[OFFICIAL
ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
D’Auray J.
BACKGROUND
[1]
These appeals are filed against reassessments
made under the Income Tax Act (the "ITA") regarding the 2007 taxation year, during which the appellants
disposed of freeze shares that they held in the corporation Les
Constructions de l’Amiante Inc. ("Amiante").
[2]
They were sold in a context of reorganization of
Amiante’s corporate structure, for the purposes of implementing the terms and
conditions of Mr. Ghislain Poulin’s ("Mr. Poulin") gradual departure and integrating Mr. David Hélie ("Mr. Hélie") into the corporation.
[3]
The following sales are the subject of these
appeals:
A. Mr. Poulin’s sale of 450,004 Class F preferred shares in
Amiante to 6847161 Canada Inc. ("Gestion Turgeon") for $450,004;
B. Herman Turgeon’s ("Mr. Turgeon") sale of 388,861 Class D preferred shares in Amiante to
Gestion David Hélie Inc. ("Gestion Hélie") for $388,861;
[4]
After the disposition of these shares, when
calculating their income for the 2007 taxation year, the appellants
reported taxable capital gains for which they each claimed a capital gains
deduction as qualified small business corporation shares under
subsection 110.6(2.1) of the ITA.
[5]
The Minister of National Revenue ("Minister") disallowed the capital gains deduction claimed by Mr. Poulin.
According to the Minister, Mr. Poulin, Mr. Turgeon and
Gestion Turgeon acted in concert without separate interests. They were
therefore deemed to have had a non-arm’s length relationship under
paragraph 251(1)(c) of the ITA. Consequently, the provisions of
section 84.1 of the ITA apply and Mr. Poulin is deemed to have
received a dividend of $449,911 during the disposition of the Class F
shares in Amiante in 2007.
[6]
The Minister also disallowed the capital gains
deduction claimed by Mr. Turgeon. According to the Minister, Mr. Turgeon,
Mr. Hélie and Gestion Turgeon acted in concert without separate
interests. They were therefore deemed to have dealt with one another at arm’s
length under paragraph 251(1)(c) of the ITA. Consequently, the
section 84.1 provisions apply and Mr. Turgeon is deemed to have
received a dividend of $388,861 during the disposition of the Class D
shares in Amiante in 2007.
FACTS
I. Partial agreed
statement of facts
[7]
On September 25, 2015, the parties filed a
partial agreed statement of facts, which is reproduced below:
[translation] PARTIAL AGREED STATEMENT OF FACTS
1. The
corporation "Les
Constructions de l’Amiante Inc. " ("Amiante") is primarily active in the construction of roads, water supply
systems and other related works.
2. Amiante resulted from mergers
under the Canada Business Corporations Act: the first, on April 1,
1999, with 3458130 Canada Inc.;1 and the second, on November 1,
2007, with Ghilin Inc. ("Ghilin").2
3. Amiante’s Articles of
Incorporation were also amended on May 20, 2005, and on September 26,
2007.3
4. Ghilin was incorporated by
Ghislain Poulin on May 26, 2005, under the Canada Business
Corporations Act.
5. The company Les Entreprises
G.H.T. Inc. ("G.H.T.
") was incorporated by Herman Turgeon
on April 25, 1997, under Part IA of the Companies Act of
Quebec.
6. The company 6847200 Canada
Inc. ("Gestion Poulin") was incorporated on September 26, 2007, by
Ghislain Poulin under the Canada Business Corporations Act.
7. The company 6847161 Canada
Inc. ("Gestion Turgeon") was incorporated on September 26, 2007, by
Herman Turgeon under the Canada Business Corporations Act.
8. The company Gestion David
Hélie Inc. ("Gestion Hélie") was incorporated on November 7, 2007, by David Hélie under
the Canada Business Corporations Act.
9. On September 19, 2005,
Ghislain Poulin and Herman Turgeon were equal shareholders in
Amiante.
10. At all relevant times, and up
until 2012, Ghislain Poulin and Herman Turgeon were members of
Amiante’s Board of Directors.
Corporate reorganization –
September 2005
11. As at March 31, 2005,
the shareholders and characteristics of the shares held in Amiante were as
follows:
|
Shareholders
|
Number
of shares
|
Class
|
CV
|
M/B ratio
|
FMV
|
|
G. Poulin
|
16,949
|
A
|
$200
|
$200
|
$1,325,000
|
|
|
10
|
E
|
$10
|
$10
|
$10
|
|
H. Turgeon
|
16,949
|
A
|
$200
|
$200
|
$1,325,000
|
|
|
10
|
E
|
$10
|
$10
|
$10
|
12. In September 2005, Amiante underwent a
corporate reorganization with a view to, among other objectives, welcoming
Bernard Bilodeau, a key Amiante employee, as a shareholder ("2005 Reorganization").4
13. Among other things, as part
of the 2005 Reorganization, 11,512 Class A shares (5,756 per
shareholder) in Amiante were converted to Class B shares.
14. Following the
2005 Reorganization, the shareholders and characteristics of the shares
held in Amiante were as follows:
|
Shareholders
|
Number of shares
|
Class
|
CV
|
M/B ratio
|
Redemption value
|
Number of votes
|
|
G. Poulin
|
5,756
|
B
|
$68
|
$68
|
$450,004
|
5,756
|
|
Ghilin
|
10,000
|
A
|
$100
|
$100
|
$100
|
10,000
|
|
|
11,193
|
C
|
$132
|
$132
|
$874,996
|
|
|
|
10
|
E
|
$10
|
$10
|
$10
|
|
|
H. Turgeon
|
5,756
|
B
|
$68
|
$68
|
$450,004
|
5,756
|
|
G.H.T.
|
10,000
|
A
|
$100
|
$100
|
$100
|
10,000
|
|
|
11,193
|
C
|
$132
|
$132
|
$874,996
|
|
|
|
10
|
E
|
$10
|
$10
|
$10
|
|
|
B. Bilodeau
|
10,000
|
A
|
$100
|
$100
|
$100
|
10,000
|
|
|
10
|
E
|
$10
|
$10
|
$10
|
|
15. An Amiante shareholders’ agreement was signed on
October 4, 2005.5 That agreement replaced the one signed on March 12, 1991.
