Citation: 2018 FCA 3
DE MONTIGNY J.A.
HER MAJESTY THE QUEEN
REASONS FOR JUDGMENT
 This is an appeal brought by Guy Gervais (Mr. Gervais or the appellant) from a decision rendered by Jorré J. of the Tax Court of Canada (the TCC Judge) confirming reassessments issued by the Minister of National Revenue (the Minister) under the general anti‑avoidance rule (GAAR) set forth in section 245 of the Income Tax Act, R.S.C. (1985), ch. 1 (5th supp.) (the ITA) with respect to the appellant’s 2002, 2003 and 2004 taxation years. These reassessments reconfigured the tax consequences arising from a sale of shares by attributing to the appellant a capital gain of $500,000, which had been realized by his spouse, Ms. Gendron.
 In support of his appeal, the appellant maintains that the GAAR does not apply in this case because none of the conditions precedent to its application are present. He suggests that the TCC Judge committed a number of legal errors in coming to the contrary conclusion.
 For the reasons which follow, I am of the view that no such error has been demonstrated and that the appeal should accordingly be dismissed.
 The legislative provisions relevant to the analysis are reproduced in the appendix to these reasons.
THE RELEVANT FACTS
 The facts, for the most part, are described in the agreed statement of facts filed by the parties, as complemented by the detailed description of the evidence set out in the reasons of the TCC Judge (reasons, at paras. 27 to 80). They need not be repeated. The following summary is sufficient for present purposes.
 The appellant and his brother, Mario Gervais, were shareholders in Vulcain Alarme Inc. (Vulcain) until 2002, when they received an offer to purchase from an arm’s length corporation by the name of BW Technologies Ltd. (BW Technologies). The offer was accepted on or before September 22, 2002. At the time it was accepted, the share capital held by Mr. Gervais included 790,000 Class “A” common shares.
 Knowing that a sale was imminent, Mr. Gervais and his spouse consulted a law firm with the view of obtaining information about the tax implications of the planned sale and for advice as to how to transfer $1,000,000 from the proceeds to Ms. Gendron, in recognition for the contribution which she had made to the business over the years. The appellant and his spouse claim that it was solemnly with this purpose in mind that the following steps were undertaken.
 First, on September 26, 2002, a reorganization of the share capital of Vulcain was completed and the 790,000 common shares held by Mr. Gervais were converted into 2,087,778 Class “E” preferred shares.
 That same day, Mr. Gervais sold 1,043,889 of the 2,087,778 preferred shares that he held to Ms. Gendron for $1,043,889, or $1 per share. With respect to the sale, Mr. Gervais elected to waive the application of the rollover provided for in subsection 73(1) of the ITA. Thus, as the adjusted cost base (ACB) of the shares was $43,889, he realized a capital gain of $1,000,000. That election also meant that the ACB of the shares purchased by Ms. Gendron was equal to the actual purchase price – i.e.: $1,043,889 or $1 per share. It is common ground that this price reflects the fair market value of the shares sold, as it coincides with the price stated in the arm’s length offer to purchase made by BW Technologies which was eventually accepted.
 On September 30, 2002, Mr. Gervais gifted the remaining 1,043,889 preferred shares to Ms. Gendron. Regarding this second transfer, he allowed the rollover provided for in subsection 73(1) of the ITA to operate by opting not to exclude it. Mr. Gervais was therefore deemed to have disposed of these shares for a consideration equal to their ACB, – i.e.: $43,889, and Ms. Gendron was deemed to have acquired them at that same price.
 On October 7, 2002, Ms. Gendron sold all the shares that she held, – i.e.: 2,087,778 shares to BW Technologies for $2,087,778. As these shares had a different ACB and were “identical property” within the meanings of subsection 47(1), their ACB was deemed to be equal to their average cost, – i.e.: $1,087,778.
 Ms. Gendron thus realized a capital gain of $1,000,000, half of which was taxable. Given the rollover that took place under subsection 73(1) with respect to the shares that were gifted, section 74.1 of the ITA attributed to Mr. Gervais a portion of the taxable capital gain realized by Ms. Gendron. Consequently, half of the taxable capital gain realized by Ms. Gendron following the sale of the shares which had been gifted to her, – i.e.: $250,000, was attributed to Mr. Gervais, leaving the other half in the hands of Ms. Gendron.
 The end result is that part of the capital gain that Mr. Gervais would have realized if he had sold the shares without first transferring them to his spouse was realized by her, thus giving her the opportunity to claim her $250,000 lifetime capital gains exemption pursuant to subsection 110.6(2.1) of the ITA.
