The appellant sold her shares in a family paving business to a holding company owned by her cousin.
The Minister reassessed the appellant under section 84.1 of the Income Tax Act, treating her capital gain as a deemed dividend on the basis that she and the holding company did not deal at arm's length.
The Tax Court of Canada allowed the appeal and vacated the reassessments, finding that the appellant and the holding company engaged in hard bargaining and did not act in concert without separate interests.
The court concluded they dealt at arm's length.