16. On November 30, 2005,
Amiante and its shareholders signed a Share Redemption Agreement that took
effect on October 4, 2005.6
17. Between September 2005
and April 2007, Amiante bought back part of its Class C shares.7
Corporate
reorganization – 2007
18. Raymond Chabot Grant Thornton
prepared Amiante’s financial statements as at March 31, 2007.8
19. From April 1 to
November 7, 2007, several transactions9 were carried out
regarding Amiante’s corporate structure in order to, among other things: buy
back Bernard Bilodeau’s shares; welcome David Hélie, a key Amiante
employee, as a shareholder; modify the shareholder participation breakdown of
Amiante share capital; plan for Ghislain Poulin’s eventual retirement; and
amend the division of roles and responsibilities within the company.10
20. Among others, the following
transactions occurred:
a. On September 26, 2007,
Amiante amended its share capital.11
b. As part of the changes made
to its share capital, Amiante exchanged some of its shares, including the
exchange of each Class B share of Amiante’s former share capital for
Class D shares in its new share capital, about 78.17 Class D shares
for each Class B share. The 5,756 Class B shares held by
Ghislain Poulin and Herman Turgeon respectively were thus exchanged
for 450,004 Class D shares. Unlike the Class B shares, the
Class D shares carried no voting rights.12
c. On November 1, 2007,
Amiante merged with Ghilin.13 Each Class D share held by
Ghislain Poulin and Herman Turgeon in the "former" Amiante share capital was converted into a Class D share in
the share capital of the merged Amiante.14
d. On November 1, 2007,
the 450,004 Class D shares in Amiante held by Ghislain Poulin were
exchanged for 450,004 Class F shares in Amiante.15
e. On November 1, 2007,
Ghislain Poulin disposed of the 450,004 Class F shares in Amiante in
exchange for $450,00416 from Gestion Turgeon.
f. On November 7, 2007,
Herman Turgeon disposed of the 388,861 Class D shares in Amiante in
exchange for $388,86117 from Gestion Hélie.
21. Deloitte prepared Amiante’s financial statements as at
October 31, 2007.18
22. On January 8, 2008, the new Amiante shareholders
signed an addendum to the shareholder agreement of October 4, 2005.19
Ghislain Poulin disposed of 450,004 Class F shares in
Amiante.
23. The Share Purchase Agreement20
signed on November 1, 2007, between Ghislain Poulin,
Gestion Turgeon and Amiante stipulated that the sale price of the 450,004
Class F shares would be payable, among other things, under the following
terms and conditions:
a. an amount of $45,000 was
payable to Ghislain Poulin on December 21, 2007;
b. the balance of the sale
price, i.e. $405,004, would bear interest at 5% per annum commencing on
November 1, 2007;
c. the balance of sale was
payable through five (5) annual consecutive payments in capital, in the
amount corresponding to the higher of:
i. $81,000.80; or
ii. 90% of the sums received by
Gestion Turgeon from Amiante; and
d. As payment of the balance
sale, Amiante agreed to pay its shareholders annually at least 80% of its
annual net profits, in the form of dividends or otherwise, providing that,
however, all of the requirements under the Canada Business Corporations Act
were met, including, in particular, those related to accounting and solvency
tests.
24. On July 18, 2008, Amiante
bought back 243,408 of its Class F shares held by Gestion Turgeon for
the sum of $243,408. Of that amount, $143,083 was paid by Gestion Turgeon
to Ghislain Poulin in repayment of the balance of the sale price.
25. On February 6, 2009, Amiante
bought back 151,666 of its Class F shares held by Gestion Turgeon for the
sum of $151,666. Of that amount, $131,139 was paid by Gestion Turgeon to
Ghislain Poulin in repayment of the balance of the sale price.
26. On February 6, 2010, Amiante
bought back 54,930 of its Class F shares held by Gestion Turgeon for the
sum of $54,930.
27. The balance of the sale price and
interest accrued thereon were paid in full in 2010.
Herman Turgeon disposed of 388,861
Class D shares in Amiante.
28. The Share Purchase Agreement21
signed on November 7, 2007, between Herman Turgeon,
Gestion Hélie and Amiante stipulated that the sale price of the 388,861
Class D shares would be payable, among other things, under the following
terms and conditions:
a. the balance of the sale price,
i.e. $388,861, bore interest at 4% per annum commencing on November 1,
2007;
b. the balance of the sale
price was payable based on cash flows generated by Amiante, which agreed to pay
its shareholders annually, as payment of the balance of the sale price, at
least 80% of its annual net profits, in the form of dividends or otherwise,
providing that, however, all of the requirements under the Canada Business
Corporations Act were met, including, in particular, those related to
accounting and solvency tests.
c. Gestion Hélie committed
itself to using 90% of the sums received from Amiante to pay the amount owing
to Herman Turgeon.
29. On July 18, 2008, Amiante
bought back 44,444 of its Class D shares held by Gestion Hélie for
the sum of $44,444.22 Of that amount, $40,000 was paid by
Gestion Hélie to Herman Turgeon in repayment of the balance of the sale
price.
30. On February 6, 2009, Amiante
bought back 27,690 of its Class D shares held by Gestion Hélie for
the sum of $27,690. Of that amount, $24,922 was paid by Gestion Hélie to
Herman Turgeon in repayment of the balance of the sale price.
31. On February 6, 2010, Amiante
bought back 42,000 of its Class D shares held by Gestion Hélie for
the sum of $42,000.
32. On February 6, 2011, Amiante
bought back 42,000 of its Class D shares held by Gestion Hélie for
the sum of $42,000.
33. On March 31, 2012, Amiante
bought back 31,500 of its Class D shares held by Gestion Hélie for
the sum of $31,500.
34. On December 28, 2012, Amiante
bought back 72,438 of its Class D shares held by Gestion Hélie for
the sum of $72,438.
Ghislain Poulin’s departure
35. On March 30, 2012,
Ghislain Poulin sold his remaining interest in Amiante to
Gestion Turgeon for a total sum of $1,370,000.23
36. It was at that point, in late March 2012,
that Ghislain Poulin left Amiante for good.
Ghislain Poulin’s
assessment
37. Ghislain Poulin reported
taxable capital gains of $224,968 resulting from the disposition of 450,004
Class F shares in Amiante. He claimed an equivalent deduction under
subsection 110.6(2.1) of the Income Tax Act (the "Act").24
38. The Minister took the position
that Ghislain Poulin’s disposition of 450,004 Class "F" shares in
Amiante to Gestion Turgeon triggered application of paragraph 84.1(1)(b)
of the Act, and thereby created a dividend deemed to be paid in the amount of
$449,911.
