Canada Revenue Agency · Active business & the small business deduction
The articles expressly permit a transfer that would end CCPC status
What the rule requires
The small business deduction, the refundable-tax regime and the enhanced SR&ED rate all turn on CCPC status, which is lost if control passes to a non-resident or a public corporation.
Authority: ITA s. 125(7) ("Canadian-controlled private corporation")
What goes wrong
The articles expressly permit a share to pass to a non-resident or a public corporation. Control passing either way ends Canadian-controlled private corporation status, and with it the small business deduction, the refundable-tax regime and the enhanced SR&ED rate. This is a permission on the page, not a gap in the drafting.
What good looks like
The articles restrict ownership in a way that protects CCPC status.
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