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For the legislation governing corporate groups, it is often necessary for one company to have a certain level of ownership in another company in order to form a group. Ownership for these purposes refers to beneficial ownership, either held directly or indirectly.

The legislation provides rules for determining beneficial ownership and assessing whether a company is a 51%, 75% or 90% subsidiary of another¹. (Although note that special rules apply when calculating ownership for group capital gains tax purposes (see D2.305)).

For both 51% and 75% subsidiaries, the holdings can be direct or indirect. In contrast 90% subsidiaries must be held directly.

It should be noted that because of an absence of the appropriate beneficial ownership, a parent company in liquidation cannot be part of a group. But, if a subsidiary goes into liquidation, the parent continues to be the beneficial owner of the subsidiary's shares and the group relationship is maintained.