39. By a Notice of Reassessment dated
October 31, 2011, the Minister therefore increased Ghislain Poulin’s
taxable income by $562,389 for the 2007 taxation year. The Minister also
cancelled the taxable capital gain initially reported and the capital gains
deduction claimed by Ghislain Poulin in his income tax return prepared for
the 2007 taxation year.25
40. By a Notice of Objection dated
November 21, 2011, Ghislain Poulin duly objected to the reassessment
made on October 31, 2011.26
41. A Report on Objection was prepared
by the Minister.27
42. In a Notice of Confirmation dated
March 27, 2013, the Minister confirmed the reassessment dated
October 31, 2011.28
Herman Turgeon’s assessment
43. Herman Turgeon reported
taxable capital gains of $194,402 resulting from the disposition of 388,861
Class D shares in Amiante. He claimed an equivalent deduction under
subsection 110.6(2.1) of the Act.29
44. The Minister took the position
that the disposition of 388,861 Class "D" shares in
Amiante to Gestion Hélie made applicable paragraph 84.1(1)(b) of
the Act, and thereby created a dividend deemed to be paid in the amount of
$388,802.
45. By a Notice of Reassessment dated
October 31, 2011, the Minister increased Herman Turgeon’s taxable
income by $486,003 for the 2007 taxation year. The Minister also cancelled the
taxable capital gain initially reported and the capital gains deduction claimed
by Herman Turgeon in his income tax return prepared for the
2007 taxation year.30
46. By a Notice of Objection dated
November 21, 2011, Herman Turgeon duly objected to the reassessment
made on October 31, 2011.31
47. A Report on Objection was prepared
by the Minister.32
48. In a Notice of Confirmation dated
March 27, 2013, the Minister confirmed the reassessment dated
October 31, 2011.33
Audit
49. As part of the audit, the Canada
Revenue Agency ("CRA") auditor,
Benoit Couillard, and representatives from CRA’s Headquarters exchanged
various correspondence regarding the assessments in dispute.34
[The footnotes are reproduced in Appendix 1.]
II. Additional facts
[8]
It is also important to add certain facts raised
during the hearing.
[9]
Mr. Poulin was hired as an Amiante employee
in 1981 and was responsible for the administrative aspect of the company.
[10]
Mr. Turgeon began working for Amiante
in 1985. As construction foreman, he was responsible for the construction
sites, where he spent most of his time.
[11]
At that time, the Amiante shareholders were
Mr. Poulin, Étienne Lacasse, Réal Lessard and
Armand Lapointe.
[12]
In 1997, following numerous reorganizations in
Amiante’s corporate structure, Mr. Turgeon became an Amiante shareholder,
thus joining Mr. Poulin and Étienne Lacasse; each held 33 1/3%
of the common shares.
[13]
Étienne Lacasse then retired and left
Amiante, leaving Mr. Poulin and Mr. Turgeon as the corporation’s 50%
shareholders.
[14]
Several conflicts arose between Mr. Poulin
and Mr. Turgeon. They disagreed on the strategy to follow regarding the
corporation’s future. Mr. Turgeon wanted to attract new shareholders in
order to expand and broaden Amiante’s market share, whereas Mr. Poulin
apparently preferred the status quo. The differences worsened to the
point that, in 2004, Mr. Turgeon was thinking of leaving Amiante and
selling his shares to Mr. Poulin. For his part, Mr. Poulin was also
preparing exit scenarios, whereby he would leave Amiante and sell his shares to
Mr. Turgeon.
[15]
That being said, despite their differences,
in 2005, Mr. Poulin and Mr. Turgeon decided to accept
Bernard Bilodeau ("Mr. Bilodeau") as an Amiante shareholder.
[16]
For that purpose, Amiante reorganized its share
capital in 2005 and the appellants froze their common shares by converting
the value of their common shares into preferred shares. Part of the common
shares were converted into Class B preferred shares. Mr. Poulin and
Mr. Turgeon each held 5,756 of these Class B preferred shares that
had a redemption value of $450,004. That value for the Class B shares
matched the amount needed by Mr. Poulin and Mr. Turgeon to claim the
capital gains deduction. The remaining common shares were converted into
Class C preferred shares. Mr. Poulin and Mr. Turgeon each held
11,193 of these Class C preferred shares that had a redemption value of
$874,996.
[17]
To complete Amiante’s reorganization,
Mr. Poulin, Mr. Turgeon and Mr. Bilodeau each subscribed to
10,000 voting common shares, at $100 each. Thus, following that reorganization,
the three shareholders each held 33 1/3% of Amiante’s new voting common
shares.
[18]
The arrival of Mr. Bilodeau as a
shareholder and director did not resolve the conflicts between the
shareholders. Mr. Poulin submitted a letter of intent dated
December 22, 2006, to Mr. Turgeon and Mr. Bilodeau, whereby he
expressed his desire to gradually leave Amiante.
[19]
That letter of intent marked the beginning of
negotiations that led to Amiante’s 2007 reorganization. Mr. Poulin and
Mr. Turgeon each consulted professionals in order to benefit from Amiante’s
reorganization, taking into account the gradual departure of Mr. Poulin.
It should be noted that once the process began, the appellants only retained
the services of Deloitte to conduct the reorganization due to the costs
involved.
[20]
On April 1, 2007, the Amiante shareholders
agreed on the new distribution of the corporation’s share capital. Thus,
Mr. Turgeon became Amiante’s majority shareholder with 51% of the common
shares; Mr. Poulin reduced his interest in the common shares to 25%; and
Mr. Bilodeau, to 24%. The agreement also stipulated that Mr. Poulin
would immediately sell his Class B preferred shares to
Gestion Turgeon in exchange for a promissory note payable within a maximum
deadline of five years, and that the buyback of his portion would be completed
on March 31, 2010, the date on which he would leave Amiante for good.
[21]
Prior to concluding the April 1, 2007
agreement governing Mr. Poulin’s departure, specifically the sale, by
Mr. Poulin of his Class B preferred shares to Gestion Turgeon,
the shareholders decided to wait until Amiante’s financial statements were
prepared.
[22]
However, before the financial statements were
prepared, a major conflict arose in September 2007 between Mr. Poulin
and Mr. Bilodeau. Mr. Bilodeau immediately quit Amiante and demanded
full buyback of his interest. Consequently, the agreement negotiated between
the parties regarding Mr. Poulin’s departure was aborted.
