Ch. 34 - Stakeholder Relationships (Associated, Affiliated and Connected)

Question 1

Which requires the SBD be shared

Answer 1

Associated companies share the business limit

Question 2

De jure control - meaning

Answer 2

means owning 50% or more of the outstanding shares

Question 3

Indirect control - how it happens

Answer 3

through controlling a company that controls another company

Question 4

Shares owned by a minor child

Answer 4

each parent is deemed to own the shares of the corporation owned by a minor child

Question 5

Related to itself, himself or herself

Answer 5

a person who owns shares in more than one corporation is deemed to be related to itself, himself or herself

Question 6

Options or rights

Answer 6

a person who owns options is deemed to be in the same position as if the options had been exercised

Question 7

Basic Association Rules (a)

Answer 7

a corporation is associated with another, if one of the corporations controlled, directly or indirectly, the other

Question 8

Basic Association Rules (b)

Answer 8

two corporations are associated if they are controlled by the same person or group of persons

Question 9

Basic Association Rules (c)

Answer 9

two corporations are associated if:

1. they are controlled by a person, and
2. the person was related to the person who controlled the other, and
3. either of those persons owned more than 25% of the other corp

Question 10

Basic Association Rules (d)

Answer 10

two corporations are associated if:

1. one corporation was controlled by a person, and
2. that person was related to each member of a group of persons that controlled the other corporation, and
3. that person owned 25% or more of the other company

Question 11

Basic Association Rules (e)

Answer 11

two corporations are associated if:

1. each of the corporations was controlled by a related group, and
2. each of the members of one of the related groups was related to all of the members of the other related group, and
3. one or more persons who were members of both related groups owned 25% or more of the outstanding shares of the other corp

Question 12

Affiliated persons - to individuals

Answer 12

1. spouse or common-law partner

2. corporation the individual controls

Question 13

Affiliated persons - co corporations

Answer 13

1. an individual who controls the corporation
2. another corporation that controls the corporation
3. a partnership or trust that controls the corporation
4. each member of an affiliated group that controls the corporation
5. the spouse of an individual that controls the corporation
6. the spouse of a member of an affiliated group that controls the corporation

Question 14

Affiliated persons - Capital loss

Answer 14

1. individual - losses are denied as a superficial loss and is added to the cost base of the property
2. Others - loss is denied and retained by the transferor until the transferee sells the asset

Question 15

Affiliated persons - terminal loss

Answer 15

1. individual - same as others (below)
2. Others - loss is added to a new CCA class for transferor and claims CCA. Transferee adds FV of the asset to the CCA class

Question 16

Connected Corporations - connected if:

Answer 16

either of the following:

1. Control: the corporation is controlled by the other corporation
2. Votes and value: The corporate shares held by the other corporation represent more than 10% of the coting shares AND more than 10% of the FMV