control the corporation. The CRA referred to para 7 of IT-302R3 (archived) for a list of the factors to be considered in deciding whether shareholders form a group.
If A, B, C and D, who are unrelated, each own 25% of the issued Common Shares in the capital of Opco, and Opco redeems D’s shares, then an AOC occurs unless it can be shown that A – C do not form a controlling group after the redemption or it appears A – C acted as a controlling group before and after the redemption. The CRA seemed to say, however, that its presumption about group control applies only to groups of fewer than four shareholders.
E Laplante and M Hoskin “Acquisition of Control: Latest Statements from the CRA” Tax For the Owner-Manager 25:1 (January 2025)
