The following definition is given in subsection 125(7) of the federal Income Tax Act:
Specified corporate income, of a corporation for a taxation year, means the lesser of
- the lesser of
- the total of all amounts each of which is income from an active business of the corporation for the year from the provision of services or property to a private corporation (directly or indirectly, in any manner whatever) if
- at any time in the year, the corporation (or one of its shareholders) or a person who does not deal at arm’s length with the corporation (or one of its shareholders) holds a direct or indirect interest in the private corporation, and
- it is not the case that all or substantially all of the corporation’s income for the year from an active business is from the provision of services or property to
- persons (other than the private corporation) with which the corporation deals at arm’s length, or
- partnerships with which the corporation deals at arm’s length, other than a partnership in which a person that does not deal at arm’s length with the corporation holds a direct or indirect interest, and
- the total of all amounts each of which is the portion, if any, of the business limit of a private corporation described in subparagraph (i) for a taxation year that the private corporation assigns to the corporation under subsection (3.2), and
- an amount that the Minister determines to be reasonable in the circumstances.
See Also
Schedule 7, Aggregate Investment Income and Income Eligible for the Small Business Deduction