Graphic Packaging Canada Corp. v. The Queen, 2001 DTC 861 (TCC), aff'd 2003 DTC 5007 (FCA)

It was found that the taxpayer had acquired shares of a U.S. corporation ("GGM") on the basis of an undertaking that it would make payments to executives of a subsidiary of GGM when they became entitled to receive such payments under the terms of a profit sharing plan notwithstanding that this undertaking was not documented in the rollover agreement. Archambault T.C.J. found, on this basis, that the payment actually made by the taxpayer to such executives at the time it sold its shares of GGM to an arm's length purchaser were part of its cost of the GGM shares, with the result that it was entitled to deduct, in computing its capital gain on the disposition, the amount of such payments.

In applying the version of the definition of superficial loss that applied to 1988 transactions, Archambault T.C.J. rejected the argument on behalf of the taxpayer that once a corporation controlled by the taxpayer in (i) of the definition had been identified, there was no requirement to determine whether that corporation was still controlled by the taxpayer at the end of the relevant period. Because, instead, there had been an intervening change of control of a corporation controlled by the taxpayer, the superficial loss definition did not apply to the transactions.