Précis: The appellant, ADC, was originally wholly owned by an American corporation, Seawind Corp., which was in turn owned by Mr. Silva, an American resident. A few months later the shareholdings of ADC were restructured such that Seawind Corp. had only 46% of the shares and employess of ADC, directly or indirectly, owned the balance. ADC operated rent free out of a premises in Canada owned by Seawind Corp., which was also the sole client of ADC. ADC claimed SRED credits after the date of change of de jure control (August 2009) which CRA rejected on the basis that ADC was not a Canadian-controlled private corporation. ADC appealed unsuccessfully to the Tax Court which held that ADC was under the de facto control of Seawind Corp. ADC then appealed to the Federal Court of Appeal which dismissed the appeal, with costs, also on the basis of de facto control but without fully endorsing the reasoning of the Tax Court.
Aeronautic Development v. R. – FCA: Federal Court of Appeal upholds finding of de facto control, denying CCPC status for SRED tax creditsPlus >