[23]
In the light of Mr. Bilodeau’s unexpected
departure, Mr. Turgeon decided to persuade Mr. Hélie to become an
Amiante shareholder and Mr. Poulin agreed to postpone his departure date
for two years, to 2012.
[24]
Mr. Hélie had been working as a controller
for Amiante since June 1, 2004. The purpose of having Mr. Hélie as a
shareholder was to ensure that he could take over the work done by
Mr. Poulin.
[25]
An agreement outlining Amiante’s reorganization
and acceptance of Mr. Hélie was signed on September 20, 2007.
[26]
Under the 2007 reorganization,
Mr. Poulin formed Gestion Poulin on September 26, 2007,
Mr. Turgeon formed Gestion Turgeon on September 26,
2007, and Mr. Hélie formed Gestion Hélie on November 7, 2007.
[27]
On November 1, 2007, Mr. Poulin sold
450,004 Class F preferred shares to Gestion Turgeon for $450,004.
These shares were the Class B preferred shares that were converted into
Class D preferred shares in 2007, and exchanged for Class F shares on
November 1, 2007. The terms and conditions of the purchase are described
in paragraphs 23, 24 and 25 of the partial agreed statement of facts.
[28]
On November 7, 2007, Gestion Poulin
sold 10.5% of Amiante’s common shares to Gestion Hélie for $1.90.
[29]
Also on November 7 2007, Mr. Turgeon
sold 388,861 Class D preferred shares to Gestion Hélie for $388,861.
These Class D shares were the Class B preferred freeze shares that
were converted to Class D shares in 2007. Mr. Turgeon financed the
purchase of these shares by Gestion Hélie.
[30]
Following certain negotiations regarding the
interest rate, in exchange for the 388,861 Class D preferred shares,
Gestion Hélie issued Mr. Turgeon a promissory note for $388,861
bearing interest at 4%. The promissory note was payable in accordance with the
conditions set out in paragraphs 28 to 34 of the partial agreed statement
of facts, i.e. even the share redemptions effected by Amiante.
[31]
Following the September 2007
reorganization, Mr. Turgeon held 57.5% of the common shares in Amiante,
Mr. Poulin held 32%, and Mr. Hélie, 10.5%.
[32]
Under an addendum to the shareholder agreement,
on December 20, 2007, it was agreed that Mr. Poulin was
required to dispose of all of his remaining shares in Amiante by no later than
December 31, 2012, at the time of his planned departure from Amiante.
Mr. Poulin also quit Amiante on March 30, 2012, the date on which his
shares were bought back.
[33]
As stipulated by the share purchase agreements,
Amiante bought back the Class F preferred shares held by
Gestion Turgeon. Gestion Turgeon had repaid in full the promissory note it
had issued to Mr. Poulin using sums resulting from Amiante buying back its
shares.
[34]
Amiante also bought back most of the
Class D preferred shares held by Gestion Hélie for $259,982. Gestion
Hélie thus paid that amount to Mr. Turgeon as repayment of the sale price
of the preferred shares. During the hearing,
Mr. Hélie stated that there was one payment remaining on the promissory
note issued by Gestion Hélie to Mr. Turgeon.
[35]
On January 27, 2014, Gestion Hélie’s
remaining 128,789 Class D shares were transferred to Groupe Profectus
Inc.
[36]
In 2014, Groupe Profectus Inc. was the parent
company of Amiante as well as other corporations controlled by
Mr. Turgeon. Ownership of Groupe Profectus Inc.’s shares modelled that of
Amiante when it was incorporated and the objective was to form an asset
management and protection company. Moreover, Mr. Turgeon was President of
Groupe Profectus Inc.
[37]
At the hearing, neither Mr. Hélie, nor
Mr. Turgeon, nor Amiante’s accountants were able to say whether
Gestion Hélie had received consideration in exchange for transferring the
Class D preferred shares it had held in Amiante to Groupe Profectus.
ISSUES
[38]
In order to determine whether the Minister
correctly applied section 84.1 of the ITA to the two share dispositions at
issue, the Court must address the following issues:
A.
In 2007, when the 450,004 Class F shares in
Amiante were sold, were Mr. Poulin and Gestion Turgeon in a non-arm’s
length relationship?
B.
In 2007, when the 388,861 Class D shares in
Amiante were sold, were Mr. Turgeon and Gestion Hélie in a non-arm’s
length relationship?
APPELLANTS’ POSITION
I. Ghislain Poulin
[39]
Mr. Poulin submits that he correctly
reported the taxable capital gain that resulted from the disposition of the
450,004 Class F shares in Amiante.
[40]
According to Mr. Poulin, during the
negotiations that led to the sale of the Class F shares in Amiante,
neither he, nor Mr. Turgeon, nor Gestion Turgeon acted in concert
without separate interests.
[41]
Indeed, Mr. Poulin had been negotiating his
gradual retirement from Amiante since late 2006. Therefore, he wanted to
benefit from his interest and did not want to relinquish control of Amiante to
Mr. Turgeon until his departure conditions had been fulfilled. That is why the
initial agreement dated April 1, 2007, was concluded, which, in the light
of the events, was adapted so as to become the final agreement dated
September 20, 2007.
[42]
It was the April 1, 2007 agreement that led
to the sale of shares on November 1, 2007, and which enabled
Mr. Poulin to impose conditions on the sale of his shares and on
Mr. Turgeon taking over control of Amiante.
[43]
Consequently, Mr. Poulin and
Mr. Turgeon submit that, when the 450,004 Class F preferred shares
were sold to Gestion Turgeon, the parties were acting in their own interests
and were dealing with one another at arm’s length. Consequently, the provisions
of section 84.1 of the ITA did not apply to Mr. Poulin.
II. Herman Turgeon
[44]
Mr. Turgeon submits that he correctly
reported the taxable capital gain that resulted from the disposition of 388,861
Class D shares in Amiante to Gestion Hélie.
[45]
Hence, in computing his income for the 2007
taxation year, he correctly claimed the capital gains deduction provided for in
section 110.6 of the ITA.
[46]
Indeed, Mr. Turgeon submits that he,
Gestion Hélie and Mr. Hélie were dealing with one another completely
at arm’s length since they were not related persons within the meaning of
subsection 251(2) of the ITA and that they had a de facto arm’s
length relationship.
[47]
None of the parties to the transaction were
acting in concert with one another and the negotiations were conducted so as to
protect their respective interests.
