Qualified CCPC?

Question

If a private company is incorporate in Canada by a Canadian residen; however, he ownes 50% of voting shares, the other 50% of shares is owned by a non-resident. Is this business qualified as CCPC and eligible to SBD? Thanks for any help.

Answer 1

I respectfully disagree with first post as the test for CCPC status is "not controlled" by a non-resident, public company, etc.  Which means exactly 50% should do it, although that does introduce other worries that could put you offside such as what happens if there is a tie vote - non-resident having tiebreaker would be bad.  Certainly 50% +1 is preferable.  However, if you are stuck with 50%, worship Allah and pray namaz three times daily but do not abandon hope for your SBD.

Answer 2

A CCPC is a CDN private corporation  that is not controlled  directly or indirectly by one or more non-residents or public corporation (ITA 125(7)).  At 50/50, one could question who has real control over the corporation?

Now, for the CCPC to qualify for SBD, 90% of its assets are used in active business carried on in Canada.  CCPC is owned by the taxpayer or spouse/common law/related partnership.  Finally, during the previous 24 month period, it was not owned by a unrelated person, and more than 50% of FMV of the assets of the corp during that time could be attibuted to assets that are used in an active business carried on primarly in Canada.

Answer 3

You need 50% + 1 share in order for it to be CCPC.

Edit:  I find I was incorrect and have to agree with shaitan.  From a CRA information bulletin, the following:

Paragraph 2. It is not necessary that a corporation be controlled by Canadian residents, private corporations or a combination thereof, in order to qualify as a CCPC. For example, if an individual resident in Canada controls 50% of

the voting rights of the shares of a Canadian corporation that is a private corporation, normally, no other person or group of persons (meaning public corporations and/or non-residents) would control the corporation for purposes of the definition of a CCPC under subsection 125(7). However, this would not

be the case if control by non-residents or public corporations exists as a result of holding a right as described in paragraph 251(5)(b) and discussed in paragraphs 5 or 6, or because of the existence of de facto control by non-

residents or public corporations as described in subsection 256(5.1) and discussed in paragraph 8.

Typical tax gobbledygook, but as strange as it may seem, the definition of a Canadian controlled corporation is that nobody NOT Canadian controls it.  Isn't THAT a telling definition?

So I bow down to shaitan and accept his judgment.  That is shaitan the man of course......