The corporate appellants appealed reassessments under Part III of the Income Tax Act relating to excess capital dividends.
The Minister alleged that a complex series of transactions involving a mutual fund trust and an RRSP trust were a sham designed to artificially manufacture capital gains and offsetting capital losses to create capital dividend account balances.
The Tax Court found that the transactions did not result in a change of beneficial ownership and were a sham and misrepresentation.
Alternatively, the Court found the transactions were abusive tax avoidance under the GAAR.
The appeals were dismissed.
