Principal Issues: Gesco holds all of the issued and outstanding shares of the capital stock of Opco. The shares of the capital stock of Gesco are held by Mr.X (XXXXXXXXXX%), Ms.Y (XXXXXXXXXX%) and Mr.Z (XXXXXXXXXX%). Ms.Y will incorporate Nouco which will acquire all the shares of the capital stock of Gesco held by Mr.X. Nouco will borrow money from Gesco to buy the shares. Mr.X and Ms.Y are not related persons within the meaning of subsection 251(2). Whether section 84.1 applies so that a dividend will be deemed to have been paid to M.X by Nouco and to have been received by Mr.X from Nouco at the time of disposition.
Position: No. Mr.X and Nouco are dealing with each other at arm’s length.
Reasons: Question of Fact