The appellants appealed reassessments adding taxable capital gains to their income under paragraph 85(1)(e.2) of the Income Tax Act following a corporate reorganization and estate freeze.
The Minister argued the shares were transferred for less than fair market value to confer a benefit on related family trusts.
The Tax Court of Canada allowed the appeals, finding that the appellants had a genuine intention to transfer the shares at fair market value and reasonably relied on their accountant's valuation.
The Court upheld the validity of the price adjustment clauses in the rollover agreements, concluding no benefit was intended to be conferred.
