(1) An entity has an
"indirect interest" in a corporation if the corporation is linked to another
corporation (the
"directly controlled corporation" ) in which the entity has a direct interest.
(5) The following are examples of how
subsection (4) works (the examples are cumulative)--
(a) an entity has a
direct interest (with a value of 80%) in corporation A. Corporation A has a
direct interest (with a value of 70%) in corporation B. The value of the
indirect interest of the entity in corporation B is 80% × 70% (that is,
56%). Accordingly, in this example the entity has a controlling interest
(within the meaning of section 73 (Groups arising from tracing of interests in
corporations)) in corporation B,
(b) corporation B also has a direct interest
(with a value of 40%) in corporation C. The value of the indirect interest of
the entity in corporation C is 80% × 70% × 40% (that is, 22.4%).
Accordingly, in this example the entity does not have a controlling interest
in corporation C.