Gerbro Holdings has been affirmed

The Gerbro Holdings case concerned a privately-held Canadian investment company, whose governing investment guidelines mandated its holding up to 60% of its funds in hedge funds. Although the hedge funds in which the company invested were in low tax-rate jurisdictions, Lamarre ACJ accepted that tax deferral was not “one of the main reasons” for acquiring these investments and that there instead was an “overarching commercial reason for investing" in these funds, e.g., the reputation of the hedge fund managers – and these offshore funds were selected as being the best choices. Accordingly, those investments were not subject to the offshore investment fund rules in s. 94.1.

This decision has now been briefly affirmed in the Court of Appeal, with Webb JA simply stating:

We are not convinced that the Associate Chief Justice made any reviewable error in her thorough and detailed Reasons.

Neal Armstrong. Summary of Gerbro Holdings Co. v. The Queen, 2016 TCC 173, briefly aff’d 2018 FCA 197 under s. 94.1(1).