Which corporations qualify as 'closely related' for the section 156 HST election?

The "closely related" test for the section 156 election generally looks at ownership: corporations are typically closely related where one owns all or substantially all of the voting shares of the other, or where both are owned to that same degree by a common parent corporation, so the group is bound together by a very high level of common ownership and control rather than a loose business relationship or shared management alone.

Simply operating under common branding, sharing an office, having overlapping directors, or doing a lot of business with each other isn't enough on its own if the actual share ownership doesn't meet the threshold, the test is specifically about voting share ownership at a very high level, not about how integrated the businesses feel in practice. Partnerships can also qualify in some circumstances, under related but distinct rules for partnership ownership structures.

Because the ownership percentages have to be calculated precisely, and a corporate reorganization, new investor, or partial sale of shares can quietly take a group below the required threshold without anyone noticing, corporate groups relying on this election should have their ownership structure confirmed against the current test periodically, not just when the election is first made.