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Any parent company that has established, purchased or otherwise
acquired a subsidiary must look very carefully at whether the costs
it incurs on an ongoing basis in holding the subsidiary can be
claimed as tax-deductible expenses.
The Income Tax Act is relatively strict on this issue and,
unfortunately, in many respects quite ambiguous. First, it should
be remembered that when talking about the relationship between the
parent company and the subsidiary in the context of the Income Tax
Act, we must rely on the definition of that relationship in the