CRA indicates that incorporating a sub through which a share sale will occur so as to avoid s. 84.1 is not per se GAARable

In order for Brother to avoid the application of s. 84.1 to his sale of half the shares of Opco to his sister’s corporation (Sister-Holdco), he first transfers those shares on a s. 85(1) rollover basis to a Newco formed by him (Brother-Portfolioco), which then sells the shares to Sister-Holdco, and claims the capital gains reserve because most of the sales proceeds are deferred.

CRA indicated that it would not apply s. 245(2) because of the specific creation of Brother-Portfolioco to avoid s. 84.1.

After noting that, under s. 40(1)(a)(ii), the availability of the reserve turned on Brother-Portfolioco and Brother not having de facto control of Sister-Holdco and on Sister-Holdco not having de facto control of Brother-Portfolioco, CRA commented on the expansion of de facto control under s. 256(5.11) stating:

As provided for in subsection 256(5.11) and the applicable jurisprudence, any factor, whether contractual, commercial, economic, moral or familial, may be taken into consideration in order to determine whether a person or group of persons has influence, direct or indirect, the exercise of which would result in de facto control of a corporation … .

Neal Armstrong. Summaries of 7 October 2022 APFF Federal Roundtable, Q.8 under s. 84.1(1) and s. 256(1.11).