Law360 Canada ( August 10, 2022, 6:21 AM EDT) -- Appeal by Nicole L. Tiessen Interior Design Ltd. from the Tax Court’s decision that section 256(2.1) of the Income Tax Act (ITA) applied to deem 30 corporations to be associated with each other for the purpose of calculating the small business deduction under the ITA. The reassessments issued to the appellants stemmed from the reorganization of an architecture and interior design business from a corporate model to a corporate partnership model. Prior to the reorganization, the business was carried on primarily through one corporate entity. When the reorganization was undertaken, the business was transferred to a newly-formed partnership which involved 30 corporations. The appellants filed their income tax returns for the 2012 and 2013 years on the basis that the anti-avoidance provision did not apply to deem any of the corporations to be associated. The Tax Court concluded that at least one of the main reasons for the reorganization and for the separate existence of the 30 corporations was the reduction of taxes by greater access to the small business deduction. The appellants took the position that the Court misinterpreted section 256(2.1) of the ITA and that absent that error the Court would have concluded that section 256(2.1) did not apply. The Crown took the position that to raise this issue for the first time in this Court was prejudicial and the Court should not consider it....