 In assessing Mr. Gervais under the GAAR, the Minister reconfigured the tax consequences arising from these transactions by attributing to him the taxable capital gain of $250,000 realized by his spouse on the sale to BW Technologies.
TAX COURT OF CANADA DECISION
 The TCC Judge concluded that the three conditions required to apply the GAAR were met and that the Minister correctly relied on section 245 in attributing the capital gain realized by Ms. Gendron to Mr. Gervais.
 He first asked if the series of transactions resulted in a tax benefit for Mr. Gervais. According to Copthorne Holdings Ltd. v. Canada, 2011 SCC 63,  3 S.C.R. 721 [Copthorne], the presence of a tax benefit is determined by comparing what the taxpayer could reasonably have done with what was actually done. Using that approach, the TCC Judge found that, instead of selling his shares directly to BW Technologies, as he could have done, Mr. Gervais created a structure that allowed him to avoid the tax on half of the gain that was ultimately realized. The series of transactions thus resulted in Mr. Gervais obtaining a tax benefit.
 Second, the TCC Judge considered whether the existence of avoidance transaction had been established. The appellant argued in this regard that the purpose of the series of transactions was not tax-related, as the sole objective was to reward Ms. Gendron for her contribution to the business over the years. The TCC Judge dismissed this argument. He first held that the reorganization of the share capital, the sale of the first block of shares, the subsequent gift of a second block of shares, and the sale of shares to BW Technologies were part of the series of transactions. According to him, each of these transactions was planned in advance to produce the desired result. Moreover, the transactions which formed part of the series were avoidance transactions, as one of the steps – i.e.: the sale to his spouse – would not have been necessary if the sole purpose of the series was to reward Ms. Gendron. Citing Copthorne, the TCC Judge concluded that the lack of a bona fide purpose in relation to one of the steps was sufficient to hold that the existence of a series of avoidance transactions had been established (Copthorne, at para. 40).
 As to the abusive nature of the series, the TCC Judge relied on the decision of the Supreme Court of Canada in Lipson v. Canada, 2009 SCC 1,  1 S.C.R. 3 [Lipson]. According to that decision, the purpose of subsection 73(1) is to defer the gain or loss from a transfer of property between spouses and sections 74.1 and 74.5 are specific anti-avoidance rules aimed at preventing spouses from benefiting from their non-arm’s length relationship by splitting their income.
 Relying on that analysis, the TCC Judge concluded that the purpose of subsection 74.2(1) was defeated because a capital gain that should have been Mr. Gervais’ was split in half and shared with his spouse, a result which this provision is intended to prevent.
THE PARTIES’ POSITIONS
- The appellant
 The appellant submits that the TCC Judge erred in finding that the GAAR applied in this case. More specifically, he argued that none of the three conditions needed to trigger the application of the GAAR are present.
 Regarding the tax benefit, the appellant submitted that it was not he who received a tax benefit, but rather his spouse, Ms. Gendron (appellant’s factum, at paras. 26, 27). It was she who was able to avoid the tax payable on the taxable capital gain that she realized by using her exemption. That result, however, is consistent with the intent of Parliament (appellant’s factum, at para. 29).
 Regarding the avoidance transaction, the appellant emphasized that the TCC Judge recognized that the series of transactions had been undertaken in order to recognize Ms. Gendron’s contribution to the company by giving her a portion of the proceeds of the sale (appellant’s factum, at paras. 35, 38). That being the true objective, he erred in finding that the transactions within the series were avoidance transactions (appellant’s factum, at para. 46). Moreover, the finding that the sale was not necessary if the sole objective was to provide a benefit to Ms. Gagnon is contrary to the well‑established principle that taxpayers may organize their affairs in order to minimize their taxes (appellant’s factum, at paras. 43, 44).
 In any event, the appellant argued that there was no abuse of any provision used to obtain the tax benefit. Subsection 73(1) provides for an election that taxpayers can exercise to their advantage; the exercise of that election cannot itself be abusive (appellant’s factum, at paras. 52, 53). As sections 74.1 to 75.5 do not apply to this case, they also cannot have been abused (appellant’s factum, at para. 55). Moreover, subsection 47(1) applies automatically, so that no abuse can be said to result from its application (appellant’s factum, at para. 56).
 The appellant closed his arguments by stating that the conclusions drawn from Lipson are incorrect, as that case involved [translation] “transactions that were clearly prohibited by law”, while the transactions in issue are “permitted by law” (appellant’s factum, at para. 60). Simply minimizing the taxes that otherwise would have been payable cannot constitute an abuse (appellant’s factum, at para. 64).
