Words and Phrases - "series of transactions"
Cameco Corporation v. The Queen, 2018 TCC 195, aff'd 2020 FCA 112
Owen J found (at para. 704) that the concept of a “series” under s. 247(2) should be interpreted narrowly, stating:
To allow for a meaningful comparative or substitutive analysis, the transaction or the series identified in the preamble must be susceptible of such an analysis. An overly broad series renders the analysis required by the transfer pricing rules impractical or even impossible by unduly narrowing (possibly to zero) the set of comparable circumstances and substitutable terms and conditions.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | having a Swiss/Lux subsidiary enter into long-term purchase contracts at a somewhat fixed price with third parties and the taxpayer did not engage s. 247(2) | 708 |
| Tax Topics - General Concepts - Sham | transactions that were not factually misrepresented were not a sham | 254 |
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(1) - Transaction | meaning of "arrangement" and "event" | 153 |
Craven v. White, [1988] BTC 268 (HL)
Lord Jauncey stated:
"If it were appropriate to prepare a formula defining 'composite transaction' in the light of the passages in the speeches in Ramsay, Burmah and Dawson to which I have referred I should be tempted to suggest the following:
'A step in a linear transaction which has no business purpose apart from the avoidance or deferment of tax liability will be treated as forming part of a pre-ordained series of transactions or of a composite transaction if it was taken at a time when negotiations or arrangements for the carrying through as a continuous process of a subsequent transaction which actually takes place had reached a stage when there was no real likelihood that such subsequent transaction would not take place and if thereafter such negotiations or arrangements were carried through to completion without genuine interruption.'"
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Tax Avoidance | 203 |
OSFC Holdings Ltd. v. Canada, 2001 DTC 5471, 2001 FCA 260
Rothstein JA found that transactions that had the effect of transferring properties with accrued losses to a partnership were a “common law” series, which he defined (at para. 24) as follows:
[F]or there to be a series of transactions, each transaction in the series must be pre-ordained to produce a final result. Pre-ordination means that when the first transaction of the series is implemented, all essential features of the subsequent transaction or transactions are determined by persons who have the firm intention and ability to implement them. That is, there must be no practical likelihood that the subsequent transaction or transactions will not take place.
However, subsequent transactions in which the taxpayers acquired interests in that partnership, with a view to the partnership realizing those losses so as to be allocated to them, were not pre-ordained, and not part of the common-law series. In finding that such subsequent acquisition transactions were assimilated to the common-law series for s. 245(2) and (3) purposes, Rothstein JA stated (at para. 36):
Thus, before applying subsection 248(10), "series" must be construed according to its common law meaning, which I have found to be pre-ordained transactions which are practically certain to occur. To that is added "any related transactions or events completed in contemplation of the series". Subsection 248(10) does not require that the related transaction be pre-ordained. Nor does it say when the related transaction must be completed. As long as the transaction has some connection with the common law series, it will, if it was completed in contemplation of the common law series, be included in the series by reason of the deeming effect of subsection 248(10). Whether the related transaction is completed in contemplation of the common law series requires an assessment of whether the parties to the transaction knew of the common law series, such that it could be said that they took it into account when deciding to complete the transaction. If so, the transaction can be said to be completed in contemplation of the common law series.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) | significant disparity between tax benefit and commercial return from transaction | 263 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | policy against corporate loss trading | 229 |
| Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. | 70 | |
| Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions | deeming v. definition provisions | 46 |
Lipson v. Canada, 2007 DTC 5172, 2007 FCA 113, aff'd 2009 DTC 5015 [at 5528], 2009 SCC 1
The taxpayer's wife ("Jordanna") borrowed $562,500 from the Bank of Montreal under an interest-bearing demand promissory note in order to purchase some of the shares of the a family corporation from the taxpayer for that sum, with the sale proceeds being used by the taxpayer to purchase a family home. The next day, a mortgage loan on the home received from the Bank was used to retire the demand promissory note. The taxpayer did not report a capital gain on the sale of the shares (on the basis that the inter-spousal rollover in subsection 73(1) applied) and included in the computation of his income both the dividends on the shares purchased by Jordanna, and the interest expense incurred by her on the mortgage loan, on the basis that the attribution rules in subsection 74.1(1) applied.
After noting (at para. 47) that in the Canada Trustco case, the Court had confirmed that "the expression 'series of transactions' in section 245 refers to transactions that are 'pre-ordained in order to produce a given result' with 'no practical likelihood that the planned events would not take place in the order ordained'", the Court noted that here the series of transactions comprised those described in the paragraph above together with the following events which were later completed in contemplation of the series, namely, the deduction by Jordanna of interest costs, and the utilization by the taxpayer of the attribution rules.