The recent Tax Court of Canada's decision in 101139810 Saskatchewan Ltd. v Queen (2017 TCC
3) did not cover any new ground with respect to subsection
55(2), but it was a useful reminder of the pitfalls one could
encounter for running afoul of that provision. This short blog
highlights what went wrong, and the court's indifference to the
taxpayer's predicament.
I have written a more detailed analysis of the Tax Court of
Canada's decision in a
Tax for the Owner-Manager newsletter (first published by
the Canadian Tax Foundation in 2017 Vol. 17, no. 2), so I won't
repeat the detailed facts of the case. What happened was a business
owner indirectly held his shares in an operating company (Opco)
through a holding corporation (Old Holdco). The business owner
wished to sell his indirect interest in Opco to two other
shareholders unrelated to him. However, in order to access his
remaining lifetime capital gains deduction, the business owner had
to personally incur the