- The respondent
 According to the respondent, the TCC Judge was correct in finding that there was a tax benefit. The appellant could have sold his shares directly to BW Technologies without the interposition of his spouse, in which case he would have realized a capital gain of $2,000,000 (respondent’s factum, at para. 38). The series of transactions allowed the appellant to split the capital gain, thus reducing the portion that would otherwise have been taxable in his hands. From the appellant’s perspective, this reduction gives rise to a tax benefit (respondent’s factum, at para. 41).
 The respondent also argued that the reorganization of the share capital, the sale, the gift, the election made under subsection 73(1) and the triggering of the averaging mechanism set out in section 47 constitute a series of avoidance transactions because, as noted by the TCC Judge, each of those steps was planned in advance to produce the desired result (respondent’s factum, at paras. 43 and 44). In that regard, the TCC Judge was correct in finding that the sale of the shares to his spouse was not necessary in order to reward Ms. Gendron for her past services (respondent’s factum, at para. 48). This suffices in order to qualify the transactions within the series as avoidance transactions (respondent’s factum, at para. 49).
 Finally, the respondent argues that Lipson is determinative of the outcome in this case, as it defines the object, spirit and purpose of subsection 73(1) and sections 74.1 to 74.5 (respondent’s factum, at para. 54). In this regard, the fact that Mr. Gervais was only taxed on a portion of the capital gain realized on the sale to BW Technologies defeats the object, spirit and purpose of subsection 73(1). This provision provides for a deferral of the taxes which would otherwise be payable, not their elimination (respondent’s factum, at para. 60). Moreover, subsections 74.2(1) and 74.5(1) were used to allow the appellant to split the capital gain between him and his spouse, which is contrary to the object, spirit and purpose of those provisions (respondent’s factum, at paras. 61 to 63).
STANDARD OF REVIEW
 In order for the GAAR to apply, there must be a tax benefit, an avoidance transaction and abuse of a provision of the Act: Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54,  2 S.C.R. 601, at para. 17 [Trustco]. The question whether there is a tax benefit or whether the existence of a series of avoidance transactions has been established gives rise to a question of fact with respect to which the trial court is entitled to deference: Trustco at paras. 19, 44; Housen v. Nikolaisen, 2002 SCC 33,  2 S.C.R. 235, at para. 10 [Housen]. The overall analysis regarding abuse gives rise to a question of mixed fact and law as it involves the application of the provisions of the Act to the facts: Trustco, at para. 44. However, the construction of the relevant provisions gives rise to a question of law which is to be reviewed on a standard of correctness (Trustco, at para. 44; Housen at para. 8).
THE RELEVANT STATUTORY PROVISIONS
 Before beginning the analysis, it is useful to briefly review the provisions relied upon by the appellant in order to obtain the result that he did.
 Paragraphs 69(1)(b) and (c) provide that, when there is a transfer of property between persons who do not deal at arm’s length—including spouses or common-law partners—at a price that is less than the fair market value of the property transferred, the transferor and the transferee are respectively deemed to have disposed of and acquired the property at that fair market value with the resulting tax consequences.
 The attribution rules set out in sections 73 to 74.5 (the attribution rules) allow spouses to depart from that rule. First, subsection 73(1) provides that, when a transfer takes place between spouses or common-law partners, the realization of a gain or loss, as the case may be, is deferred through the operation of a rollover until the property is sold outside the family unit, at which time subsection 74.2(1) attributes the gain or loss realized back to the transferor.
 However, the attribution rules need not apply when the transfer occurs at a price that is at least equal to the fair market value of the property transferred and the transferor elects to waive the application of subsection 73(1) in his or income tax return (subsection 74.5(1)). In this case, the appellant made that election with respect to the shares which were sold but not with respect to the shares which were gifted, with the result that the attribution rules only applied to the latter.
 Moreover, as the shares sold and gifted to Ms. Gendron were identical property and had a different ACB, the application of subsection 47(1) was triggered, so that the ACB of the 2,087,778 shares that were sold to BW Technologies was deemed to be their average cost, rather than their actual cost. As noted by the TCC Judge, the sole purpose of this provision is to facilitate the calculation of the capital gain (or loss), resulting from the disposition of identical property. The rationale being that in the end – i.e.: once all are sold – the result will be the same whether the ACB is calculated based on the actual cost of each property or their average cost.
