This article posted on our partner site refers to a recent Tax Court of Canada decision to make it clear that a corporation can now receive the tax benefits offered to Canadian-Controlled Private Corporations (CCPCs) even though the majority of its shareholders are non-residents. The author uses the case to show that even if the majority of voting shares lies with non-resident shareholders, if the resident shareholders have the ability to elect a majority of directors, de jure control (or control in law) will be deemed to reside with the resident shareholders; the corporation is thus allowed to enjoy the tax benefits as a CCPC. A carefully drafted shareholders’ agreement that limits the control of non-resident shareholders can help ensure this outcome.

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