[48]
On the one hand, Mr. Turgeon wanted to attract
Mr. Hélie into Amiante to benefit from his administrative and financial
expertise. On the other hand, Mr. Hélie, through Gestion Hélie,
apparently wanted to become an Amiante shareholder.
[49]
Consequently, the sum of $388,861 received by
Mr. Turgeon in exchange for the 388,861 Class D shares in Amiante
should not be a deemed dividend under the provisions of section 84.1 of
the ITA.
RESPONDENT’S POSITION
I. Ghislain Poulin
[50]
The respondent submits that Mr. Poulin,
Mr. Turgeon, as well as Gestion Turgeon, acted in concert, without
separate interests, with respect to the sale of 450,004 Class F shares in
Amiante.
[51]
The balance of the price of sale for the shares
was paid entirely with the funds arising from their buyback by Amiante. Thus,
Gestion Turgeon simply acted as a conduit for the money flowing from the
corporation. Gestion Turgeon had no interest in buying freeze shares whose
value was frozen or, on top of that, in paying 5% interest on that amount.
According to the respondent, that transaction does not take the form of
ordinary business relations between parties acting in their own interests.
Gestion Turgeon was merely helping Mr. Poulin claim a capital gains
deduction.
[52]
Consequently, the respondent argues that
Mr. Poulin and Gestion Turgeon are deemed not to have acted at arm’s
length under subsection 251(1)(c) of the ITA, which made applicable
the provisions of paragraph 84.1(1)(b) of the ITA. Mr. Poulin
is therefore deemed to have received a dividend of $450,004 during the 2007
disposition of 450,004 Class F shares in Amiante.
II. Herman Turgeon
[53]
The respondent submits that Mr. Turgeon,
Mr. Hélie, and Gestion Hélie acted in concert, without separate
interests, with respect to the sale of 388,861 Class D shares in Amiante.
[54]
For the same reasons as those enumerated
regarding the transaction carried out between Mr. Poulin and Gestion
Turgeon, Mr. Turgeon is allegedly deemed to have received a dividend of
$388,802 during the 2007 disposition of 388,861 Class D shares in Amiante.
[55]
According to the respondent, Gestion Hélie was
simply a middleman for Mr. Turgeon, which enabled him to strip Amiante of
its surpluses in order to benefit from the capital gains deduction.
[56]
The respondent also argues that Gestion Hélie
had no interest in acquiring shares the value of which was not likely to
increase, for which no dividend was paid, and for which the payment was subject
to 4% interest. According to the respondent, the objective of this transaction
was to enable Mr. Turgeon to benefit from the capital gains deduction.
ANALYSIS
[57]
The following provisions of the ITA are relevant
to the cases at bar:
Non-arm’s
length sale of shares
84.1 (1) Where after
May 22, 1985 a taxpayer resident in Canada (other than a corporation)
disposes of shares that are capital property of the taxpayer (in this section
referred to as the “subject shares”) of any class of the capital stock of a
corporation resident in Canada (in this section referred to as the “subject
corporation”) to another corporation (in this section referred to as the
“purchaser corporation”) with which the taxpayer does not deal at arm’s length and,
immediately after the disposition, the subject corporation would be connected
(within the meaning assigned by subsection 186(4) if the references
therein to “payer corporation” and to “particular corporation” were read as
“subject corporation” and “purchaser corporation” respectively) with the
purchaser corporation,
(a) where shares (in this
section referred to as the “new shares”) of the purchaser corporation have been
issued as consideration for the subject shares, in computing the paid-up
capital, at any particular time after the issue of the new shares, in respect
of any particular class of shares of the capital stock of the purchaser
corporation, there shall be deducted an amount determined by the formula
(A - B) × C/A
where
A is the increase, if any,
determined without reference to this section as it applies to the acquisition
of the subject shares, in the paid-up capital in respect of all shares of the
capital stock of the purchaser corporation as a result of the issue of the new
shares,
B is the amount, if any, by
which the greater of
(i) the paid-up capital,
immediately before the disposition, in respect of the subject shares, and
(ii) subject to
paragraphs 84.1(2)(a) and 84.1(2)(a.1), the adjusted
cost base to the taxpayer, immediately before the disposition, of the subject
shares,
exceeds the fair market value, immediately after the disposition, of
any consideration (other than the new shares) received by the taxpayer from the
purchaser corporation for the subject shares, and
C is the increase, if any,
determined without reference to this section as it applies to the acquisition
of the subject shares, in the paid-up capital in respect of the particular
class of shares as a result of the issue of the new shares; and
(b) for the purposes of
this Act, a dividend shall be deemed to be paid to the taxpayer by the
purchaser corporation and received by the taxpayer from the purchaser
corporation at the time of the disposition in an amount determined by the
formula
(A + D) - (E + F)
where
A is the increase, if any,
determined without reference to this section as it applies to the acquisition
of the subject shares, in the paid-up capital in respect of all shares of the
capital stock of the purchaser corporation as a result of the issue of the new
shares,
D is the fair market value,
immediately after the disposition, of any consideration (other than the new
shares) received by the taxpayer from the purchaser corporation for the subject
shares,
E is the greater of
(i) the paid-up capital,
immediately before the disposition, in respect of the subject shares, and
(ii) subject to
paragraphs 84.1(2)(a) and 84.1(2)(a.1), the adjusted
cost base to the taxpayer, immediately before the disposition, of the subject
shares, and
F is the total of all amounts
each of which is an amount required to be deducted by the purchaser corporation
under paragraph 84.1(1)(a) in computing the paid-up capital in
respect of any class of shares of its capital stock by virtue of the
acquisition of the subject shares.
Arm’s
length
251 (1) For the
purposes of this Act,
(a) related persons shall
be deemed not to deal with each other at arm’s length;
(b) a taxpayer and a
personal trust (other than a trust described in any of paragraphs (a) to
(e.1) of the definition trust in subsection 108(1)) are
deemed not to deal with each other at arm’s length if the taxpayer, or any
person not dealing at arm’s length with the taxpayer, would be beneficially
interested in the trust if subsection 248(25) were read without reference
to subclauses 248(25)(b)(iii)(A)(II) to (IV); and
(c) in any other case,
it is a question of fact whether persons not related to each other are, at a
particular time, dealing with each other at arm’s length.
[My emphasis.]
[58]
As the parties explained during the hearing, the
essential question in these appeals is whether a non-arm’s length relationship
existed, on the one hand between Mr. Poulin and Gestion Turgeon, and,
on the other hand, between Mr. Turgeon and Gestion Hélie, in which
case the appeals should be dismissed.
