Mr.Hanes owns 100% of the common shares of Jimbo Corp.and 40% of the common shares of Hughes Corp.Hughes Corp.owns 80% of the common shares of ARC Ltd.Mr.Hanes' daughter-in-law also owns 5% of the common shares of Hughes Corp., and 15% of the common shares of ARC Ltd.The remaining shares are held by parties who deal at arm's length with Mr.Hanes and his daughter-in-law.The following Companies are asso- ciated under ITA 256 of the Income Tax Act:

Question

Quizplus · Accepted Answer

Under the ITA 256, two or more corporations are associated if one corporation directly or indirectly controls the other. In this case, Hughes Corp. owns 80% of the common shares of ARC Ltd., so they are associated. And since Mr. Hanes owns 40% of the common shares of Hughes Corp., he indirectly owns 32% (40% of 80%) of the common shares of ARC Ltd. Therefore, Jimbo Corp., Hughes Corp., and ARC Ltd. are all associated.

MrHanes Owns 100% of the Common Shares of Jimbo Corp