The taxpayer’s daughter who had recently turned down a gift of a car from her father, became aware that her mother needed a car. In quick succession, she received a gift of the car from her father and gifted it to her mother. Both transfers benefited from a Quebec sales tax exemption for vehicle transfers by way of gift between related persons, whereas a direct gift would not have been exempted because the father and mother (the taxpayer) were divorced.
In finding that these transfers were not avoidance transactions for purposes of s. 480 of the general anti-avoidance rule in the Quebec Sales Tax Act, Poirier JCQ stated (at para. 37, TaxInterpretations translation):
The context does not indicate that the transaction was effected in two stages simply to avoid the payment of tax. The testimony of Madame Soucy instead indicated that the purpose in proceeding in this manner was to obtain the vehicle. Nothing indicates that Monsieur Rivard would have accepted or welcomed a gratuitous transfer of his vehicle to his ex-wife. The evidence reveals instead that he was prepared to give it to his daughter and that she was prepared to give the same vehicle to her mother.
In also finding (at para. 37) that there was no abuse within the meaning of s. 481 of the QSTA, he stated that "utilizing the exemptions provided by the Act cannot constitute an abuse within the meaning of the Act."