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Unformatted text preview: of expenses. Furthermore, a corporation is generally considered to be engaged in the active conduct of a trade or business if its officers or employees (or the officers or employees of related entities, if they are supervised on a daily basis and the related costs are borne by the corporation conducting the trade or business) carry out “substantial managerial and operational activities.”30
However, Canada has not adopted the us interpretation of trade or business, so the term should have the same meaning that it has under the laws of Canada. although regulation 400(2)(g) uses the term, trade or business is not specifically defined for the purposes of the act. in earlier Canadian case law, the supreme Court of Canada established that “profits” and “income from a trade or business” consist of the difference in amount between the receipts from a trade or business and the expenditures necessary to earn these receipts “ascertained on ordinary commercial principles.”31 accordingly, Canadian case law appears to support a broad interpretation of trade or business for Canadian tax purposes. In Connection with or Incidental to
similarly, the terms...
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