T2 Schedule 9: four relationship codes, use the first that applies

Which relationship code applies, and why does the first match win?

Complete Schedule 9 if the corporation is related to or associated with at least one other corporation, and answer yes on line 150 of the T2, "Is the corporation related to any other corporations?" canada.ca. Each row gets one code in column 400, and the form tells you to take it "from the following order" canada.ca. Read that as: go down the list and use the first code that fits.

The order matters because the codes overlap. A parent and its subsidiary are always associated, since s.256(1)(a) associates two corporations when one controls the other, so a holding company is code 1 on its operating company's schedule, never code 3. Code 4 is the leftover: related, but none of the association tests is met.

The schedule itself is T2 SCH 9 (11), marked "2011 and later tax years", so the same version applies to 2026 returns as of October 2026 canada.ca.

Related or associated: which test puts a corporation on the schedule?

Related comes from s.251(2), associated from s.256(1), and the gap between them is mostly one number: 25% laws-lois.justice.gc.ca. Relationship looks only at who controls each corporation. Association, for corporations controlled by related people, also needs one of them to own at least 25% of a class of shares of each corporation.

Cousins drop off because s.251(6) limits blood relationship to a child or other descendant, or a brother or sister laws-lois.justice.gc.ca. Marriage reaches further: your client is connected to a spouse and to the spouse's siblings and parents. Two corporations are also deemed related under s.251(3) when each is related to the same third corporation. GST/HST uses its own, tighter test for the section 156 election: 90% or more of the votes and value.

The 25% tests in s.256(1)(c) to (e) ignore shares of a specified class, and association applies if a test is met "at any time in the year" laws-lois.justice.gc.ca. For the five association tests in full, see associated corporations in Canada.

How does one family group fill in Opco's Schedule 9?

Lena owns 100% of Holdco, and Holdco owns 100% of Opco. Opco owns all 1,000 common shares of USco, a Delaware corporation with no Canadian business number. Lena's husband Ravi owns 70% of the common shares of Ravico and Lena owns the other 30%. Lena's brother Tom owns 100% of Tomco, and Lena holds no Tomco shares. Here is Opco's schedule.

Holdco controls Opco, so it's the parent: code 1. Opco controls USco, so USco is code 2, and because it has no business number, column 300 gets "NR" canada.ca. Ravico is associated under s.256(1)(c): Lena indirectly controls Opco, Ravi controls Ravico, they're spouses, and Lena owns 30% of Ravico's common shares. She also counts as owning Holdco's Opco shares, because s.256(1.2)(d) pushes shares held by a holding corporation out to its shareholders laws-lois.justice.gc.ca.

Tomco is code 4. Holdco and Tomco are related under s.251(2)(c)(ii) because Lena and Tom are siblings, Opco is related to Holdco, and s.251(3) then makes Opco and Tomco related to each other laws-lois.justice.gc.ca. Nobody owns 25% of a class of shares on both sides, so there's no association. If Lena later bought 25 of Tomco's 100 common shares, Tomco would move to code 3 and onto the business limit agreement.

What goes in the other columns, including for a foreign corporation?

Each row describes the listed corporation and the filer's own stake in it. The share columns are headed "shares you own", so they show what the filing corporation holds, not what the family holds canada.ca.

A foreign corporation still belongs on the schedule when it's related or associated; column 200 and the NR note exist for exactly that row canada.ca. A corporation the filer owns no shares in, like a sibling's company, is still listed with nothing in the share columns, because Schedule 9 asks about relationships, not investments. The form has 14 rows.

How does Schedule 9 feed Schedule 23 and the rest of the T2?

Schedule 9 is the master list. The business limit agreement on Schedule 23 takes only the associated CCPCs from it canada.ca. In the Opco example, Holdco and Ravico go on Schedule 23, while USco (not a Canadian corporation, so not a CCPC) and Tomco (not associated) stay off.

The money sits on Schedule 23. A CCPC's business limit is $500,000, but nil when it's associated with another CCPC, unless the associated CCPCs file an agreement assigning percentages that total no more than 100% laws-lois.justice.gc.ca. If they don't file within 30 days of a written CRA request, the Minister allocates the limit under s.125(4). The T2 guide adds that only one of the associated corporations needs to file Schedule 23 for a calendar year, and the same list sets the balance due day canada.ca. How to split the limit is on the Schedule 23 page.

Which edge cases change a relationship code?

A third corporation. Under s.256(2), two corporations associated with the same third corporation are deemed associated with each other, so they're code 3 on each other's schedules laws-lois.justice.gc.ca. If the third corporation is a CCPC, it can file Schedule 28 so the other two aren't associated for the small business deduction. Its own business limit is then zero, the other two remain associated with it, and it must file a new election each year canada.ca. Form: canada.ca.

Specified class shares. A spouse holding only nonvoting, nonconvertible preferred shares with a capped dividend may leave the 25% tests unmet, which turns a code 3 into a code 4 laws-lois.justice.gc.ca. Check the share terms before you pick the code.

A sale partway through the year. Association counts if a test was met at any time in the tax year, so a corporation sold in March can still be associated for the whole year laws-lois.justice.gc.ca.

Penalties. The CRA says associated CCPCs claiming the small business deduction or the 35% SR&ED credit must report their relationships on Schedule 9, and that it may assess penalties for failing to report them canada.ca.