William Hobson

The appellant corporate taxpayer sold its assets to a sister subsidiary that had accumulated substantial tax losses.

The appellant then operated the business as an agent for the subsidiary, transferring the net income to it at the end of each fiscal year to utilize the loss carry-forward.

The Minister of National Revenue reassessed the appellant, arguing the transaction was incomplete, a sham, and lacked a bona fide business purpose.

The Supreme Court of Canada allowed the appeal, holding that the transaction was legally complete and not a sham, as it created the exact legal relationships intended by the parties.

The Court rejected the strict 'business purpose' test, affirming that taxpayers may arrange their affairs to minimize tax liability provided the transaction is legally effective and does not violate specific anti-avoidance provisions.

The appellant was the top candidate in two closed competitions for clerical positions with the RCMP but was denied the required 'Top Secret Security Clearance' without reasons.

She appealed the subsequent appointments of lower-ranked candidates to the Public Service Commission Appeal Board, which allowed her appeal on the basis that it could review the reasonableness of the security clearance denial.

The Federal Court of Appeal set aside the Board's decision.

The Supreme Court of Canada dismissed the appellant's appeal, holding that the requirement of a security clearance is a condition of appointment within management's authority, not an evaluation of relative merit under the Public Service Employment Act, and therefore cannot be reviewed by an Appeal Board under section 21.