Example
I am the controlling shareholder of two CCPCs.
This taxation year, one CCPC has active business income of $500,000 and the other CCPC has active business income of $300,000.
I have various options. For example, I could allocate the entire $500,000 to the first corporation and it could benefit from the small business deduction for the whole amount.
But I might allocate $400,000 to the first corporation and $100,000 to the other corporation, and those amounts would benefit from the small business deduction.
The rationale for this associated corporation rule?
The government does not want you to double up, triple up, and so on, if you own or control various CCPCs.