Groupe Honco - Federal Court of Appeal finds that a 5-year separation is not enough time to break a series

The taxpayers in a s. 83(2.1) case (respecting the denial of capital dividend treatment where one of the main purposes of a series of transactions including an acquisition of shares was to receive a capital dividend from other than a safe harbor source) were a casualty of the Copthorne doctrine that the "in contemplation of" extension in s. 248(10) of the "series of transactions" concept included backward-looking contemplation.

The taxpayers argued that five years between the share acquisition and the capital dividend was too long for there to be a series.  However, applying Copthorne, the Court found that the subsequent capital dividend payment clearly contemplated the previous acquisition of the target corporation’s capital dividend account.

Neal Armstrong.  Summaries of Groupe Honco Inc. v. The Queen, 2013 CAF 128 under ss. 248(10) and 83(2.1).