Company A is owned by wife. Is Company A associated with other companies owned by husband?
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Interpretation Letter 08-0097, March 2009
We refer to our conversation of XXXXXX regarding Company A and the Employer Health Tax (EHT).
We have received a letter informing us that Company A, owned by Mrs. A, is not associated with other companies owned by Mr. A.
Based on the information we have available at this time, we understand that:
- Company A was owned 100% by Mrs. A, wife of Mr. A
- Mr. A controls a number of other businesses
- Mr. A is President and CEO of Company A and has signing authority
- Company A's financial statements for XXXXXX, 2007 note large amounts of debt due to/due from related parties owned by family members, with no set repayment terms and no interest
- Company A claimed the full tax exemption for 2007, but did not claim any tax exemption from 2003 to 2006.
From the above information, it is our opinion that Company A is associated by de facto control with the other corporations controlled by Mr. A. There is presumed significant influence between spouses. In addition, it appears that Mr. A has control over the operations of Company A.
As a result, Company A will be reassessed for 2007 to disallow the tax exemption.
