Canadian-controlled private corporation (CCPC)
A Canadian-controlled private corporation (CCPC) is a private corporation that is a Canadian corporation, other than one controlled by non-residents or public corporations, one with a class of shares listed on a designated stock exchange, and certain others set out in subsection 125(7) of the Income Tax Act.
You meet CCPC status whenever tax on a private company is discussed, because several rules refer to it. The small business deduction under subsection 125(1) goes to a corporation that was a CCPC throughout the taxation year, and the CRA notes that deduction and an enhanced research credit are available to certain CCPCs.
How the definition works
Control is tested "directly or indirectly in any manner whatever". Paragraph (b) adds a second test: the corporation also falls outside the definition if it would be controlled by one person were every share held by a non-resident, a public corporation or a listed corporation held by that person. Qualified small business corporation shares must also be shares of a CCPC, which links the term to the lifetime capital gains exemption.
What to ask
- Whether any shareholder is non-resident or a public corporation
- Whether status was held for the whole year in question
- Whether a buyer’s own residence or structure would change the status after closing
The tax guide for a sale shows where the status is relied on.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Government of CanadaGovernmentIncome Tax Act, R.S.C. 1985, c. 1 (5th Supp.)
- 02Canada Revenue AgencyGovernmentHow certain relationships affect the small business deduction and SR&ED investment tax credits
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