[59]
Indeed, the parties have acknowledged that,
aside from the non-arm’s length issue, the conditions set out by
paragraph 84.1(1)(b) of the ITA were also met in the case of the
two dispositions at issue.
[60]
I will therefore discuss the issue whether the
parties in this case had a de facto non-arm’s length relationship.
[61]
In this regard, in Descarries v. The
Queen, Justice Hogan
recalled that:
.
. . the specific rules show that the object, spirit or purpose of
section 84.1 of the Act is to prevent taxpayers from performing transactions
whose goal is to strip a corporation of its surpluses tax-free through the use
of a tax-exempt margin or a capital gain exemption.
[62]
This comment is consistent with the analysis
made by Justice Archambault in Desmarais v. The Queen,
where he explained:
A
textual and contextual analysis of section 84.1 establishes that – and
this is consistent with the Technical Notes of the Minister of Finance –
Parliament intended to prevent stripping of the surpluses of an operating
company when the mechanism used for this stripping was similar to that used
here by Mr. Desmarais. This was the mechanism he used to receive surpluses
from an operating company free of tax following a transfer of the shares of
this company to a holding company and, following redemption, out of the
surpluses received from the operating company, of the shares issued in
consideration of the shares of the operating company.
[63]
However, the de facto non-arm’s length
relationship notion, first defined in Peter Cundill & Associates Ltd.
v. The Queen, was examined by the
Supreme Court of Canada in Canada v. McLarty,
where Justice Rothstein wrote:
[62] The Canada Revenue Agency Income Tax Interpretation Bulletin
IT-419R2 “Meaning of Arm’s Length” (June 8, 2004) sets out an approach to
determine whether the parties are dealing at arm’s length. Each case will
depend on its own facts. However, there are some useful criteria that have been
developed and accepted by the courts: see for example Peter Cundill
& Associates Ltd. v. Canada, [1991] 1 C.T.C. 197 (F.C.T.D.), aff’d
[1991] 2 C.T.C. 221 (F.C.A.). The Bulletin provides:
22. . . .
By providing general criteria to determine whether there is an arm’s length
relationship between unrelated persons for a given transaction, it must be
recognized that all-encompassing guidelines to cover every situation cannot be
supplied. Each particular transaction or series of transactions must be
examined on its own merits. The following paragraphs set forth the CRA’s
general guidelines with some specific comments about certain relationships.
23. The
following criteria have generally been used by the courts in determining
whether parties to a transaction are not dealing at “arm’s length”:
•
was there a common mind which directs the
bargaining for both parties to a transaction;
•
were the parties to a transaction acting in
concert without separate interests; and
•
was there “de facto” control [by one party over
another] (one party’s control over the other).
[My emphasis.]
[64]
It is in accordance with this second criterion,
that of parties acting in concert without separate interests, that the
respondent argues that a non-arm’s length relationship existed between
Mr. Poulin and Gestion Turgeon, and between Mr. Turgeon and
Gestion Hélie, during the respective sales of their preferred shares.
[65]
In Petro-Canada v. Canada,
Madam Justice Sharlow of the Federal Court of Appeal, after citing Peter
Cundill, stated at paragraph 55 of her reasons that if the "terms of the transactions did not reflect ordinary commercial
dealings between vendors and purchasers acting in their own interests,
" one must conclude that there was a non‑arm’s
length relationship between the parties.
[66]
In Gestion Yvan Drouin,
at paragraph 75 of his reasons, Mr. Justice Archambault wrote
that, in order to determine whether or not parties are acting in concert,
without a separate interest, one must examine whether they are acting for their
own benefit, or for that of someone else:
.
. . a person merely participates in a transaction, not for his own benefit but
for someone else’s or, even if he is acting for his own benefit, if he is also
acting for someone else in a context of reciprocity. That person is acting
without a separate interest and not independently in his own interest.
[67]
As to which transactions must be examined, the
Supreme Court of Canada stated in McLarty that the relationship between
the parties to a transaction should be examined in the light of all the
relevant facts. Rothstein J. stated the following at paragraph 65:
The
Minister states that “it is the relationship between vendor and purchaser at
the time of purchase that must be examined, and not the relationship at any
other time or with respect to any other transaction” (Minister’s factum on
cross-appeal, at para. 26). I am unable to agree with such a restrictive
approach. Of necessity, where the acquisition is made by an agent of the
purchaser, the purchaser’s connection to the acquisition transaction and to the
question of whether the vendor and purchaser were dealing at arm’s length will
require that the agreement between the agent and the purchaser be considered.
That agreement would normally precede the acquisition agreement (here all
documents were signed on December 31, 1992).
[68]
Moreover, in RMM Canadian Enterprises Inc. v.
Canada, Mr. Justice Bowman
broadened the range of facts that must be analyzed in order to conclude that
there is a non-arm’s length relationship under paragraph 251(1)(c)
of the ITA. Indeed, in that case, the Court concluded that although the
negotiations that led to the transaction took place at arm’s length, the
parties’ conduct after that transaction apparently showed that the party who
helped the other party clearly had no independent role:
What,
then, is the situation here? We have a corporation that uses another corporation
to participate in what is essentially a plan to achieve a particular fiscal
result. Does the very act of participation make the relationship non-arm’s
length? Admittedly there was clearly arm’s length bargaining about the return
that RMM would realize on the transaction. During those negotiations there was
no element of control between EC and RMM, and RMM was separately advised. At
that stage EC and RMM were at arm’s length. However, once the deal was
settled, and as it evolved through the sale, the payment of the funds, the
premature payment of the guaranteed amount, the endorsement of the refund
cheques by RMM to EC and the virtual disappearance of RMM from the scene once
it had served its purpose, it became clear RMM had no independent role. . .
. The same result is achieved if one applies the “acting in concert” theory.
RMM and EC were in my view not at arm’s length in carrying out the transaction,
including the sale.
[Emphasis added.]
[69]
At the hearing, the appellants insisted that
there was a major conflict between Mr. Poulin and Mr. Turgeon. It was
in the interests of Amiante that one of the two parties leave the corporation.
According to the appellants, the parties came to an agreement following arduous
negotiations. The parties called upon several independent professionals to
better represent their respective interests. According to the appellants, this
demonstrates that the parties were acting independently, with separate
interests.
