24 June 1991 T.I. (Tax Window, No. 4, p. 2, ¶1313)

Where, in order to satisfy the 24-month asset test, it is agreed between the vendor of shares and the purchaser that the vendor's common shares will be immediately changed into cumulative preference shares which then will be purchased in two-years' time, s. 110.6(8) will not apply assuming that the stipulated dividends are paid on the preferred shares. The vendor's capital gain on the preferred shares will be attributable to the period of time prior to their change from common shares.

GAAR does not apply to an arrangement whereby, in order to satisfy the 24-month hold period for the enhanced capital gains exemption, the vendor has his common shares changed under a s. 86 reorganization into preferred shares, and agrees to sell those preferred shares to the purchaser in 24-months' time.