The intent behind that “closely related” test is to identify when you have a group of corporations that essentially act as one entity because the overall control of everything is under the same person, essentially.
These rules were working well and still work well, but given the fact that there are more and more complex corporate structures and types of shares put forward by corporations, there are a few scenarios that went to the CRA to ask whether, in certain situations, the closely related test was met when technically, according to the old working of the legislation, it could have been met but it was not the intent.
To give you an example, you could have a corporation that holds 90% or more of the value and number of shares that have only one vote, and the other 10% of shares have 100 votes associated with them. Essentially a person asked CRA whether the corporation that holds the 90% of single-vote shares would be closely related to another corporation.
That's not the intent, because even if that person held 90% of the value of the corporation, they don't really control the corporation, so they are not acting as one person when the group is making decisions.