 It is not disputed that based on the relevant provisions as they read, a taxable capital gain of $500,000 was realized by Ms. Gendron following the sale of her shares to BW Technologies, half of which was taxable in the hands of Ms. Gendron and the other half in the hands of Mr. Gervais. It is also not disputed that if this taxable capital gain was properly hers, Ms. Gendron is entitled to the capital gains deduction provided for in subsection 110.6(2.1).
 The effect of the reassessments issued against Mr. Gervais under section 245 of the ITA is to attribute to him the taxable capital gain realized by Ms. Gendron, thus increasing his income accordingly and depriving Ms. Gendron of the opportunity to use her capital gains deduction.
ANALYSIS AND DISPOSITION
 In support of his appeal, Mr. Gervais argues that the TCC Judge committed errors of law at each step of the analysis, by holding that the planning resulted in a tax benefit, that the series of transactions was not undertaken for bona fide non-tax purposes, and that provisions used to achieve the tax benefit were abused.
 Mr. Gervais first argues that he did not obtain a tax benefit. Rather, it was Ms. Gendron who derived a benefit. The appellant adds that, even then, it is inaccurate to say that Ms. Gendron avoided paying taxes. She incurred liability for tax on the capital gain that she realized and simply used the deduction which she was entitled to pursuant to subsection 110.6 (2.1).
 In short, [translation] “the economic tax benefit” derived by Ms. Gendron is not one that section 245 of the ITA is intended to prevent and, in any event, is not a tax benefit for the appellant.
 In making this argument, Mr. Gervais disregards the finding made by the TCC Judge that he received a personal benefit because he avoided paying taxes on the portion of the capital gain that would otherwise have been his, had he disposed of his shares without the interposition of his spouse (reasons, at paras. 96, 114). The appellant did not explain why this finding would be incorrect.
 Second, Mr. Gervais argued that there were no avoidance transactions because the series was undertaken primarily for bona fide non-tax reasons. In this respect, the appellant emphasized that the gift which he made was in recognition of Ms. Gendron’s contribution to the business over the years and that the TCC Judge acknowledged this purpose (reasons, at para. 112).
 That is so. However, as the TCC Judge explained, this purpose coexisted with that of tax minimization, such that the analysis must go further (reasons, at paras. 112, 113). The TCC Judge went on to observe, citing Copthorne at para. 40, that if one of the transactions in the series is carried out primarily to obtain a tax benefit, that is sufficient to establish the existence of an avoidance transaction (reasons, at para. 113). In this case, the sale to his spouse cannot be explained otherwise than by a quest to obtain the tax benefit which he derived. There was therefore an avoidance transaction (reasons, at paras. 114 and 115). There is no error in this regard.
 Third, Mr. Gervais argued that even if there was an avoidance transaction, it cannot be qualified as abusive (appellant’s factum, at paras. 48 to 69). More specifically, none of the provisions relied upon to achieve the tax benefit were used to obtain a result that those provisions aim to prevent or that is contrary to their purpose or spirit.
 Specifically, Mr. Gervais challenged the finding that an abusive use of the attribution rules had been made, particularly subsection 74.2(1) of the ITA. According to Mr. Gervais, the TCC Judge’s textual, contextual and purposive analysis of the relevant provisions did not lead to a correct appreciation of their purpose.
 The essential part of the TCC Judge’s analysis in this regard is found in the following three paragraphs:
 When we consider subsections 73(1), 74.2(1) and 74.5(1) together, the scheme of the Act thus provides that when an individual transfers property to his or her spouse or common-law partner, the tax payable may92 be deferred. If the tax is deferred, when the spouse or common-law partner disposes of the property, the taxable capital gain will be attributed to the individual who made the transfer.93
92 This triggers a rollover and, accordingly, a tax deferral, unless the individual who made the transfer elects not to exercise the rollover provision.
93 As the Supreme Court stated in Lipson, 2009 SCC 1, the object and spirit of the attribution rules specifically seek to prevent spouses from benefiting from their non-arm’s length relationship to reduce the tax payable.
 Here, we must consider all the circumstances surrounding the series: the transfer of the two blocks of class E shares, one of which was sold, the other gifted; the choice not to roll over the shares sold to Ms. Gendron; the choice to allow the rollover of the shares gifted to Ms. Gendron with the result that subsection 47(1) of the Act applied when Ms. Gendron sold her shares. Obviously this leads to a result that subsection 74.2(1) aims to prevent and defeats the purpose of subsection 74.2(1) and the scheme of the Act by avoiding the attribution of part of the taxable capital gain to Mr. Gervais, which normally would have occurred when Ms. Gendron sold her shares.