[70]
First, that argument does not apply to the
transaction between Mr. Turgeon and Gestion Hélie. There have never
been any conflicts between Mr. Turgeon and Mr. Hélie. Moreover, it
was not due to conflicts between the shareholder-directors of a corporation
that the latter necessarily acted independently with separate interests. In
certain transactions, shareholders can act independently with separate
interests, and in other transactions, they can act in concert, without separate
interests, in spite of strained relationships. In each case, it is a question
of fact.
[71]
In this respect, I adopt the following comments
of Justice Pizzitelli in Alberta Printed Circuits Inc. v. The Queen.
At paragraph 79 of his decision he wrote:
[79] While I certainly do not doubt that there was much
negotiation between Mr. McMuldroch and the Bambers, negotiations
leading to the planning, putting into effect, and managing of a common interest
do not magically transform those negotiations into evidence of not acting in
concert in a common interest or lead to the necessary conclusion that the
parties must logically have had separate interests.
[Emphasis added.]
[72]
Nor is it a determinative factor that parties
who used the services of the same firm or the same professional in decisions as
to whether the parties acted in concert without separate interests.
[73]
Justice Lamarre Proulx made the following comments
in Brouillette v. The Queen, and I adopt her
reasoning:
[51]
Financial advisors are not the directing minds of the corporations that they
advise. They advise. They do not make the decisions. It cannot be determined
that parties have acted in concert simply because they have used the same
financial advisors. The interests of each party to an agreement must be
analysed to determine whether they have acted in concert.
[74]
In the light of the above, I will therefore
determine whether the parties to the transactions in this case acted in concert
without separate interests when the preferred shares were sold.
I. Sale of
450,004 Class F shares of Amiante by Mr. Poulin to Gestion Turgeon
[75]
As regards the sale of shares held by
Mr. Poulin, I am of the opinion that he and Gestion Turgeon were not
acting in concert without separate interests.
[76]
Indeed, all of the evidence shows that
throughout the negotiations prior to said sale, Mr. Poulin had intended to
leave the corporation if Mr. Turgeon were not to comply with his
conditions. However, one of these conditions for his departure was that he
could benefit from his capital gains deduction. As a result, this increased the
sale price of his shares.
[77]
As in Brouillette, Mr. Poulin wanted
to sell his interest in Amiante at the best price and under the most optimal
possible conditions. As for Mr. Turgeon, he wanted to acquire control of
Amiante through Mr. Poulin’s departure. In this respect,
Lamarre-Proulx J. wrote the following in her reasons:
[50]
In my opinion, the evidence established without a doubt that the interests of
Messrs. Chagnon and Brunet were totally separate from those of
Mr. Brouillette. Mr. Brouillette tried to sell at the best price
he could get. Mr. Chagnon and Mr. Brunet tried to get the lowest
price for the shares of a business that they were seeking to purchase and
operate.
[Emphasis added.]
[78]
The report on Mr. Poulin’s departure,
initially planned for March 31, 2010, later postponed to
December 31, 2012, is, in my view, understandable given the circumstances.
During the period when Mr. Turgeon was the majority shareholder, i.e. on
April 1, 2007, it was clear that Mr. Poulin would be leaving Amiante
and that Amiante would be continuing activities with Mr. Turgeon and
Mr. Bilodeau. The unexpected departure of Mr. Bilodeau made it
necessary for Amiante to reorganize, to buy back Mr. Bilodeau’s interest,
and to accept a new shareholder, Mr. Hélie.
[79]
That being said, the evidence shows that
throughout the negotiations, Mr. Poulin had intended to quit Amiante since
2006, and Mr. Bilodeau’s departure, paired with the integration of
Mr. Hélie, merely delayed his departure from the corporation.
[80]
Therefore, I only see very few distinctions
between the transaction effected between Mr. Poulin and
Gestion Turgeon and that at issue in Brouillette, except that in
this case, due to unforeseen circumstances, the reorganization did not go
smoothly, the terms and conditions of which were first established on
April 1, 2007, and which later led to the September 20, 2007
agreement, and that the buyer was already an Amiante shareholder. That being
said, both cases bore on the application of the "leveraged buy-out" technique. In my view, these differences are not significant enough
to justify a different result.
[81]
The fact that Mr. Poulin and
Mr. Turgeon had structured the transaction such that Mr. Poulin could
benefit from his capital gains deduction does not mean that the parties acted
in concert without separate interests.
[82]
In this regard, Justice Bonner, in McNichol
v. The Queen, made a distinction
between a buyer and a seller seeking to effect a transaction that is beneficial
to both parties, and the aspect of acting in concert without separate
interests:
The
evidence in the present case shows that arm’s length bargaining was present in
the sale of the Bec shares. The interests of vendors and purchaser were
divergent with regard to the purchase price. The appellants were clearly price
sensitive for they terminated discussions with regard to the sale of the shares
to a prospective purchaser, Malcolm Dunfield, upon learning that Forestell
would pay a higher price. . . . The fact that the tax savings potentially
accruing to the appellants as a consequence of sale formed not only the reason
for the sale but also the boundaries within which sale price might be
negotiated does not suggest that the appellants and Forestell acted in concert.
Buyer and seller do not act in concert simply because the agreement which
they seek to achieve can be expected to benefit both. Section 84.1 is
therefore not applicable.
[Emphasis added.]
[83]
In my view, the sale of shares by
Mr. Poulin to Gestion Turgeon reflects ordinary business relations
between parties acting in their own interests, with each party guided by its own
objectives and benefits. Mr. Poulin was seeking to obtain the best
possible price for his shares, taking into account the capital gains deduction,
and subjected his departure to conditions in his favour. Mr. Turgeon
wanted control of Amiante.
[84]
Consequently, the parties were in an arm’s
length relationship when Mr. Poulin sold the 450,004 Class D
shares of Amiante to Gestion Turgeon. The provisions of section 84.1
of the ITA do not apply to this transaction.
II. Sale of 388,861 Class D shares of Amiante by Mr. Turgeon
to Gestion Hélie
[85]
As regards the transaction between
Gestion Hélie and Mr. Turgeon, I am of the opinion that the parties
acted in concert without separate interests.
[86]
The purpose of that sale was to help
Mr. Turgeon claim his capital gains deduction.
[87]
It is evident from the documentation pertaining
to each reorganization—the one in 2005, and that in 2007—as well as all of
the evidence, that Mr. Turgeon wanted to benefit from his capital gains
deduction.
