The CRA has issued GST/HST Notice 303, “Changes to the Closely-related Test”, in relation to the proposed changes to the closely-related test introduced in this year’s federal budget. The current test requires a parent corporation or partnership to own 90% or more of the value and number of shares of a subsidiary corporation. However, the budget proposal requires a corporation or partnership to also hold and control 90% or more of the votes in respect of every corporate matter of the subsidiary corporation (with certain exceptions), in addition to meeting the conditions of the current test.
The change generally becomes effective on March 22, 2017. However, the measure will come into effect on March 23, 2016 for elections that are filed and become effective after March 22, 2016.