In Bioartificial Gel Technologies (Bagtech) Inc. v. The Queen, 2012 TCC 12, the Tax Court of Canada (TCC) found that the company was a Canadian-controlled private company (CCPC) even though a majority of the company’s voting shares were collectively held by non-residents. The company had claimed refundable investment tax credits in respect of scientific research and experimental development costs (refundable SRED credits). The CRA denied the refundable SRED credits on the basis that the company was not a CCPC, by virtue of paragraph (b) of the definition of a CCPC in s. 125(7). That paragraph asks a hypothetical question: If all the shares held by non-residents were held by one (fictional) person, would that person “control” the company? If the answer is yes, the company is not a CCPC. Here the CRA said the test was met because collectively the non-resident shareholders had more than 50% of the voting shares in the company (giving the one fictional person majority control in the election of the company’s directors). In this respect, in determining this one fictional person’s control of the company, the CRA said that any actual restrictions in a unanimous shareholder’s agreement (USA) concerning the election of the company’s directors must be ignored. The TCC disagreed. Any deeming rule, such as that in paragraph (b) of the CCPC definition, must be restricted to what is clearly expressed and cannot further modify facts beyond that expression (paragraph 32). Accordingly, the deemed fictional person must be taken as being bound by the actual USA in place. Under that USA, this fictional person (being the non-residents as a collective) did not have the ability to elect a majority of the company’s directors. This meant (i) the fictional person did not control the company, (ii) the company was a CCPC, and (iii) the refundable SRED credits were available.