CRA finds that s. 84.1(2.31)(g)(i) accommodates a transfer of management (including part management) by a parent to both a child and a 3rd party

Aco, wholly-owned by Mr. A, held 60% of the units of a general partnership (SENC) and Bco, wholly-owned by an arm’s length third party, held the other 40%. On January 1, 2025, Mr. A sold 55% of the shares of Aco to a corporation controlled by his son (Cco) and the remaining 45% to Bco.

At issue was the condition in s. 84.1(2.31)(g)(i) (the “Condition”) which, in context, required that, within the 36 month (or longer) period following the disposition to Cco, the taxpayer (Mr. A) must have taken reasonable steps to transfer the “management” (as defined in s. 84.1(2.31(i)) of each relevant business of Aco and of any relevant group entity (SENC) to his child.

CRA stated:

In practice, it is not uncommon for more than one person to be involved in directing or supervising the activities of a business. The Condition does not require that the parent be the sole or principal person involved in the management of the business within the meaning of paragraph 84.1(2.31)(i). Nor does the Condition preclude a person from transferring the management of a business in which the person is involved to more than one person.

… If … it were shown that Child would exercise a sufficiently significant power previously exercised by Mr. A in relation to the business of Aco and SENC, either alone or with Mr. B, following the disposition of the Shares, we believe it would be possible to establish that Mr. A had transferred the management of Aco to Child for the purposes of the Condition.

Neal Armstrong. Summary of 9 October 2025 APFF Roundtable, Q.15 under s. 84.1(2.31)(g)(i).