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Thread: Small Business Corporation Requirements - other CC dormant

  1. #1
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    Small Business Corporation Requirements - other CC dormant

    Good morning guys,

    According to Section 12E of the Income Tax Act, one of the many requirements to qualify as a small business corporation are that :

    "... none of the shareholders or members at any time during the year of assessment of the company, close corporation or co-operative holds any shares or has any interest in the equity of any other company as defined in section 1 (other than-
    ...
    (hh) any company, close corporation or co-operative if the company, close corporation or co-operative—
    (A) has not during any year of assessment carried on any trade..."

    I have a case where the return has already been submitted that a PTY is not a Small Business Corporation. The area I am uncertain about, is that both members are members in another CC, but it is a CC that has not been trading for a while now.

    Have any of you dealt with a similar situation, or are you able to guide me on whether I should do a request for correction on this return?

  2. #2
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    Sec (hh)(A) was inserted to make provision for shelf companies and not to make allowance for dormant companies, which is effectively what you are referring to.

    Do you know if the cc is still "in business" at CIPC, or is it de-registered?

    The "wrong" bit has already been done so your choices are leave it, or to request a correction.

    If it had been submitted correctly, would there have been any tax liability? If not, I would be inclined to hold my thumbs and leave it.

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