 It follows that there is an abuse in the application of the provisions of the Act and, consequently, subsection 245(2) applies.
 In my opinion, the TCC Judge was correct in concluding that there was abuse. More specifically, the splitting of the capital gain that had accrued in the shares while they were held by Mr. Gervais prior to the implementation of the series and the fact that he was eventually taxed on only part of this gain frustrates the object, spirit and purpose of subsections 73(1) and 74.2(1).
 A review of the tax implications that arise from the sale of the first block of shares and the gift of the second block of shares is useful in making this demonstration. I use rounded figures to facilitate this exercise.
 The sale was made for a consideration equal to the fair market value of the shares, which is consistent with the consideration which would otherwise have been deemed pursuant to paragraph 69(1)(b). With respect to the sale, Mr. Gervais made the election available to him under paragraph 73(1)(a). In those circumstances, subsection 74.5(1) applied and both the rollover provided for in subsection 73(1) and the attribution rule set out in subsection 74.2(1) were excluded. The tax consequences of the sale of the first block of shares were therefore determined based on the normally applicable rules (sections 39, 40 and 54). Under those rules, Mr. Gervais realized a capital gain of $1,000,000, that being the difference between the proceeds of disposition ($1,000,000.00) and the ACB of the shares sold (close to 0 cents) (reasons, at para. 69). The normal rules also applied to deem the ACB of the shares acquired by Ms. Gendron to be equal to their cost – i.e.: $1,000,000.00 or $1 per share (Ibid.).
 This transaction is not in itself problematic. The accrued gains in the shares sold to Ms. Gendron were realized by Mr. Gervais as a result of that sale. That is why, under those circumstances, subsection 73(1) allows the transferor to opt out of the rollover as Mr. Gervais did and why the application of subsection 74.2(1) is also excluded (see subsection 74.5(1)).
 The gift of the second block of shares to Ms. Gendron took place without Mr. Gervais excluding the application of subsection 73(1). That provision thus deferred the tax consequences resulting from the gift. Specifically, the deferral is achieved by deeming the transferor – i.e.: M. Gervais – to have received a consideration equal to the ACB of the gifted shares in his hands (for present purposes, close to 0 cents) and, at the same time, Ms. Gendron was deemed to have acquired the gifted shares at the same price. The result is that the capital gain of $1,000,000 which would otherwise have resulted from the transfer by reason of paragraph 69(1)(b),was deferred.
 It can quickly be seen that the ACB of close to 0 cents which was deemed to be Ms. Gendron’s with respect to the gifted shares would have resulted in the deferred gain being attributable in full to Mr. Gervais on the subsequent sale to BW Technologies. However, this did not happen. Subparagraph 40(1)(a)(i) required that the ACB of the shares sold by Ms. Gendron be computed “immediately before the disposition” to BW Technologies and subsection 47(1) which had been brought into operation as a result of the gift deemed the ACB of the shares at that time to be 50 cents per share, that is the average cost of the shares which Ms. Gendron acquired by way of the gift – 0 cents – and by way of the share purchase – $1,00. The result is that the deferred gain attributed back to Mr. Gervais turned out to be half of what it would have been had subsection 47(1) not applied.
 That result, although it flows from the text of the relevant provisions, is contrary to the object, spirit and purpose of subsections 73(1) and 74.2(1), the purpose of which is to ensure that a gain (or loss) deferred by reason of a rollover between spouses or common-law partners be attributed back to the transferor. Maintaining the transferor’s ACB as provided for in subsection 73(1) and then attributing the gain (or loss) to the transferor, under subsection 74.2(1), evidences this objective. In this case, the offer to purchase made by BW Technologies before the series of transactions was initiated demonstrates unequivocally that the gifted shares had an accrued gain of $1,000,000.00 when they were transferred to Ms. Gendron. Because the rollover provided for in subsection 73(1) deferred this accrued gain in its entirety, the whole of the gain realized on the sale to BW Technologies had to be attributed back to Mr. Gervais when regard is had to the object, spirit and purpose of subsection 74.2(1). It follows that the splitting of that gain, by reason of the astute use that was made of subsection 47(1), frustrates the rationale underlying these provisions or their reason for being.
 The TCC Judge therefore came to the correct conclusion in holding that the attribution to the appellant of the entire taxable capital gain realized on the sale of the shares to BW Technologies was justified under the GAAR.
 I would dismiss the appeal with costs.
Johanne Gauthier, J.A.”
Yves de Montigny, J.A.”