[88]
Mr. Turgeon stated throughout his testimony
that he had no idea why the various transactions and tax operations were effected
regarding Amiante’s structure. He mentioned several times that he trusted his
tax advisors and that he had no specific knowledge of the capital gains
deduction.
[89]
I do not accept that claim by Mr. Turgeon.
In my opinion, he was well aware of the possibility of benefitting from the
capital gains deduction if he disposed of his personally owned shares. The
documentation adduced at trial clearly indicated that even before
Mr. Bilodeau joined Amiante, Mr. Turgeon wanted to obtain that
relief, and he did precisely that by selling his 388,861 Class D shares to
Gestion Hélie.
[90]
That being said, while it is completely
acceptable for an entrepreneur to want to benefit from tax relief available to
them, it is, however, necessary to ensure that the method used is permitted.
That was not the case.
[91]
During his testimony, Mr. Hélie often said
that he had purchased "voting shares" in Amiante.
[92]
The evidence revealed that through
Gestion Hélie, Mr. Hélie had purchased 10.5% of the common shares in
Amiante from Mr. Poulin (Gestion Poulin). Again through Gestion
Hélie, Mr. Hélie also purchased 388,861 Class D preferred shares in
Amiante from Mr. Turgeon—the freeze shares—for $388,861.
[93]
To that end, on behalf of Gestion Hélie,
Mr. Hélie issued a promissory note to Mr. Turgeon in the amount of
$388,861, bearing interest at an annual rate of 4% beginning on
November 1, 2007.
[94]
The Share Purchase Agreement dated
November 7, 2007, between Gestion Hélie and Mr. Turgeon stipulated
that Amiante was to pay its shareholders at least 80% of its annual net profits
in the form of dividends or otherwise–particularly by way of share redemptions.
That agreement also stipulated that 90% of the sums received by Gestion Hélie
had to be given to Mr. Turgeon in repayment of the balance of sale
payable.
[95]
The Class D shares, just as the
Class F shares, were freeze shares and could not increase in value. They
did not include the right to receive an invitation to, to attend, or to vote at
shareholder meetings. The dividend was non-cumulative, varying from 0.3% to
1.25% per month, depending on the share redemption price. No dividend was
reported for these shares. However, the shares were redeemable at the option of
the holder, for the amount paid for those shares. They also included the right
to receive, as a priority, payment of the share redemption price in the event
of a liquidation or dissolution.
[96]
Consequently, for Mr. Hélie, there were no
risks associated with his involvement in this transaction. Gestion Hélie repaid
its debt to Mr. Turgeon through Amiante buying back the shares. Gestion
Hélie was able to force Amiante to buy back all of its shares at its
discretion. Moreover, no period was stipulated to repay the promissory note that
Gestion Hélie issued to Mr. Turgeon. As of the hearing date, i.e. nine
years after the transaction, a balance still remained payable on the promissory
note.
[97]
I am of the opinion that in no way did
Gestion Hélie benefit from buying such shares or, on top of that, from
paying interest on shares whose value was frozen. In the absence of any de
facto control by Gestion Hélie over the corporation, few scenarios
exist in which a person would be interested in obtaining similar freeze shares.
For Gestion Hélie, the cost of those shares far exceeded their actual
return since it was not shown that any dividend had been paid on them while
they were held by Gestion Hélie.
[98]
I am of the view that in buying the Class D
shares from Mr. Turgeon, Gestion Hélie had no interest other than to
enable Mr. Turgeon to realize a capital gain, so that he could claim the
capital gains deduction.
[99]
Furthermore, the evidence revealed that on
January 27, 2014, Gestion Hélie transferred the remaining shares that
had not yet been bought back by Amiante to Groupe Profectus Inc., of which
Mr. Turgeon was President.
[100]
Although that transaction occurred seven years
after Gestion Hélie purchased the preferred shares from Mr. Turgeon,
just as in RMM Canadian Enterprises, this shows that, with respect to
Amiante’s Class D shares, Gestion Hélie had no role independent of
Mr. Turgeon. Mr. Hélie repeated on several occasions that he had
always wanted to purchase "voting shares" in Amiante, except that he could not say what he received as
consideration when his shares were transferred to Profectus.
[101]
In the words of Justice Archambault in Gestion
Yvan Drouin, I conclude that Gestion Hélie was only involved in the
transaction for the benefit of Mr. Turgeon, thereby allowing him to strip
Amiante of its surpluses tax-free through the use of its capital gains
deduction.
[102]
Finally, it is important to note that despite
the resemblance between the two preferred freeze share sale transactions,
namely the sale of Class F shares between Mr. Poulin and
Gestion Turgeon, and the sale of Class D shares between
Mr. Turgeon and Gestion Hélie, there are clear distinctions that call
for a different result, as follows:
−
Mr. Turgeon’s objective was to acquire
control of Amiante; this was done through Mr. Poulin’s departure and the purchase
of his shares. Mr. Poulin’s objective was to leave Amiante under the best
possible conditions. Both parties to the transaction had their own interests
and benefits, which was not the case in the sale of shares by Mr. Turgeon
to Gestion Hélie.
−
Contrary to the transaction concluded between
Mr. Poulin and Gestion Turgeon, the Share Purchase Agreement between
Mr. Turgeon and Gestion Hélie did not stipulate any terms and
conditions of repayment regarding the promissory note issued to
Mr. Turgeon. As I have already mentioned, nine years following the
transaction, a balance of the price sale still remained payable.
−
Mr. Poulin quit Amiante as planned.
Mr. Turgeon is still working at Amiante and, as majority shareholder and
director, he controls the corporation.
[103]
For all of these reasons, I am of the opinion
that Gestion Hélie and Mr. Turgeon acted in concert, without separate
interests, during the sale of 388,861 Class D shares in Amiante, thereby
creating a non-arm’s length relationship between the parties to that
transaction. I am of the view that the conditions of the transaction effected
between them do not reflect ordinary business dealings between parties acting
in their own interests.
[104]
Therefore, the Minister was correct in
disallowing the capital gains deduction claimed by Mr. Turgeon and in
applying the provisions of section 84.1 of the ITA, namely, that
Mr. Turgeon is deemed to have received a dividend during the 2007 taxation
year.
CONCLUSION
[105] Mr. Poulin’s appeal is allowed, without costs.
[106] Mr. Turgeon’s appeal is dismissed, without costs.
Signed at Ottawa, Canada, this
14th day of June 2016.
"Johanne D’Auray"
Email this Content